May 4, 2004

COVINGTON RETURN PREPARER PLEADS GUILTY

Memphis, TN - Terrell L. Harris, U.S. Attorney for the Western District of Tennessee, and Sherree W. Preston, Special Agent in Charge of Internal Revenue Service Criminal Investigation Division, announced today that Barry Gray, of Covington, Tennessee, pled guilty to 10 counts of filing false claims against the United States before U.S. District Judge J. Daniel Breen. Gray faces a maximum penalty of 50 years in prison and a fine of $2.5 million when he is sentenced on August 17, 2004.

Gray was indicted on November 25, 2003, charged with 21 counts of filing false claims against the United States. According to the indictment, Gray knowingly assisted in the preparation of 21 Amended U.S. Individual Income Tax Returns (Forms 1040X) that Gray knew to be false and fraudulent and caused them to be sent to the Internal Revenue Service. The amended returns were prepared between October 12, 2001 and November 15, 2001, and pertained to calendar years 1998 and 1999. All the returns claimed an Education Tax Credit (Hope and Lifetime Learning Credit) that Gray allegedly knew to be false when he placed it on the return. These fraudulent credits ranged from $300 to $1,500.

As part of Gray's plea agreement that was filed during the hearing, Gray admitted that the tax loss for sentencing guidelines purposes is $376,395.00. The government agreed to dismiss the remaining counts of the indictment.

This investigation was conducted by IRS Criminal Investigation Special Agent Jim Jackson. Assistant U.S. Attorney Stephen Parker represented the government.

# # # #