Owners Of Tax Preparation Business Arrested In Delaware, Charged With Filing Thousands Of Phony Tax Returns
TRENTON, N.J. – The two owners of a tax preparation business that claimed millions of dollars in fraudulent tax refunds on behalf of inmates at various New Jersey prisons were arrested this morning in Laurel, Del., U.S. Attorney Paul J. Fishman announced.
Special agents of the IRS-Criminal Investigations (IRS-CI) arrested Kamal J. James, aka “Bro Messiah Aziz El,” and Crystal G. Hawkins, aka “Sis. Crystal Gabri El,” at Hawkins’ residence on a criminal complaint charging them with one count of conspiracy to defraud the United States. The pair operated Release Refunds, a purported tax preparation business – previously based in Brick, N.J., and now in Seaford, Del. – through which they solicited New Jersey prison inmates as clients and then filed thousands of fraudulent tax returns on their behalf. James’ and Hawkins’ conduct allegedly resulted in hundreds of thousands of dollars in illicit profits and an actual tax loss of approximately $1.7 million.
James and Hawkins appeared in Trenton federal court this afternoon before U.S. Magistrate Judge Douglas E. Arpert. During the proceeding, the government alleged that marijuana plants and a firearm were found in the Laurel home during the arrests. James was detained following the proceeding and Hawkins is expected to be released on a $250,000 bond.
According to the complaint unsealed today:
Between October 2011 and October 2013, James and Hawkins conspired to defraud the United States out of millions of dollars by creating and filing income tax returns that were based on bogus income and withholding information. James and Hawkins used their purported tax preparation business as a vehicle to carry out the scheme.
To execute the scheme, James and Hawkins sent Release Refunds “promotional” flyers to inmates at various New Jersey prisons offering tax return preparation services. The pair asked inmates interested in Release Refunds’ services to provide basic identification information and to sign Income Tax Returns and other IRS documents, but not to include any information about their income or withholdings. James and Hawkins then filled in the missing income information on the return forms, fabricating the inmates’ earnings to trigger fraudulent and inflated refunds.
During the course of the investigation, an undercover IRS-CI agent posing as an inmate in a New Jersey prison submitted a completed Release Refunds form and sent it to James and Hawkins. They then sent the “inmate” blank income tax forms and other IRS documents and instructions to sign the documents. James and Hawkins did not request any financial information from the undercover agent before preparing three fraudulent tax returns – including false income information that James and Hawkins provided – to be filed on behalf of the agent for tax years 2010 through 2012. The fraudulent returns resulted in several thousand dollars in refunds and a $1,485 fee for the defendants.
In total, James and Hawkins caused approximately 2,432 fraudulent tax returns to be filed during the relevant time period, claiming approximately $4,402,288 in improper refunds, of which the United States paid approximately $1,779,910.16.
If convicted, the defendants face a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the amount of the gain or loss from the offense.
U.S. Attorney Fishman credited special agents of IRS-CI, under the direction of Special Agent in Charge Shantelle P. Kitchen, with the investigation.
The government is represented by Assistant U.S. Attorneys Nicholas P. Grippo and Jennifer Davenport of the U.S. Attorney’s Office Criminal Division in Trenton and Trial Attorney Tino Lisella of the Justice Department’s Tax Division. Assistant U.S. Attorney Sarah Wolfe represented the government at today’s proceeding.
The charges and allegations contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Kamal J. James: Bruce Throckmorton Esq., Trenton
Crystal G. Hawkins: Assistant Federal Public Defender Andrea Bergman Esq., Trenton