Tax Fraud

A federal grand jury has indicted 55 people connected with two Southern California companies accused of filing hundreds of falsified tax returns seeking hundreds of millions of dollars in bogus tax refunds. The owners of the two companies, Fontana-based Old Quest Foundation and De la Fuente and Ramirez and Associates of Rancho Cucamonga, were charged along with customers, attorneys, tax preparers and other professionals who worked with them. The indictment accuses Old Quest of filing false tax forms that reported more than $1 billion in withheld income tax and sought more than $250 million in tax refunds.

Sprint Nextel Corp. is being sued for $300 million by New York Atty. Gen. Eric T. Schneiderman, who is accusing the wireless carrier of tax fraud. Schneiderman called Thursday's suit - which alleges, based on a whistle-blower's tip, that Sprint underpaid sales tax on some of its wireless plans for the last seven years - a “groundbreaking” filing. The complaint alleges that Sprint's debt to New York is growing by $210,000 a week. Schneiderman claims the company already owes more than $100 million.

 A federal judge in Sacramento has sentenced a Los Angeles tobacco distributor to 15 months in prison and ordered him to pay $880,000 to the state of California for his participation in a scheme to defraud the state of more than $800,000 in excise taxes. Jawid Wahidi, 34, the owner of LMS International, was sentenced Wednesday. He pleaded guilty in U.S. District Court on May 10 to charges of mail fraud. According to U.S. Atty. Benjamin B. Wagner, Wahidi filed statements with the California Board of Equalization that  "dramatically under-reported the amount of tobacco he sold in the state.

SACRAMENTO — A federal judge in Sacramento has sentenced a Los Angeles tobacco distributor to 15 months in prison and ordered him to pay $880,000 to California for his participation in a scheme to defraud the state of more than $800,000 in excise taxes. Jawid Wahidi, 34, the owner of tobacco distributor LMS International, was sentenced Wednesday. He pleaded guilty in U.S. District Court on May 10 to charges of mail fraud. According to U.S. Atty. Benjamin B. Wagner, Wahidi filed statements with the California Board of Equalization that "dramatically under-reported the amount of tobacco he sold in the state.

Sprint Nextel Corp. is being sued for $300 million by New York Atty. Gen. Eric T. Schneiderman, who is accusing the wireless carrier of tax fraud. Schneiderman called Thursday's suit - which alleges, based on a whistle-blower's tip, that Sprint underpaid sales tax on some of its wireless plans for the last seven years - a “groundbreaking” filing. The complaint alleges that Sprint's debt to New York is growing by $210,000 a week. Schneiderman claims the company already owes more than $100 million.

There has been much written about workers' compensation fraud in the medical and legal professions and even by the insurance companies, but there is a much overlooked area of workers' compensation fraud, and that is fraud by the employer. I operate a carpet installation workroom and I pay all workers' compensation, payroll taxes and, liability insurance based on payroll. I am competing with and losing contracts to workrooms that illegally classify their employees as subcontractors.

Former Orange County Assistant Sheriff Don Haidl was sentenced Monday to two years' probation, a $40,000 fine and 200 hours of community service for tax fraud. Haidl, a Newport Beach businessman and onetime assistant to convicted former Orange County Sheriff Michael S. Carona, was accused of tax fraud in a scheme to help pay his son's legal bills in a sexual assault case. He was given probation rather than prison time because of his cooperation in the federal corruption case against Carona.

The father of a young woman who is fighting the foreclosure of her Diamond Bar home pleaded guilty in February to a federal tax fraud charge, court records show. The daughter, Zeenat Ali, said her father, Ather Ali, has been estranged from the family for three years, having moved out of the home before his indictment in December 2008. Zeenat Ali was profiled in a Los Angeles Times story Thursday focusing on her seven months of court battles to save the family home, including her lawsuit alleging wrongdoing by Deutsche Bank, Downey Savings and Arvest Bank subsidiary Central Mortgage Co. The banks wouldn't comment.

A former Los Angeles County welfare worker was sentenced Monday to 46 months in federal prison for filing nearly 200 fraudulent tax returns in the names of people who had applied for public assistance. Trang Van Dinh of El Monte pleaded guilty in February to two felony counts of filing false tax returns, admitting that he used needy clients' personal information to file false tax returns in their names in 2009 and 2010. In addition to the prison time, U.S. District Judge Jacqueline Nguyen ordered the 63-year-old Dinh to pay $667,000 in restitution to the Internal Revenue Service for refunds he received through the scheme.

The owner of a Riverside halfway house and a homeless man were indicted by a federal grand jury Friday on tax fraud charges, alleging that they attempted to claim more than $600,000 in bogus refunds. Peaches Mercer Turner, owner of the halfway house, was also charged with aggravated identity theft, wire fraud and obstructing an IRS investigation.

In the thick of tax season, a new study suggests that when Americans get their refunds, they file for more bankruptcies - because they can finally afford all the related fees. Researchers from the University of Chicago, Columbia University and Washington University in St. Louis found that, in 2008, the number of people who went broke went through a “significant, short-run” 7% increase after the IRS sent out refunds. Many used the extra money to pay the average $1,477 in fees needed to declare bankruptcy; without the refunds, 3.8% of filers could not have afforded to go through the process, according to the report.

Identity theft, hiding income offshore and inflating expenses are among the frauds that commonly pop out during tax preparation season, the Internal Revenue Service warns. The federal agency, which administers tax collection, has released its annual list of the so-called dirty dozen tax scams. Such scams often become more prevalent as the tax season comes to a head; this year's tax deadline is April 17. The ranking is designed to protect taxpayers from the unscrupulous as well as ensure the government gets the funds it needs to operate.

When Huguette Clark's will was filed six months ago, art lovers in Santa Barbara were delighted: The bluff-top estate owned by the reclusive 104-year-old copper heiress was to be transformed into a museum. It was an exciting but uncertain prospect at the time, largely because the museum was to be established by Clark's attorney and accountant — longtime advisors whose ethics had been questioned in news reports and in legal actions by Clark's relatives. The possibility grew even dimmer Friday when a New York City judge suspended the pair as Clark's executors, citing accusations of massive tax fraud.

A federal grand jury has indicted 55 people connected with two Southern California companies accused of filing hundreds of falsified tax returns seeking hundreds of millions of dollars in bogus tax refunds. The owners of the two companies, Fontana-based Old Quest Foundation and De la Fuente and Ramirez and Associates of Rancho Cucamonga, were charged along with customers, attorneys, tax preparers and other professionals who worked with them. The indictment accuses Old Quest of filing false tax forms that reported more than $1 billion in withheld income tax and sought more than $250 million in tax refunds.

As U.S. District Judge Margaret Morrow contemplated federal law from her bench Wednesday, more than a dozen ultra-Orthodox Jewish men watched. One held open a gilt-edged, elaborately embossed copy of the Shulchan Aruch, a book of Jewish law, tracing lines of the Hebrew text with his finger. Appearing before the judge was Rabbi Moshe Zigelman, 64, a devout Hasid who was refusing to testify before a federal grand jury, citing an ancient Jewish principle that forbids informing on other Jews.

A former Los Angeles County welfare worker was sentenced Monday to 46 months in federal prison for filing nearly 200 fraudulent tax returns in the names of people who had applied for public assistance. Trang Van Dinh of El Monte pleaded guilty in February to two felony counts of filing false tax returns, admitting that he used needy clients' personal information to file false tax returns in their names in 2009 and 2010. In addition to the prison time, U.S. District Judge Jacqueline Nguyen ordered the 63-year-old Dinh to pay $667,000 in restitution to the Internal Revenue Service for refunds he received through the scheme.

Gene Francis Haas, the owner of Oxnard-based machine tool maker Haas Automation Inc., was sentenced Monday to two years in prison for defrauding the federal govern- ment of $34 million in income taxes. Haas, 54, pleaded guilty in August to conspiring to defraud the Internal Revenue Service. He has paid back taxes, penalties and interest of $70 million, more than twice the amount he failed to pay, to resolve the government's tax claims, U.S. Atty. Thomas O'Brien said in a statement.

A federal judge's refusal to halt a businessman's tax-fraud trial so he could be at his son's deathbed was cause to overturn the businessman's conviction, an appeals court has ruled. U.S. District Judge Dale S. Fischer also prejudiced the case against Garth Kloehn by failing to inform the jury that he was absent for the final day of trial because his son had died, the appeals panel said. Fischer told the jury that Kloehn "has a right not to be here," possibly leaving jurors with the impression that he was showing a lack of respect for the court, the judges said.