Federal Prosecutors send strong message to Tax Fraudsters

Tax Evaders Face Criminal Prosecution and Long Prison Sentences

CHARLOTTE, N.C. – The U.S. Attorney’s Office for the Western District of North Carolina prosecuted multiple tax fraud cases in 2011, some resulting in long prison sentences and stiff fines for those who committed tax crimes.

Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina and Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service - Criminal Investigation Division (IRS-CID), jointly announce recent tax fraud prosecutions and sentencings, and deliver a reminder that tax crimes are investigated and prosecuted vigorously in this district.

“Today we want to send a strong warning to those who are thinking of committing tax fraud,” said U.S. Attorney Tompkins. “Don’t do it. My office has experienced tax prosecutors who work with dedicated criminal investigators with the IRS and are committed to finding and prosecuting tax fraudsters. Tax fraud is not a victimless crime. It is a crime against those who abide by the law, file honest and accurate tax returns and pay their taxes on time. We urge taxpayers to watch out for potential tax scams and to be vigilant in detecting and reporting suspected tax fraud. And, for those tempted to cross the line from legitimate tax avoidance to illegal tax evasion, don’t do it! We will find you and prosecute you and you will discover that the tax savings is not worth the cost.”

“Prosecuting those who violate our tax laws is how we defend the integrity of our tax system and protect the vast majority of honest, tax-paying Americans from those who would otherwise leave them to pick up the tab,” said Special Agent in Charge Hammett. “Tax fraud is not a victimless crime. Honest, hardworking Americans pay the price when others choose to evade their tax obligations.”

In the last year, the U.S. Attorney’s Office, with the assistance of the IRS-CID, has prosecuted numerous individuals for criminal tax violations. Case highlights from the Western District of North Carolina’s tax enforcement prosecutions over the last year include:

Charles A. Davis - On March 12, 2012, a federal jury convicted Charles A. Davis, 63, formerly of Mooresville, N.C., of ten counts of filing false tax returns and one count of corruptly impeding the due administration of the IRS. Davis was a pilot for U.S. Airways from 1983 through 2011. Davis did not file timely income tax returns for 1996 through 2007 despite receipt of wages ranging from $129,950 to $190,510. Davis subsequently filed fraudulent amended income tax returns for 1996 through 2000, falsely claiming that he earned little or no adjusted gross income, and he later filed five fraudulent individual income tax returns for 2004 through 2008, reporting false amounts of federal income tax withheld for each of those years and requesting fraudulent refunds from the IRS of approximately $1.5 million. The sentencing date for Davis has not yet been scheduled. Davis faces a maximum potential sentence of 33 years in prison and a maximum fine of $2,750,000. (Case No. 5:11-cr-32).

Arileyda Amparo, et al. - On March 20, 2012, four defendants in false claims conspiracy were sentenced to prison for their roles in a scheme to file false tax returns seeking refunds using the names and social security numbers of residents of Puerto Rico. Dania Ramos, 36, of Lincolnton, was sentenced to 48 months in prison. Jose de Jesus, a/k/a Jose Ramos, 29, of Vale, was sentenced to 37 months in prison. Xiomara Amparo, 34, of Lincolnton, was sentenced to 18 months in prison. Mildred DePena, 49, of Lincolnton, was sentenced to 12 months and one day in prison. Two additional co-defendants are currently awaiting sentencing, and a third co-defendant remains a fugitive from justice. (Case No. 3:11-cr-75).

John Jenkins - On February 2, 2012, John Jenkins, 40, of Charlotte, was sentenced to 27 months in prison for tax fraud and ordered to pay restitution of $275,052. For tax years 2005 through 2007, Jenkins filed false joint individual tax returns, and based on false W-2 forms that claimed fraudulent amounts of federal tax withholding, Jenkins claimed fraudulent tax refunds totaling $211,263. Jenkins also filed eleven false tax returns, again using fraudulent W-2 forms, in the names of other individuals seeking $184,876 in fraudulent refunds. Jenkins filed those false tax returns without those individuals’ knowledge or permission. (Case No. 3:11-cr-130).

Ricky Dean Hardee - On February 8, 2012, Ricky Dean Hardee, 48, of Charlotte, was sentenced to 21 months in prison in connection with his scheme to evade approximately $1.5 million in taxes from the IRS. From 2002 to 2007, Hardee earned gross receipts of $4.2 million from his masonry contracting business but failed to file income tax returns and engaged in a sophisticated scheme to conceal his income and assets from the IRS. Specifically, Hardee purchased and utilized a system of nominee entities, sham trusts and related domestic and foreign bank accounts, including a bank account in Panama and ten different domestic bank accounts to hide money from the IRS. Subsequent to Hardee's guilty plea, he cooperated with authorities by filing income tax returns and paying his back taxes. (Case No. 3:10-cr-52).

Harold Roque - On September 19, 2011, Harold Gonzalez Roque, 30, of Lincolnton, was sentenced to 72 months in prison for his participation in a large scale fraudulent tax refund scheme. Roque and his co-conspirators used stolen identities and social security numbers of residents of Puerto Rico to file fraudulent tax returns claiming tax refunds. These fraudulent returns then caused the Treasury Department to mail false tax refund checks to various addresses throughout New York, North Carolina and elsewhere. Participants in the scheme then used fake identification documents to cash the fraudulently obtained tax refund checks at money service businesses in Lincolnton and Gastonia, N.C. Roque and his co-conspirators were able to successfully obtain $12 million by cashing fraudulent tax refund checks through money service businesses in North Carolina. (Case No. 3:09-cr-177).

Duane Hamelink, et al. - On September 1, 2011, Duane Hamelink, 68, and his wife, Eileen Hamelink, 66, formerly of Mooresville, NC, were sentenced to 27 months and 21 months in federal prison respectively and ordered to pay restitution in the amount of $1,086,815 to the IRS for tax fraud. From 1992 to 2005, Duane and Eileen Hamelink owned and operated a successful trim carpentry business in Mooresville, N.C. During this time, the Hamelinks failed to file income tax returns and took numerous steps to conceal their income and assets from the IRS. For example, the Hamelinks obtained several sham trusts and related nominee bank accounts to conceal their ownership of their trim carpentry business. (Case No. 3:10-cr-52).

Reginald Martin - On June 30, 2011, Reginald Martin, 61, of Charlotte, pled guilty to filing a false tax return for 2008. Martin was the owner of Quick and Eze Food Mart in Charlotte, N.C., and he diverted funds from the Food Mart to himself for personal expenditures, failed to provide his tax return preparer information about his earnings from the Food Mart as well as all of his interest income and proceeds from IRA distributions, and structured financial transactions to avoid reporting requirements. For 2005 through 2008, Martin had total unreported income of $784,767 and additional tax due and owing of $198,886. No sentencing date has been set. Martin faces a maximum sentence of three years in prison. (Case No. 3:11-cr-173).

Jennifer Kenna - On August 24, 2011, Jennifer Kenna, 36, of Gastonia, pled guilty to two counts of failure to file tax returns. From 2006 to 2008, Kenna was the sole owner and operator of K & K Productions, LLC, an adult internet call center located at her home in Gastonia. For tax years 2006 and 2007, Kenna failed to file timely U.S. Individual Income Tax Returns with the IRS despite the fact that she had gross receipts from her business totaling approximately $333,797 and $215,332, respectively. No sentencing date has been set. Kenna faces a maximum sentence of two years in prison. (Case No. 3:11-cr-242).

Leeora Anderson - On February 13, 2012, Leeora Anderson, of Charlotte, pled guilty to a false claims conspiracy. Anderson and others participated in a scheme to obtain payment of false IRS refunds by filing in their own names and causing others to file false federal income tax returns for tax years 2004 through 2008, claiming refunds to which they knew they were not entitled. Anderson created false Forms W-2 that contained fabricated names of employers and that contained fabricated amounts of wages and tax withholdings. Knowing that the false information contained in these Forms W-2 would be used to create tax returns claiming refunds for the individuals involved in this scheme, Anderson, and others, caused the false Forms W-2 to be submitted, as purportedly legitimate, to commercial tax return preparers authorized by the IRS to file tax returns electronically. Anderson, as part of the scheme, caused to be filed approximately 57 false returns falsely claiming approximately $331,959 in fraudulent refunds from the IRS. No sentencing date has been set. Anderson faces a maximum sentence of ten years in prison. (Case No. 3:12-cr-2).

Esel Oh - On August 17, 2011, Esel Oh, of Charlotte, pled guilty to one count of tax evasion. From 2005 to 2011, Oh was the owner of The U.S. Trade, Inc. in Charlotte, N.C. From 2005 through 2009, Oh diverted funds from his company to himself for personal living expenditures, failed to provide his tax return preparers information about his earnings from his business, and structured financial transactions to avoid reporting requirements. For tax years 2005 through 2009, Oh earned income totaling approximately $698,485 that he failed to report on his federal income taxes. The additional tax due on this unreported income is approximately $195,575. No sentencing date has been set. Oh faces a maximum of five years in prison. (Case No. 3:11-cr-233).

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 maximum of 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.

The U.S. Attorney’s Office and the IRS remind tax payers to exercise caution during tax season and to be vigilant in protecting themselves against a wide range of tax schemes. The IRS has issued its annual “Dirty Dozen” listing, which identifies common scams that taxpayers may encounter, particularly during filing season. Taxpayers are urged look out for, and to avoid, the following common schemes:

• Identity theft
• Phising
• Return Preparer Fraud
• Hiding Income Offshore
• “Free Money” from IRS & Tax Scams Involving Social Security
• False/Inflated Income and Expenses
• False Form 1099 Refund Claims
• Frivolous Arguments
• Falsely Claiming Zero Wages
• Abuse of Charitable Organizations and Deductions
• Disguised Corporate Ownership
• Misuse of Trusts

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.