June Tax Crime Cases: From Florida to Las Vegas, Utah & NY

June Tax Crime Cases: From Florida to Las Vegas, Utah & NY

DOJ June Tax Crime Cases

Every few days, the Department of Justice publishes a press release identifying various tax crime cases. Oftentimes, these cases involve issues such as money laundering, tax evasion, tax fraud and filing false returns. While the IRS only pursues a few thousand criminal tax cases each year – for the cases they do pursue, they have a very high conviction rate. In other words, when US Taxpayers get stuck in the matrix of a tax fraud or evasion investigation, there is a high likelihood that if the US government prosecutes the case, that they will win. That does not mean that the Taxpayer is left with no option for settlement throughout the life of the investigation and it does not necessarily mean that they will end up doing time behind bars — although that is typically the endgame goal of the government in these types of cases. Let’s take a look at some of the more recent tax fraud cases in 2022.

As provided by the DOJ:

Florida Money Laundering

• • • A federal jury today convicted a man who operated labor-staffing companies in Florida with conspiracy to harbor non-resident aliens and induce them to remain in the country, conspiracy to commit money laundering, and conspiracy to defraud the IRS.

    • Mykhaylo Chugay and others owned and operated a series of labor-staffing companies in southern Florida, including General Labor Solutions LLC, Liberty Specialty Service LLC, Paradise Choice LLC, Paradise Choice Cleaning LLC, Tropical City Services LLC and Tropical City Group LLC, between August 2007 and July 2021. At trial, the government proved that Chugay, through these staffing companies, facilitated the employment of individuals in hotels, bars and restaurants in Key West and other locations, even though the employees were not authorized to work in the United States.

    • The government also proved that Chugay and his co-conspirators defrauded the IRS out of more than $10 million in Social Security and Medicare taxes that should have been collected and paid over in connection with the employment of these workers. In addition, the government proved Chugay conspired to encourage workers to enter the United States and remain in the country, in violation of immigration laws. The government also proved that Chugay and others sent checks and wires totaling more than $11 million in proceeds from the illegal scheme to conspirators in Ukraine and elsewhere.

    • Chugay was convicted at trial on all counts. He is scheduled to be sentenced on Aug. 22 and faces maximum penalties of five years in prison on the tax conspiracy, 10 years in prison for conspiring to harbor aliens and induce them to remain in the United States and 20 years in prison on the money laundering conspiracy. He also faces a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Las Vegas Identity Theft and Money Laundering

• • • A Nevada man pleaded guilty yesterday to aggravated identity theft, wire fraud and money laundering. On March 28, he pleaded guilty to a separate indictment charging him with filing false tax returns with the IRS on behalf of clients, aggravated identity theft, wire fraud and impersonating an FBI agent.

    • According to court documents, King Isaac Umoren, 41, of Las Vegas, owned and operated Universal Tax Services (UTS), a tax preparation business. From 2012 through 2016, Umoren prepared and filed with the IRS tax returns for clients that included false deductions and fictitious businesses, in an effort to generate larger refunds than the clients were entitled to receive. At times, Umoren used the names and IRS preparer tax identification numbers of other UTS employees without their knowledge or consent, making it seem as if they, not he, had prepared the false returns. On Feb. 7, 2016, Umoren posed as an FBI agent, wearing a fake badge and tactical gear, and drove to a client’s house with police lights attached to his vehicle to demand payment of a tax preparation fee. Umoren required his clients to use a refund anticipation check program, which he utilized at times to secretly take fees out of clients’ tax refunds without their knowledge.

    • In May 2016, Umoren attempted to sell UTS. To induce potential buyers to purchase the company at an inflated price, he provided fraudulent documents — including forged bank statements, fabricated return preparation fee reports, false personal tax returns and other tax forms that had never actually been filed with the IRS — as well as the stolen tax and personal identifying information of approximately 12,000 taxpayers who were not UTS clients. Eventually, Umoren succeeded in inducing a victim to purchase UTS and received more than $3.8 million in the sale. Umoren used the sale proceeds to purchase land in Henderson, Nevada, and an automobile.

    • Umoren is scheduled to be sentenced on all charges on Nov. 2. He faces a maximum sentence of five years in prison on each count of helping file a false tax return for others, three years in prison for impersonating a federal agent, 10 years in prison for each money laundering count, 20 years in prison on each of the wire fraud counts, and a mandatory minimum sentence of at least two years in prison based on the aggravated identity theft counts. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Utah Dentist Tax Evasion

• • • A Utah man was sentenced today to five years in prison for evading more than $1.8 million in federal income tax and obstructing the IRS’s efforts to collect the money he owed.

    • According to court documents and evidence presented at trial, Derald Wilford Geddes, of Ogden, was a dentist who owned and operated Mount Ogden Dental PC. From approximately 1998 through 2014, Geddes took repeated steps to evade the federal income taxes he owed and obstruct the IRS’s efforts to collect his tax debt. Among other efforts, Geddes filed false liens against his own properties, submitted to the IRS bogus “bonds to discharge debt” that he claimed were from the account of the former Treasury Secretary and filed false corporate income tax returns. In March 2022, Geddes was convicted at trial by a federal jury of tax evasion, filing false tax returns and impeding the IRS.

    • In addition to the term of imprisonment, U.S. District Judge Tena Campbell ordered Geddes to serve 36 months of supervised release and to pay approximately $1.8 million in restitution to the United States.

New York False Tax Returns

• • • A federal grand jury in Central Islip, New York, returned an indictment last week charging a New York businessman with filing false business and individual tax returns with the IRS.

    • According to the indictment, Pawel Bartoszek, of Lake Grove, owned and operated Mega State Inc., a construction company. From 2015 through 2017, Bartoszek and individuals acting at his direction allegedly cashed more than $6 million in checks from Mega State clients at a check-cashing business, instead of depositing those funds into Mega State’s business bank account. Bartoszek then allegedly used some of this cash to fund an “off the books” cash payroll for Mega State. The indictment also charges that Bartoszek did not inform his return preparer about the cashed checks, thereby enabling Bartoszek to underreport Mega State’s gross receipts, sales and ordinary business income, as well as his 2015-2017 personal total income. As a result, Bartoszek allegedly filed false tax returns with the IRS for Mega State and himself for each of those years.

    • Bartoszek was arraigned today before U.S. Magistrate Judge Steven Tiscione of the U.S. District Court for the Eastern District of New York. If convicted, Bartoszek faces a maximum of three years in prison for each of six counts of filing a false tax return. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

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