Canadian Man Pleads Guilty To Conspiring To Defraud The United States And Steal Government Funds

CONTACT:      Barbara Burns
PHONE:         (716) 843-5817
FAX:            (716) 551-3051

ROCHESTER, NY, – Acting U.S. Attorney James P. Kennedy, Jr. and Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division announced today that Timothy Johnston, 36, of Calgary, Alberta, Canada, pleaded guilty to conspiring to defraud the United States and commit theft of government funds before Chief U.S. District Judge Frank P. Geraci, Jr. The charge carries a maximum penalty of five years in prison. As part of his plea agreement, Johnston agreed to pay restitution to the IRS in the amount of $642,947.26.

According to Assistant U.S. Attorney John J. Field and Trial Attorneys Melissa S. Siskind and Thomas F. Koelbl of the Tax Division, who are handling the case, the defendant, along with other Canadian citizens, participated in a scheme to file fraudulent claims for refund with the Internal Revenue Service (IRS). In March 2009, Johnston filed a fraudulent nonresident alien income tax return seeking a refund of $642,947.26.  On this return, Johnston falsely claimed that the requested refund represented the amount of income taxes that had been withheld and paid to the IRS on his behalf.  After the IRS issued the refund to Johnston, he entered the United States and opened a bank account in Rochester, NY to deposit the fraudulently obtained check. Between August 2009 and December 2011, Johnston caused funds to be transferred from this account to a bank account in Canada and accounts in the United States in the names of his co-conspirators. 

Johnston is the third Canadian citizen to be convicted for his role in this scheme. In January 2016, Kevin Cyster of Burlington, Ontario, was sentenced to 135 months in prison after a jury convicted him of conspiring to defraud the United States and commit theft of government funds, making a false claim against the United States and transferring stolen money in foreign commerce.  In June 2014, Renee Jarvis, also of Ontario, pleaded guilty to conspiring to defraud the United States and commit theft of government funds and is awaiting sentencing. 

The plea is the result of an investigation by the Internal Revenue Service, Criminal Investigation Division, under the direction of Special Agent-in-Charge James D. Robnett, New York Field Office.

Sentencing is scheduled for September 12, 2017, at 3:00 p.m. before Judge Geraci.