PRESS RELEASE

CONTACT: Jim Vines
United States Attorney

Robert C. Watson
Assistant U.S. Attorney

03/18/04 - MD-TN

TAX RETURN PREPARER SENTENCED IN TAX FRAUD CASE

James Leon Wray, 54, of Nashville, was sentenced to 36 months in prison, followed by one year of supervised release, with a special condition during his supervised release period prohibiting him employment or association with any tax preparation business.

Wray was charged with 29 counts of aiding or assisting in the preparation of fraudulent tax returns. Wray prepared tax returns for other individuals claiming deductions that he knew were false. Wray pled guilty to one count charging him with preparation of a 1999 federal income tax return for an individual which falsely claimed a business loss relating to an auto brokerage business and rental property resulting in a tax loss to the government of $18,950.

Wray marketed himself as a tax recovery specialist and overstated his expertise by claiming to have formerly worked for the IRS. He focused his services on high-density employers such as Saturn Corporation in Spring Hill, Tennessee, and various automotive dealerships. Wray carried out his scheme by convincing clients that additional expenses could be deducted on their tax returns based upon their occupation, and charged those clients a preparation fee along with a percentage of the amended tax refunds ranging between 10% and 50% of their tax refunds. Wray accomplished this by reclassifying employees' positions to make them appear to be self-employed or engaged in Schedule C businesses. He would then prepare a completely false Schedule C, including fictitious income, expenses and net losses. All of this resulted in the potential tax loss to the government for years 1996 through 2000 of $561,998.