HARRISBURG - With the deadline for filing income tax returns rapidly approaching, the U.S. Attorney’s Office for the Middle District of Pennsylvania, and the Philadelphia Field Office, IRS Criminal Investigation Division, jointly announced a warning to those who are thinking about breaking the law by committing tax crimes including a listing of recent tax fraud prosecutions and sentences.
“During this time of the year, IRS will receive millions of tax returns from honest taxpayers who file their returns on time and pay all the taxes they owe," said U.S. Attorney Bruce D. Brandler. “Today’s warning is not for them; it is for tax cheats who break tax laws and abuse our tax system. If you belong in this category, pay close attention. My office will hold accountable anyone who participates in a tax fraud scheme that puts an added tax burden on honest taxpayers and drains our public finances."
“With the 2017 tax deadline looming, it is important for people to have confidence that when they pay their taxes, their neighbors and co-workers are doing the same," said IRS Criminal Investigation Acting Special Agent in Charge Gregory Floyd. "IRS Criminal Investigation will vigorously investigate those individuals who knowingly and willfully evade their tax obligation."
FILING FALSE TAX RETURNS AND EVASION
Over the last year, the U.S. Attorney’s Office has prosecuted and convicted numerous individuals for filing false federal tax returns and committing tax evasion. Defendants have received substantial sentences for tax fraud, ranging from several years in prison to home confinement. Restitution is mandatory and often includes substantial interest and penalties. For example, the following individuals were charged and/or sentenced for tax fraud recently:
Angel P. Oliva, of Carlisle, Pennsylvania, was charged in a criminal information on April 14, 2017, for aiding in filing a false tax return related to payroll taxes. Oliva was part owner of the Middlesex Diner in Carlisle, Pennsylvania. It is alleged that Oliva evaded the payment of all employment taxes from 2011 through 2014, by reporting only a portion of the wages paid to the diner employees. The total tax loss alleged is approximately $809,000.
Michael Runco, of Olyphant, Pennsylvania, was charged in a criminal information on April 3, 2017, for failing to pay the IRS employment taxes withheld from his employees’ paychecks and filing a false personal income tax return omitting substantial personal income in 2010. Runco operated Runco Transportation, Inc., a business that provided school bus transportation services under contract with Mid Valley School District, Lackawanna County, Pennsylvania. During 2006 through 2010, Runco Transportation, Inc. employed as many as 12 individuals. While federal employee employment taxes were withheld from employee paychecks, Runco allegedly failed to account for and pay these tax monies over to the IRS on behalf of his employees. Runco also received compensation from his company but failed to report this income on his 2010 personal income tax return. The total tax loss to the IRS is alleged to be approximately $78,578. Runco is scheduled to enter a plea of guilty on April 19, 2017.
Joseph Andershonis, of Stroudsburg, Pennsylvania, pleaded guilty on March 20, 2017, for failing to pay employment taxes. Andershonis owned and operated Just Very Affordable, Inc., a Stroudsburg home renovation business, and failed to pay employment taxes from the first quarter of 2010 to the last quarter of 2012, resulting in a tax loss of more than $212,000. Sentencing is scheduled for June 22, 2017.
Diego Rojas, of Dunmore, Pennsylvania, pleaded guilty on March 7, 2017, to making false claims against the government. Rojas deposited more than 350 United States tax refund treasury checks, at least 250 which were identified as fraudulent, into the check cashing company he owned and operated, Dunmore Check Cashing. The value of the checks was more than $1.6 million. Rojas agreed to make full restitution in the amount of $1,669,864 to the Internal Revenue Service. Sentencing is scheduled for June 20, 2017.
Theodore Martin and his wife, Arminda Martin, of Ravenna, Ohio (formerly resided in York County), were both sentenced to one year and one day imprisonment on Oct. 18, 2016. The Martins operated three cemetery businesses, including Suburban Memorial Gardens in Dover, Pennsylvania, and Grandview Memorial Park and Fairview Memorial Park in Ohio. The Martins failed to report to the Internal Revenue Service $786,533 they received from the operations of the cemeteries located in Ohio during the years 2008, 2009, 2010 and 2011. The Martins were ordered to pay restitution in the amount of $304,837.
Jeffrey Miller, of Shavertown, Pennsylvania, pleaded guilty on Oct. 12, 2016, for failing to pay his companies employment taxes and failing to pay his personal taxes. From the first quarter of 2010 to the last quarter of 2012, Miller failed to pay the employment taxes for JMSI Environmental Corporation which he owned and operated. Additionally, Miller failed to file his own personal income tax returns from 2008 through 2011. These actions resulted in a tax loss of more than $473,000. Sentencing is scheduled for June 15, 2017.
Paul Biko, of Harrisburg, Pennsylvania, was sentenced on Sept. 21, 2016, to 18 months’ imprisonment for federal tax fraud in relation to his three Harrisburg businesses: Clearview of Harrisburg, Clearview Landscaping and Clearview Builders. As owner, Biko controlled the financial affairs of the three companies including all business bank accounts. For the fourth quarter of 2008, Biko’s companies withheld employment taxes from employees but failed to pay to the IRS the federal income taxes and Federal Insurance Contributions Act (FICA) taxes due to the United States. Biko was ordered to pay restitution in the amount of $437,336.
Joel Fuller, formerly of Hazleton, Pennsylvania, was charged in a Criminal Information on September 9, 2016, with failing to remit federal payroll taxes to the IRS. Fuller owned and operated two Hazleton, Pennsylvania-based marketing businesses that sold time shares to prospective clients on behalf of vacation companies, from 2010 through 2013. The Information alleges that Fuller withheld federal payroll taxes from his employees’ paychecks, but failed to then remit those taxes, totaling approximately $180,000 to the Internal Revenue Service. Fuller is scheduled to plead guilty and be sentenced on June 14, 2017.
STOLEN IDENTITY REFUND FRAUD
In addition to prosecuting tax evaders and fraudulent tax return preparers, the IRS and the U.S. Attorney’s Office are conducting a continuing major effort to investigate and prosecute individuals who steal the identities of taxpayers and file fraudulent tax returns.
Federal penalties for each count of conviction of tax crimes range from a maximum of one year in prison and a $100,000 fine for failure to file a tax return, false withholding exemptions, and delivering or disclosing false tax documents, to a maximum of 10 years in prison and a $250,000 fine for conspiracy to defraud with respect to false refund claims. Other penalties include a mandatory term of two years in prison and a $250,000 fine for aggravated identity theft charges, three years in prison and a $250,000 fine for obstructing or impeding an investigation and filing or preparing a false tax return, and a maximum of five years in prison and a $250,000 fine for tax evasion, failure to pay taxes, conspiracy to commit a tax offense or conspiracy to defraud.
TAX SCAM WARNING
The U.S. Attorney’s Office and the IRS remind tax payers to exercise caution during tax season to protect themselves against tax schemes ranging from identity theft to return preparer fraud. Illegal scams can lead to significant penalties and interest and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice to shutdown scams and to prosecute the criminals behind them.
The IRS has issued its annual “Dirty Dozen" which lists common tax scams that taxpayers may encounter, particularly during filing season. Taxpayers are urged look out for, and to avoid, the following common schemes:
• Identity Theft
• Phone Scams
• Phishing
• Return Preparer Fraud
• Offshore Tax Avoidance
• Inflated Refund Claims
• Fake Charities
• Falsely Padding Deductions on Returns
• Excessive Claims for Business Credits
• Falsifying Income To Claim Credits
• Abusive Tax Shelters
• Frivolous Tax Arguments
Education is the best way to avoid these common schemes. To learn more about the Dirty Dozen scams and for help with recognizing and avoiding abusive tax schemes, the IRS offers educational material at www.irs.gov. Suspected tax fraud can be reported to the IRS using Form 3949-A found on the IRS.gov website.
Source: U.S. Department of Justice, Office of the United States Attorneys
