WASHINGTON - Matthew Carl Berry was convicted on federal tax fraud charges yesterday following a jury trial in Riverside, Calif., the Department of Justice and Internal Revenue Service (IRS) announced today. Berry, of Rialto, Calif., was indicted on September 13, 2006, for one count of conspiracy to defraud the United States and three counts of filing false income tax returns for his personal taxes during the years of the conspiracy. The evidence at trial showed that defendant Berry conspired with Karen Berry, Carla Berry, Ivan Johnson and Valerie Dixon, each of whom already pleaded guilty to conspiracy to defraud the United States and false preparation charges.
The evidence presented to the jury showed that the scheme operated simultaneously on three tracks, including preparing thousands of fraudulent income tax returns every year, creating false documentation for use in IRS audits and failing to report to the IRS the more than $1,000,000 earned from the conspiracy. The fraudulent tax returns contained false Schedule A deductions for mortgage interest, real estate taxes, or un-reimbursed employee expenses. The evidence showed that the members of the conspiracy prepared tax returns claiming mortgage interest deductions for taxpayers who did not own homes. According to the evidence adduced at trial, the IRS audited more than 4,500 false income tax returns, with an average tax loss of more than $3,150 per return.
Nathan J. Hochman, Assistant Attorney General of the Justice Department’s Tax Division, said: “Dishonest and fraudulent tax preparers should stand up and take note of today's conviction. People who break these laws face serious felony charges, prison time and having to pay back all the taxes owed with interest and penalties."
“This was not a victimless crime. These individuals engaged in blatant, organized theft from the government,” said Eileen Mayer, Chief of the Criminal Investigation Division of the Internal Revenue Service. “As the vast majority of citizens finalize their tax returns this month, they can feel confident that the government will hold accountable those who attempt to harm our tax system.”
The conviction represents the latest action involving defendants Karen Berry, Carla Berry and Ivan Johnson, against whom the United States obtained a stipulated preliminary injunction in 2006, which barred them from preparing tax returns until resolution of this parallel criminal case and resolution of the civil injunction case. Defendant Valerie Dixon consented to an injunction barring her from preparing tax returns for 10 years. According to documents filed in the civil case against the defendants, the total tax loss is estimated to exceed $25 million.
Defendant Matthew Berry faces maximum potential sentences of five years’ imprisonment and a fine of $250,000 for the conspiracy, and three years’ imprisonment and a fine of $250,000 as well as the costs of prosecution for each count of filing a false return.
Assistant Attorney General Hochman and U.S. Attorney for the Central District of California, Tom O’Brien, thanked Assistant United States Attorney Antoine Raphael and Tax Division trial attorney Charles E. Pell, who prosecuted the case. They also thanked the IRS Criminal Investigation special agents, whose assistance was essential to the successful investigation of the case.
More information about the Justice Department’s efforts against tax-scam promoters can be found at http://www.usdoj.gov/tax/taxpress2008.htm. Information about the Justice Department’s Tax Division can be found at http://www.usdoj.gov/tax.