Press Release
FOR IMMEDIATE RELEASE
Date: November 21, 2008
Contact : Sue McKinney
Seven Defendants Sentenced to Federal Prison
Maxwell Wood, United States Attorney announced that seven defendants involved in an eleven person scheme to defraud the Internal Revenue Service were sentenced yesterday before the Honorable W. Louis Sands in U.S. District Court in Valdosta, Georgia. Dana K. Swain, Rachel K. Swain, Marvin W. Swain, Jr., Lonnie Cason, Linda Cason, Misty Kelly and Mason E. Coddington, Sr. were all sentenced for their participation in a fraud scheme involving the filing of fraudulent claims for refund based on fictitious diesel fuel tax credits.
Sole proprietors and businesses who purchase diesel fuel on which federal excise taxes have already been paid (known as “undyed fuel”), and then use that fuel in off-highway business equipment qualify for a tax credit (or reimbursement) for the excises taxes paid. The claims for refund in this investigation were fraudulent because the defendants did not purchase, nor did they use, the undyed fuel in their off-highway business equipment. The seven defendants sentenced yesterday were collectively responsible for fraudulent claims for federal income tax refunds totaling $3,214,231.00.
Misty Kelly Linn was sentenced to five months in prison, five months of home confinement, three years of supervised release, and ordered to pay restitution to the Department of Treasury, Internal Revenue Service of $118,356.00. On October 10, 2007, Kelly-Linn pleaded guilty to one count of filing a false claim in 2003 scheme for $45,991 in fraudulent federal income tax.
Mason E. Coddington, was sentenced to twenty-four months in prison, three years of supervised release, and ordered to pay restitution in the amount of $414,440.00. On February 5, 2008, Coddington pleaded guilty to one count of filing a false claim in 2003 for $146,362.
Lonnie Cason was sentenced to one year of home confinement, five years probation and ordered to pay restitution in the amount of $25,000 by December 31, 2008, and further ordered to continue paying $500.00 per week until he has repaid total restitution in the amount of $460,218.
Linda Cason was sentenced to six months home confinement, five years of probation, ordered to pay restitution of $25,000 by December 31, 2008, and further ordered to continue paying $500.00 per week until she has repaid total restitution in the amount of $349,023.
On February 5, 2008, Lonnie and Linda Cason each pleaded guilty to one count of filing a false claim in 2002 for $150,796.00 and $174,479.00, in fraudulent income tax credits respectively.
Dana K. Swain was sentenced to thirty-six months in prison, followed by three years supervised release, and further ordered to pay restitution in the amount of $1,597,809.00.
Rachel K. Swain was sentenced to five months in prison, five months home confinement, one year of supervised release and ordered to pay restitution in the amount of $528,284.00.
Rev. Marvin W. Swain was sentenced to one year home confinement, five years probation, and ordered to pay restitution in the amount of $309,835.00.
The three Swains pleaded guilty on July 29, 2008, to conspiring with each other and others from 1998 to 2003 to cause the filing of 16 claims for fraudulent income tax credits on diesel fuel.
The defendants filed the false claims with the Internal Revenue Service through the tax preparation services of defendant Clinton Basil Hughes and Pamela Hughes who are awaiting sentencing before Judge Sands at a later date.
This case was investigated by Internal Revenue Service, Criminal Investigation, the Department of Justice Tax Division and the U.S. Attorney’s Office for the Middle District of Georgia. Assistant United States Attorney Jim Crane prosecuted the case.
"Taxpayers who file fraudulent claims - whether they involve fictitious fuel tax credits or some other credit - are on notice that they face criminal prosecution and the related serious consequences of a criminal conviction," said Nathan J. Hochman, Assistant Attorney General of the Justice Department's Tax Division. "Law-abiding taxpayers need to know that not only is the government investigating and prosecuting taxpayers who fail to comply with their federal tax obligations, but juries are holding those taxpayers accountable through guilty verdicts and judges are sentencing them to months in prison."
“The IRS is determined to stop any false tax refund schemes, and that includes fraudulent excise tax refunds,” said Eileen C. Mayer, Chief, IRS Criminal Investigation. “The message this case sends is that crimes like this do not pay and those who commit these crimes will face prosecution.”
Questions concerning this case should be directed to Sue McKinney, Public Affairs Specialist, United States Attorney’s Office, at (478) 621-2602.
