James E. Beavers and Beverly S. Beavers of Knoxville, Tenn., were each sentenced to serve 36 months in prison followed by three years of supervised release, the Justice Department and Internal Revenue Service (IRS) announced today. James and Beverly Beavers were also each ordered to pay restitution in the amount of $591,123. On March 20, 2013, a jury sitting in Knoxville, Tenn., found the couple guilty of conspiracy to defraud the United States and filing false claims for tax refunds. They have been in custody since they were convicted.
Court documents and the evidence at trial showed that James Beavers held a Ph.D. in civil engineering and was employed as an engineering consultant. He was formerly employed as the director of an academic engineering center at the University of Tennessee. Beverly Beavers owned a small formalwear and jewelry store in Knoxville.
According to court documents and the evidence presented at trial, in June 2009, James and Beverly Beavers arranged to have a fraudulent 2008 tax return prepared by PMDD Services LLC, a tax return preparation firm that helped clients claim exorbitant tax refunds specifically intended to help the clients pay off their personal debts. The tax return falsely reported that their personal debts, including the amount of the Beavers’ mortgage and the limits on their credit cards, were actually income on which federal income tax was withheld. This fictitious income and tax withholding were reported to the IRS on false Forms 1099-OID, which were prepared by Penny Jones of PMDD Services based on information provided by James and Beverly Beavers. As a result of the fraudulently inflated income and withholding, the Beavers’ 2008 tax return claimed a fraudulent tax refund of over $591,000. Upon receiving the funds, James and Beverly Beavers paid off their home mortgage, then conveyed their newly unencumbered real estate to sham trusts in order to impede IRS efforts to collect the erroneously paid refund. They later filed false amended tax returns for the 2006 and 2007 tax years, also prepared by Jones, requesting fraudulent tax refunds of $193,056 and $202,625, respectively. Jones pleaded guilty to related tax crimes and was sentenced to 144 months in prison in January 2013.
Assistant Attorney General Kathryn Keneally of the Tax Division commended the efforts of special agents of IRS – Criminal Investigation who investigated the case and Trial Attorneys Jonathan Marx and Jed Silversmith of the Tax Division who prosecuted the case, with local assistance from the U.S. Attorney’s Office for the Eastern District of Tennessee.
Additional information about the Tax Division and its enforcement efforts may be found at the division website .