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| Highlights |
The Investigation Highlights are updated weekly.
IRS Dallas Lockbox Employee Sentenced for Theft and Embezzlement of Over $485,000 in Taxpayer Remittance Checks
On April 9, 2009, Emmanuel Ekwuruke was sentenced in Texas to 66 months in prison and four years of supervised release. He was also ordered to pay a $300 assessment for theft by a bank employee, theft of public money and aggravated identity theft. [1]
Mr. Ekwuruke was initially stopped by Mesquite, Texas, police officers who were responding to a 911 call from a bank regarding a possible forged check. After arresting him, the police officers impounded and inventoried a vehicle located in the bank parking lot that was registered to Mr. Ekwuruke. There was an identification card hanging from the rear view mirror identifying him. There were 21 checks found in the vehicle, totaling approximately $485,539 that had been sent to the Internal Revenue Service (IRS) Dallas Lockbox. [2]
Mr. Ekwuruke was subsequently indicted by a Federal grand jury and convicted at trial.
- [1] Source: Northern District of Texas Judgment in Criminal Case dated April 9, 2009.
- [2] Source: Affidavit in support of criminal complaint dated June 6, 2008.
Man Indicted for Misuse of Department of the Treasury Name and False Statements
On March 12, 2009, Keith Towns was indicted for misusing the IRS name and making false statements. The web site for Towns' business, Emerge Financial Group, stated that Towns was an "Internal Revenue Service Certified Enrolled Agent." This statement, by using the IRS name, could reasonably be interpreted as conveying the false impression that the business activity was approved, endorsed, sponsored, authorized and associated with the IRS. [1]
In addition, on 16 occasions, Towns represented to the IRS that he was an Enrolled Agent when he was not. [2]
- [1] Source: Eastern District of California Indictment dated March 12, 2009.
- [2] Source: Eastern District of California Indictment dated March 12, 2009.
Man Agrees to Plead Guilty to Illegal Gratuity to a Public Official
On March 5, 2009, in California, Victor John agreed to plead guilty to illegal gratuity to a public official. According to the plea agreement, on or about March 24, 2008, Victor John had a telephone conversation with an individual he knew to be an Internal Revenue Service (IRS) revenue agent. The telephone conversation was regarding an audit of John's taxes in which he owed approximately $33,052 in back taxes. During the telephone conversation, John offered to give gifts and pay the revenue agent $5,000 to close out the audit report with no money owed to the United States.
On or about April 3, 2008, John met the revenue agent in person and gave the revenue agent an envelope that contained $4,900 in cash in return for the revenue agent's closing out of his audit with no money owed and deleting the assessment of tax due. During the meeting, John stated to the revenue agent that the $4,900 was for the revenue agent personally, and not for the money he owed in back taxes.
Man Sentenced for Interfering with the Administration of Internal Revenue Laws
On March 23, 2009, Laurence Wolff was sentenced to 27 months in prison and three years supervised release. He was also ordered to pay $450 in assessments and a $400 fine.
On September 24, 2008, Wolff was indicted by a grand jury in Wyoming for interference with the administration of Internal Revenue laws and mailing a threatening communication. According to court documents, Wolff mailed a communication to numerous government employees, including Internal Revenue Service (IRS) employees, which stated that he would defend property that was the subject of an Order of Foreclosure and Decree of Sale. It further threatened to kill any person who attempted to enforce the Order. Wolff also refused to vacate property that had been foreclosed as ordered in the Order of Foreclosure and Decree of Sale. He posted notices on the foreclosed property threatening to use force against law enforcement officers and barricaded entry doors to the foreclosed property. Additionally, Wolff caused to be delivered a communication addressed to a U.S. judge containing a threat to injure government agents and officials.
This case was worked jointly with the IRS's Criminal Investigation Division and the U.S. Postal Inspection Service.
IRS Revenue Agent Agrees to Plead Guilty to Tax Fraud
On March 30, 2009, Jim H. Liu agreed to plead guilty to count one of the indictment: submitting a false tax return.
On November 13, 2008, Liu, an IRS Revenue Agent, was indicted in the U.S. District Court for the Central District of California on one count of submitting a false tax return and two counts of obstructing the IRS audit of his 2002 tax return.
According to court documents, in 2001, Liu purchased property in Pomona, California. In 2002, Liu sold the property. On or about April 15, 2003, Liu falsely claimed a $4,236 loss from the sale of the property on his 2002 tax return, when he knew that he had actually sold the property for a substantial gain.
On or about June 18, 2004, while the IRS was conducting an audit of Liu's 2002 tax return, he mailed and faxed to the IRS documents that falsely listed Liu's purchase price of the Pomona, California, property as $231,250, when the purchase price was approximately $185,000. Also in June 2004, Liu falsely stated on the documents listing the purchase price of the property that his wife provided money for a $47,550 additional deposit when there had not been an additional deposit.
U.S. Awarded a Final Judgment Against RGI, CSM, and John Rachel
According to a January 29, 2009, U.S. Department of Justice press release, the U.S. Government was awarded $428,532 for the submission of false or fraudulent claims by RGI, Inc. (RGI), Computer Specialties of Maryland, Inc. (CSM), and John Rachel.
According to the evidence presented at the trial, in 1995 the Internal Revenue Service (IRS) entered into a contract with a company to repair laptop computers used by the IRS throughout the country. The contract called for the company to charge the IRS a fixed hourly rate, plus the actual cost of parts used in the repairs. The contractor subcontracted most of the work to RGI.
Testimony showed that RGI contracted with a third party to perform certain repairs to the IRS laptops. Instead of billing the actual cost of the third party's work, Rachel and RGI artificially inflated these costs by claiming that a shell company, CSM, had actually performed the work. When questioned about these transactions, Rachel and RGI provided the IRS with phony invoices reflecting that the work had been done by CSM at prices much higher than was actually charged by the true vendor. Trial testimony showed that the IRS paid an additional $428,532 under the contract as a direct result of the fraudulently inflated invoices.
On March 16, 2009, a final judgment against RGI, CSM, and John Rachel awarded the U.S. Government $1,285,597 in treble damages and a civil penalty of $385,000.
Woman Charged with Attempting to Interfere with Administration of Internal Revenue Laws
On March 5, 2009, Gwendolyn Schenk was charged in Michigan with attempting to interfere with the administration of Internal Revenue laws by threatening Internal Revenue Service (IRS) employees. According to the criminal complaint, Schenk was apparently upset that she had not received her $300 economic stimulus payment. Schenk left a voice mail for an IRS Lead Contact Representative that threatened to cut an IRS employee's head off. She also spoke to an IRS Contact Representative and threatened to be in the parking lot waiting to cut the head off of the first person to leave the building.
Man Indicted for Bribery of a Public Official
On March 11, 2009, Danny Means II, also known as Butch Cassidy, was indicted in California for bribery of a public official. According to the indictment, Means promised $8,000, and gave a $300 deposit, to an IRS Revenue Officer in return for receiving favorable treatment regarding the outstanding tax liability that he owed the IRS.
Man Sentenced for Bribery of a Public Official for the Purpose of Lowering his Tax Liability
On March 9, 2009, Ashok Patel was sentenced in the U.S. District Court for the Southern District of Illinois to ten months in prison and two years supervised release. He was also ordered to pay $89,221 in restitution and a $100 assessment. Patel previously pled guilty to a charge of bribery of a public official.
According to the indictment, Patel had intentionally and corruptly acted to influence an official act by promising or giving $5,000 to a public official for the purpose of accomplishing a lower tax liability.
Man Sentenced in Murder for Hire Plot of IRS Revenue Officer
On March 5, 2009, U.S. District Court Judge James S. Moody, Jr., imposed a sentence of 30 years imprisonment on Florida businessman Randy Nowak. He noted that, after having listened to Nowak's recorded conversations with an undercover agent posing as a hit man, he had concluded that Nowak had "no conscience."
Nowak was convicted by a Federal jury in December 2008 of attempting to murder a U.S. officer or employee and for using a facility of interstate commerce with the intent that a murder-for-hire be committed.
According to court documents, in June 2008, Nowak, owner of RJ Nowak Enterprises, Inc., had been looking for someone to kill an Internal Revenue Service (IRS) employee who was auditing him because he stood to lose $4,000,000 that he had hidden offshore.
Nowak met with an undercover Federal Bureau of Investigation (FBI) Task Force agent who was posing as a hit man in July 2008. Nowak paid him $10,000 as a down payment to kill the IRS Revenue Officer. Nowak also asked the undercover agent if he would be willing to burn down the IRS's office in Lakeland.
Nowak was charged in a criminal complaint filed in July 2008 with attempting to kill an IRS Revenue Officer who was engaged in the performance of official duties. At that time, Nowak had an outstanding IRS liability of approximately $300,000 related to his personal income tax obligations, and he had four years of outstanding corporate tax returns for his business that he had not filed.
The case was worked jointly with the FBI.
Man Sentenced for Impersonating an Agent of the IRS
On January 9, 2009, Michael J. Sabo was sentenced in the U.S. District Court, District of Nevada, to one year and one day imprisonment, followed by three years of supervised release. He was also ordered to pay criminal monetary penalties totaling $95,109.79. Sabo pleaded guilty to one count of false impersonation of an officer or employee of the U.S., aiding and abetting; and one count of tax evasion.
The Treasury Inspector General for Tax Administration (TIGTA) received information that Sabo filed a questioned document purporting to be an Internal Revenue Service (IRS) Release of Notice of Federal Tax Lien with the Clark County, Nevada, Office of the County Recorder on or about September 8, 2004.
The investigation established that three fraudulent documents were filed with the Clark County Office of the County Recorder during 2004 and 2005. Each of the fraudulent documents was notarized and bore Sabo's name and signature as an "Authorized Agent" of the IRS. The fraudulent documents referenced Notices of Federal Tax Liens that were filed by the IRS on April 18, 1997; April 5, 2001; and December 13, 2002. The investigation further established that Sabo was not an IRS employee.
The Treasury Inspector General for Tax Administration (TIGTA) worked jointly with the IRS's Criminal Investigation Division on this investigation.
Tax Preparer Pled Guilty in Connection with Tax Payment Theft
On January 12, 2009, Abdul Wahid pled guilty in California to 10 charges, including mail fraud, theft of government property, and aggravated identity theft. Wahid was sentenced to 132 months in prison and three years supervised release. He was also ordered to pay a $1,000 special assessment.
According to court documents, Wahid owned and operated a tax return business in Los Angeles, called Global Accounting and Tax Service. Wahid prepared personal and corporate tax returns for his clients. These returns showed significant amounts of tax due to various taxing authorities.
Wahid directed his clients to give him checks in the amounts of the taxes due, as reflected on the return. In cases where the clients made the checks payable to Wahid, he deposited them into his accounts and did not pay the taxes. In cases where the clients made the checks payable to the relevant taxing authority, Wahid also deposited the checks into his own accounts and converted them to his own use. In order to avoid detection, Wahid prepared a different return showing little or no tax due and submitted them to the taxing authorities.
This case was worked jointly with the Internal Revenue Service's (IRS) Criminal Investigation Division and the Federal Bureau of Investigation.
United States Awarded Over $400,000 in Damages
According to a U.S. Department of Justice press release, the United States Federal government has been awarded $428,532 for the submission of false or fraudulent claims submitted by RGI, Inc. (RGI), Computer Specialties of Maryland, Inc. (CSM), and John Rachel.
According to the evidence presented at the trial, in 1995, the Internal Revenue Service (IRS) entered into a contract with a company to repair laptop computers used by the IRS throughout the country. The contract called for the company to charge the IRS a fixed hourly rate, plus the actual cost of parts used in the repairs. The contractor subcontracted much of the work to RGI.
Testimony showed that RGI contracted with a third party to perform certain repairs to the IRS laptops. Instead of billing the actual cost of the third party's work, Rachel and RGI artificially inflated these costs by claiming that a shell company, CSM, had actually performed this work. When questioned about these transactions, Rachel and RGI provided the IRS with phony invoices reflecting that the work had been done by CSM at prices much higher than was actually charged by the true vendor. Trial testimony showed that the IRS paid an additional $428,532 under the contract as a direct result of the fraudulently inflated invoices.
United States To Be Paid More Than $1 Million
According to a January 2009 Department of Justice (DOJ) press release, Barrday Inc. and two related companies agreed to pay more than $1 million dollars to the United States in connection with their role in the weaving of Zylon fabric used in the manufacture and sale of defective bullet-proof vests.
The complaint alleged that Barrday's woven Zylon fabric was used in the manufacture of bullet-proof vests sold by various companies and that the Zylon in the vests lost its ballistic capability quickly. Barrday was reportedly aware of the defective nature of the Zylon by at least December 2001, but continued to sell Zylon for use in ballistic armor until approximately 2003. These vests were purchased by the Federal Government.
This case was worked jointly with the General Services Administration Office of the Inspector General, the Department of Homeland Security Office of the Inspector General, the Defense Criminal Investigative Service, the U.S. Army Criminal Investigative Command, the Air Force Office of Special Investigations, the Department of Energy Office of the Inspector General, the U.S. Agency for International Development Office of the Inspector General, and the Defense Contracting Audit Agency.
Former IRS Employee Sentenced in D.C. Tax Scam
According to a DOJ press release, in December 2008, former Internal Revenue Service (IRS) employee Robert Steven was sentenced to 46 months in prison and 3 years supervised release, for receipt of stolen property and conspiracy to commit money laundering in connection with a property tax refund scheme in which over $48 million were stolen from the District of Columbia (D.C.). His wife, Patricia Steven, was sentenced to 70 months in prison and 3 years supervised release.
Robert Steven had been an IRS employee since 1975. At the time of his arrest, Steven was Division Director, Modernization Information Technology Systems.
The release stated that Steven's wife, Patricia Steven, first met Harriette Walters, a former manager within the D.C. Office of Tax and Revenue, in the mid-1970s. By the late 1980's, Harriette Walters proposed that Patricia Steven deposit a check drawn on a D.C. Government bank account made payable to Patricia Steven. Walters explained that Steven would be allowed to keep a portion of the proceeds from the check, but would have to return a substantial portion to Walters. Despite knowing that Walters obtained the check fraudulently, Patricia Steven agreed and deposited the first check.
Robert and Patricia Steven opened a business that eventually developed into a clothing design business called "Bellarmine Design." Bellarmine Design never grossed more than $15,000 in a single year. From 1990 to 2007, Patricia Steven and Harriette Walters made 67 deposits of fraudulently obtained D.C. Government checks or cash proceeds from the scheme into a Bellarmine Design checking account maintained by Robert and Patricia Steven. The individual checks ranged in amounts from a handful of initial deposits over $4,000 each, to subsequent deposits of up to $490,000. Patricia Steven also transferred at least $344,700 to Harriette Walters.
The Stevens transferred at least $1,709,500 of these funds into another bank account used primarily by Robert Steven. Using these funds, Robert and Patricia Steven purchased at least four Jaguar cars, a townhouse located in Edgewater, Maryland, and took multiple vacations to the Bahamas.
This case was worked jointly with the Federal Bureau of Investigation; the IRS's Criminal Investigation Division; the Inspector General's Office for the District of Columbia; the D.C. Office of Tax and Revenue, Criminal Investigation Division; and the D.C. Office of the Chief Financial Officer, Office of Integrity and Oversight.
Man Sentenced for False Impersonation of an IRS Agent and Tax Evasion
On September 29, 2008, Michael J. Sabo pled guilty in Nevada to false impersonation of an officer, or employee of the United States and tax evasion. According to court documents, Sabo, under false authority while pretending to be an agent of the Internal Revenue Service (IRS), affirmatively signed and filed three forms which fraudulently purported to release Federal tax liens that the IRS lawfully imposed against his property. Sabo then sold the property, thereby avoiding payment of taxes, and transferred most of the proceeds of the sale to a third party to further evade the payment of his taxes.
On January 9, 2009, Sabo was sentenced to one year and one day in prison and three years of supervised release. He was also ordered to pay $94,909 in restitution.
This case was worked jointly with the IRS's Criminal Investigation division.
Individual Charged With Impersonating an IRS Employee
On December 2, 2008, Lourdes Salazar-Velazquez was indicted in Arizona for one count of False Personation of Employee of the United States. According to the indictment, Salazar-Velazquez pretended to be an Internal Revenue Service (IRS) employee and falsely represented that she was authorized to collect a debt owed to her by garnishing wages and levying property.
Man Convicted in Murder for Hire Plot of IRS Revenue Officer
In July 2008, Randy Nowak was charged in a criminal complaint in Florida, with attempting to kill an IRS Revenue Officer who was engaged in the performance of official duties. According to court documents, in June 2008, Nowak, owner of RJ Nowak Enterprises, Inc., had been asking around to find someone to kill an IRS employee. Nowak sought to kill the IRS employee because she was auditing Nowak and he stood to lose $4,000,000 that he had hidden offshore. Nowak had an outstanding liability to the IRS of approximately $300,000 related to his personal income tax obligations and had four years of outstanding corporate tax returns for his business that he had not filed.
In July 2008, Nowak met with an undercover Federal Bureau of Investigation (FBI) Task Force agent posing as a hit man and paid him $10,000 as a down payment for killing the IRS Revenue Officer. Nowak also asked the undercover agent if he would be willing to burn down the IRS's office in Lakeland.
After a trail by jury, Nowak was convicted in December 2008, of attempting to murder an officer or employee of the United States and using a facility of interstate commerce with the intent that a murder-for-hire be committed.
This case was worked jointly with the FBI.
Individual Sentenced for Conspiracy
On December 18, 2008, Merlinhg Alcantara was sentenced in New Jersey to 5 years imprisonment and 3 years supervised release. Alcantara was also ordered to pay $1,160,865.94 in restitution jointly and severally with other defendants after pleading guilty to one count of conspiracy.
According to court documents and a U.S. Department of Justice press release, Alcantara worked with a number of individuals to acquire mail containing U.S. Treasury checks. Alcantara paid baggage handlers working at Newark Liberty International Airport to steal the mail as it was being transported in the luggage compartment of commercial airliners. To avoid detection, on days in which airport security was conducting inspections, the baggage handlers communicated with each other to advise of the inspections. Baggage handlers hid stolen mail in their clothing and backpacks as they were unloading luggage. They would subsequently remove it from the airport undetected. Alcantara would receive the stolen mail from the baggage handlers. After the Treasury checks were acquired, counterfeit Treasury checks were created, copying five specific characteristics of authentic Treasury checks. Other members of the conspiracy were then given the counterfeit Treasury checks to be negotiated at banks. More than $1 million in counterfeit Treasury checks were negotiated.
As part of the ongoing investigation, Alex Torres and Kenneth Robinson, both baggage handlers working at Newark Liberty International Airport, pled guilty to conspiracy charges. Elaine Acevedo, of the Dominican Republic, who cashed the counterfeit U.S. Treasury checks, pled guilty in Federal court in Orlando, Florida, to one count of bank fraud. She was sentenced to 13 months in prison, 5 years of supervised release, and ordered to perform
150 hours of community service. She was also ordered to pay $76,997 in restitution. Juan Castillo has been charged by complaint and remains at large.
This case was worked jointly with the U.S. Secret Service and the U.S. Postal Inspection Service.
Man Pleads Guilty to Interference with a Federal Employee
On December 12, 2008, Anthony Blasi pleaded guilty in Colorado to interference with a Federal employee. He was sentenced to six months probation and was ordered to pay a $25 special assessment.
According to the sworn affidavit supporting the criminal complaint, Blasi was being interviewed at his residence on August 11, 2008, by two Internal Revenue Service (IRS) agents. During the interview, Blasi became angry and said, "I should have killed you when I first met you." The IRS agents decided to end the meeting. Prior to the IRS agents departing, Blasi said to one of the agents, "If you show up again, I'll start shooting." During a telephone call with one of the IRS agents the next day, Blasi again made a threatening statement.
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