LOS ANGELES - The operator of a Glendale tax preparation business who admitted defrauding his clients out of more than $1.2 million by diverting their tax refunds into his own bank accounts was sentenced today to 46 months in federal prison.
Michael Joseph Calalang Cabuhat, 42, a resident of the Hollywood Hills West neighborhood of Los Angeles, who refers to himself in online postings as “celebritytaxguy," was sentenced by United States District Judge John F. Walter.
At this morning’s sentencing hearing, Judge Walter said Cabuhat’s scheme was “vicious" because it led to both financial and emotional harm to his victim-clients. Judge Walter noted that the stolen money was used simply to enhance Cabuhat’s lifestyle, allowing him to obtain a big house and a fancy car “all on the backs of these individuals who placed their trust" in Cabuhat.
Cabuhat is a half-owner of VisionQwest Resource Group, Inc., which operates VisionQwest Accountancy Group and Icon Tax Group, Inc., in Glendale. By pleading guilty, Cabuhat admitted that, from 2010 through 2016, he defrauded his clients in two ways.
In some instances, the client was given a copy of a tax return that showed a much smaller refund amount than on the tax return that Cabuhat actually filed with the IRS. Sometimes, Cabuhat would simply increase the amount of tax owed on the taxpayer’s copy of the return, thereby decreasing the refund; and sometimes he would manipulate the expenses reported on the filed returns to increase the refund. Without the taxpayer’s knowledge, Cabuhat filed paperwork that directed the IRS to deposit the small amount reflected on the taxpayer’s copy of the tax return into the taxpayer’s bank account, and to deposit the remainder into a bank account that Cabuhat controlled.
In other instances, Cabuhat gave the client a copy of a tax return that falsely showed a tax due, but Cabuhat would file with the IRS a tax return that sought a refund. In these instances, Cabuhat would tell the taxpayer to make the “tax payment" directly to him so he could remit the payment to the IRS. In fact, Cabuhat kept the “tax payment" and directed the IRS to deposit the refund that the client should have received into a bank account that he controlled.
Using these fraudulent means, Cabuhat stole more than $1.2 million that belonged to over 150 of his clients. Cabuhat also admitted that he failed to report this money on his own tax returns, which allowed him to evade the payment of approximately $268,000 that he owed to the IRS.
Cabuhat pleaded guilty in June 2016 to wire fraud and subscription to a false federal income tax return.
In addition to the prison sentence, Judge Walter ordered Cabuhat to pay $1,496,416 in restitution to his victims and the IRS. Cabuhat has already transferred and agreed to transfer to federal authorities $426,528 derived from the sale of his residence and a Ferrari 360 Spider that was seized from Cabuhat when he was arrested last year.
This case was investigated by IRS Criminal Investigation and the U.S. Treasury Inspector General for Tax Administration (TIGTA).
Source: U.S. Department of Justice, Office of the United States Attorneys
