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Tuesday, October 4, 2011

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District Tax Preparer Pleads to Federal Charges
In Conspiracy to Generate Millions in Fraudulent Refunds
- Scheme Involved More than 3,000 Fraudulent Federal Income Tax Returns -

     WASHINGTON - Ladonna Davis, 28, a tax preparer from Washington, D.C., pled guilty today to federal charges stemming from her role in a scheme that involved the filing of more than 3,000 fraudulent income tax returns that netted more than $14 million in refunds.

     The guilty plea was announced by U.S. Attorney Ronald C. Machen Jr., Jeannine A. Hammett, Acting Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation, and Stephen M. Cordi, Deputy Chief Financial Officer for the District of Columbia Office of Tax and Revenue.

     Davis pled guilty in the U.S. District Court for the District of Columbia to charges of conspiracy and first-degree theft. She is to be sentenced by the Honorable Senior Judge Thomas F. Hogan at a date to be determined later. Under federal sentencing guidelines, Davis faces a likely sentence of up to 57 to 71 months and a potential fine of up to $100,000. As part of the plea agreement, Davis also must make full restitution.

      According to information presented to the Court by Assistant U.S. Attorney Sherri L. Schornstein, from 2006 through this year, Davis worked for 2FT Fast Facts Tax Service, a tax return preparation business based in the District of Columbia. During that time, she and others filed approximately 3,044 fraudulent federal income tax returns for clients of the business, producing fraudulent refunds totaling about $13,953,317.

     In addition, Davis and the others filed about 665 fraudulent District of Columbia income tax returns, generating fraudulent refunds of about $835,000. Fraudulent returns also were filed in Maryland and Virginia, generating refunds that are still being calculated.

      Davis and the others charged fees for the preparation of the fraudulent returns, billing more for clients who were to receive larger refunds. Among other things, they listed fraudulent businesses purportedly owned and operated by the taxpayers and phony itemized deductions.

      “The tremendous scope of this tax fraud – 3,000 returns and $14 million in false refunds – is mind-boggling,” said U.S. Attorney Machen. “The integrity of our tax system depends on everyone paying their fair share. Today’s conviction should make preparers think twice before using their expertise to help clients cheat on their taxes.”

      “Taxpayers should be very careful when choosing a return preparer. You should be as careful as you would in choosing a doctor or lawyer. One of the IRS’s main objectives is to ensure that all tax practitioners, tax preparers, and others who practice in the tax law profession adhere to professional standards and follow the law,” said Acting Special Agent in Charge Hammett. “IRS-Criminal Investigation’s efforts to deter refund fraud are critical to overall tax compliance. Our Special Agents play a valuable role in protecting revenue by identifying, investigating and recommending prosecution of abusive return preparers.”

     “The Office of Tax and Revenue’s Audit Division uncovered this scheme and worked closely with our Criminal Investigation Division to prepare the case to go to federal authorities,” said Deputy Chief Financial Officer Cordi. “We continue to do the hard work necessary to unravel tax evasion schemes and to protect the District’s revenue.”

      In announcing the guilty plea, U.S. Attorney Machen, Acting Special Agent in Charge Hammett and Deputy Chief Financial Officer Cordi commended the efforts of Special Agent Abubaker Naim of IRS-Criminal Investigation and Special Agent George Batista of the D.C. Office of Tax and Revenue. They also praised the work of the staff of the U.S. Attorney’s Office, including Paralegal Jared Forney and Assistant U.S. Attorney Sherri L. Schornstein, who is prosecuting the case.


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