Tax Return Preparer Arrested On Fraud And Theft Charges

PHILADELPHIA - Martin W. Kennedy, 68, of Coatesville, PA, was arrested today on charges of preparing false tax returns and theft of government property, announced United States Attorney Zane David Memeger. 

According to an indictment filed February 9, 2016, Kennedy, an employee of the Department of Veterans Affairs’ Hospital located in Coatesville, PA, prepared approximately 176 federal income tax returns for other individuals, including his co-workers, during the years 2010 through 2013, which fraudulently sought tax refunds of approximately $610,526.  It is further alleged that the tax returns that Kennedy prepared contained false financial information regarding the filers’ Schedule C Business Expenses and the filers’ Schedule a Medical Expenses, Charitable Deductions and phantom losses from the sale of business property.  In addition to charging his co-workers a fee for preparing their tax returns, Kennedy allegedly stole a portion of the refunds that he generated for his clients by having a portion of the tax refunds deposited into his personal bank account.  To accomplish his alleged theft, Kennedy prepared, without the filers’ knowledge, IRS Form 8888 requesting that a portion of the refund be deposited into a bank account controlled by Kennedy with the remaining amount of the refund deposited into the filers’ account. 

If convicted of all counts, Kennedy faces a substantial period of incarceration, a possible fine, restitution to the IRS, a period of supervised release, and a $1,400 special assessment.

The case was investigated by the Office of Inspector General for Department of Veterans Affairs and IRS Criminal Investigations. It is being prosecuted by Assistant United States Attorney Floyd J. Miller.