Even Though Tax Day is behind us, a Reminder to be Vigilant about Tax Fraud
ATLANTA – The deadline for individuals to file their tax returns passed yesterday. Most will breathe a sigh of relief that their tax returns were filed on time. However, some may encounter an unexpected impediment – an unscrupulous return preparer who took advantage of them, or their identity was stolen and a tax refund has already been claimed in their name by a thief.
The U.S Attorney’s Office for the Northern District of Georgia, along with IRS-Criminal Investigations and other law enforcement partners, is actively engaged in combating tax preparing cheats and identity thieves. The following cases highlight some of the work done by the U.S. Attorney's Office and its law enforcement partners in recent months relating to tax fraud.
Frazier B. Todd, Jr., Cozzie Walker and Roberta Sheffield
Frazier B. Todd, Jr. was sentenced to eighteen years, six months in prison on March 29, 2017, in connection with his conviction for preparing over $5.5 million in fraudulent tax returns on behalf of clients. Todd was found guilty following a four-day jury trial in December, 2016. Todd owned and operated Diverse Resource Business and Tax Firm in Union City, Georgia, along with Cozzie Walker and Robert Sheffield. Walker and Sheffield were also charged in the case and previously pleaded guilty.
“Mr. Todd represents a small but very harmful segment of the tax return preparation industry that takes advantage of our tax system,” said U.S. Attorney John Horn. “By falsely claiming that his clients were entitled to the American Opportunity Tax Credit and other tax credits, Todd and other fraudulent return preparers like him cause real financial damage to the government’s fiscal health and our economy as a whole. We urge the citizens in our district to be careful about who they entrust with the preparation of their tax returns.”
“IRS Criminal Investigation has a zero-tolerance policy for refund fraud. Return Preparer fraud is a top priority for the agency and our special agents work year round to bring return preparers who lack integrity and engage in illegal activities to justice,” said James Dorsey, Acting Special Agent in Charge, Atlanta Field Office. “The prison time received by Frazier Todd and his co-conspirators should serve as a strong warning that tough punishments await those who embark on a similar criminal path.”
According to U.S. Attorney Horn, the charges and other information presented in court: Todd conspired with Cozzie Walker and Roberta Sheffield to exploit the American Opportunity Tax Credit (“AOTC”), a refundable tax credit for certain college expenses such as tuition and related costs. Marketing the AOTC as a “stimulus” available to almost anyone, Todd and his business partners prepared false tax returns for thousands of clients, many of whom were disabled, elderly, or low-income.
Todd was also convicted for a much broader fraud scheme in which he exploited not only the AOTC but other tax credits as well to maximize his clients' refunds. For example, he filed dozens of corporate tax returns falsely claiming that the businesses purchased tens of thousands of gallons of gasoline for "off-highway business use," and were entitled to the Fuel Tax Credit. He also falsely claimed that clients had installed solar panels on their homes in order to claim the Residential Energy Credit, which is designed for taxpayers who make green energy upgrades to their homes.
On December 8, 2016, a jury found Todd guilty of conspiracy to commit mail and wire fraud, obstructing the internal revenue laws, and ten counts of presenting false claims for refund to the IRS. Cozzie Walker pleaded guilty on March 2, 2016, to conspiracy to commit mail and wire fraud. Roberta Sheffield pleaded guilty on March 21, 2016, to conspiracy to commit mail and wire fraud, and 14 counts of presenting false claims for refund to the IRS.
During his sentencing hearing before U.S. District Court Judge Mark H. Cohen, Todd, 58, of Atlanta, Georgia, was ordered to serve eighteen years, six months in prison, followed by three years of supervised release, and pay restitution to the IRS in the amount of $3,631,466. Judge Cohen stated that the conduct of Todd and his co-conspirators was “an abuse of the tax credit system” in this country. The sentencings of Cozzie Walker, 42, of Atlanta, Georgia, and Roberta Sheffield, 43, also of Atlanta, Georgia, are scheduled for May 16, 2017, before Judge Cohen.
Assistant United States Attorneys Lynsey M. Barron and Steven D. Grimberg prosecuted the case.
Frazier Todd, Jr. is not the first return preparer to be sentenced to prison this year. On January 9, 2017, Tauya Muteke, 35, of Douglasville, Georgia, was sentenced to four years, nine months in prison, followed by one year of supervised release, after a jury convicted him on August 19, 2016, on two counts of preparing and filing false income tax returns and one count of failure to appear for trial. Muteke owned and operated Icon Tax Service, a tax preparation business located in Norcross, Georgia. According to U.S. Attorney Horn, the charges and other information presented in court: Muteke prepared and filed tax returns that made up businesses and falsified business expenses to make it appear as if the businesses had lost money, resulting in larger refunds for his clients. Muteke was originally scheduled to go to trial in March 2010, but three weeks before his trial date Muteke fled to Johannesburg, South Africa, and did not return to the United States for five years. He was arrested upon his return on July 13, 2015.
Assistant United States Attorneys Bernita B. Malloy and Christopher C. Bly prosecuted the case.
Kim A. Earlycutt, Shannon King and Marcia Farmer
The United States Attorney’s Office is also actively prosecuting numerous tax fraud cases. For example, on March 1, 2017, Kim A. Earlycutt, 54, of Covington, Georgia, and Shannon King, 37, of Lithonia, Georgia were indicted by a federal grand jury in the Northern District of Georgia and charged with conspiracy and filing false claims with the United States. In a related case, Marcia Farmer, 50, of Snellville, Georgia, pled guilty to a criminal information charging her with conspiracy to file false claims on October 28, 2016. According to U.S. Attorney Horn, the charges and other information presented in court: the three alleged co-conspirators obtained identity documents of foreign nationals, which they then used to manufacture and file false and fraudulent tax claim forms. These fraudulent tax returns were submitted to the IRS, resulting in more than $5 million in fraudulent refunds being paid.
Members of the public are reminded that the indictment against Earlycutt and King only contains charges. The defendants are presumed innocent of the charges and it will be the government’s burden to prove the defendants’ guilt beyond a reasonable doubt at trial.
Assistant U.S. Attorney Christopher H. Huber is prosecuting these cases.
All of the above cases were investigated by the Internal Revenue Service Criminal Investigation.
For further information please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.