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Six Defendants Allegedly Filed False Forms Reporting $2.4 Million in Gambling Proceeds

WASHINGTON, D.C. Eileen J. O'Connor, Assistant Attorney General for the Tax Division of the Department of Justice, and Lorraine Johnson, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigation, announce the arrest and indictment of Wilson D. Addison, Thaer M. Ayoub, Scott S. Fischer, David R. Harvey, Warren G. Miller and Cindi M. Smith for conspiring to defraud the IRS and for other charges related to preparing false and fraudulent IRS Forms reporting gambling proceeds.

According to the indictment unsealed today in Ft. Lauderdale, Fla., Addison, Ayoub, Smith, Harvey and Fischer were employed as tellers at the Hollywood Greyhound Track, a pari-mutuel facility in Hallandale, Fla., and Miller was a frequent patron there. The indictment alleges that the tellers assisted Miller in cashing approximately 2,200 "IRS tickets" worth nearly $2.4 million during the period from at least Jan. 3, 1993, to Oct. 27, 1999, although the tickets did not belong to Miller. Furthermore, the indictment alleges that Miller served as a "ten-percenter" in transactions for gamblers who actually won proceeds at the pari-mutuel facility.

Pari-mutuel facilities are required to file a Form W-2G, known as a "Statement for Certain Gambling Winnings," for each transaction in which the net winnings exceed $600 and are at least 300 times the amount of the wager. Winning tickets that require the filing of a Form W-2G are often referred to as an "IRS tickets" by par-mutuel patrons and employees. "Ten percenting" is a practice by which the actual winners of gambling proceeds evade IRS reporting requirements by having another individual cash the winning ticket and complete the Form W-2G. In exchange for this service, the individual who completes the Form W-2G retains a percentage of the winnings, often set as high as 10 percent of the proceeds.

All of the defendants named in the indictment are charged with conspiracy to defraud the IRS, in violation of 18 U.S.C. 371. The indictment also charges Addison, Ayoub, Miller and Smith with the crime of willfully assisting in the preparation of false Forms W-2G, in violation of 26 U.S.C. 7206(2). Defendants Smith, Harvey and Fisher are charged with witness tampering, in violation of 18 U.S.C. 1512(b)(3).

A violation of 18 U.S.C. 371 carries a maximum penalty of five years of imprisonment, a $250,000 fine, or both. A violation of 26 U.S.C. 7206(2) carries a maximum penalty of three years imprisonment, a $250,000 fine, or both. A violation of 18 U.S.C. 1512(b)(3) carries a maximum penalty of 10 years of imprisonment, a $250,000 fine or both.

These charges are only allegations. The defendant is presumed innocent unless and until proven guilty.

Special agents with IRS Criminal Investigation conducted the investigation. The prosecution will be handled by Stephanie D. Evans and Jeffrey A. Neiman, trial attorneys with the Tax Division of the Department of Justice.

Anyone who has information about suspected tax fraud should report it to the IRS tip line at 1-800-829-0433.

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