TEXAS FEDERAL COURT ORDERS JAIL FOR
MULTISTATE TAX-SCAM PROMOTERS

Oklahoma City Woman, Tennessee Man Found In Contempt Of Court

WASHINGTON, D.C. - The Department of Justice announced today that a federal court in Fort Worth has ordered the imprisonment of two promoters of a fraudulent tax scheme that targets African-American business owners. Judge John McBryde of the U.S. District Court for the Northern District of Texas, in Fort Worth, found Sherri L. Harris of Oklahoma City and Kelvin Bailey of Madison, Tennessee, both doing business as “S-N-K Enterprise, Inc.,” in contempt of court for failing to provide the government with records identifying their customers and salespersons and for failing to notify their customers of the permanent injunctions the court had entered against them.

The Justice Department sued Harris, Bailey, S-N-K Enterprise, and Ebony Scott of Arlington, Texas, in December 2003. The complaint alleged that the defendants had charged customers several hundred dollars to prepare and submit applications for federal minority-owned business grants. In obtaining the injunction order the government showed that the defendants never filed the grant applications but instead, without the customers’ knowledge, filed amended federal income tax returns and IRS Forms 2439 for the customers seeking refunds based on claiming bogus tax credits.

On January 21 and January 29, 2004, the court entered permanent injunctions against Harris, Bailey, and S-N-K Enterprise that barred them from promoting their scheme and preparing federal income tax returns. The court also ordered them to notify their customers of the injunctions and to provide the government with records identifying their customers and salespersons.

“The Department of Justice closely monitors compliance with the court-ordered injunctions it has obtained,” said Eileen J. O'Connor, Assistant Attorney General for the Tax Division. “People who violate court orders can face stiff penalties, including fines and imprisonment.”

Tax scams targeting African-American taxpayers and using identity theft are among the schemes listed by the IRS in its warning about the "Dirty Dozen" tax frauds for 2004. The "Dirty Dozen" list is available at http://www.irs.gov/newsroom/article/0,,id=120803,00.html.
More information about this case is available at: http://www.usdoj.gov/tax/txdv03651.htm,
http://www.usdoj.gov/tax/txdv04045.htm, and http://www.usdoj.gov/tax/txdv04064.htm.
Information about Tax Division efforts in other injunction cases is available at http://www.usdoj.gov/tax/taxpress2004.htm.