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Decatur Man is Second Defendant to Plead Guilty in False Tax Return Scheme Scheme Claimed More Than $1 Million in Fraudulent Refunds

FOR IMMEDIATE RELEASE
February 22, 2012

Springfield, Ill. – A Decatur, Ill., man, Charles Drake, 47, is the second defendant to plead guilty for his role in a tax fraud conspiracy scheme led by his now-deceased brother-in-law that claimed more than $1,000,000 in false tax refunds over three years, from 2005 to 2008. Drake appeared today before U.S. Magistrate Judge Byron G. Cudmore and pled guilty to one count each of mail fraud and to aiding and assisting in the preparation of false and fraudulent tax returns. Sentencing is scheduled on June 26, 2012, before Senior U.S. District Judge Richard Mills.

Sentencing for another defendant, Jennifer Muhammad, also known as Jennifer Powers, of Springfield, Ill., is scheduled on March 21, 2012. Muhammad was charged in a separate but related case and pled guilty on Aug. 3, 2011, to one count each of conspiracy to commit fraud and aiding and assisting in the preparation of false and fraudulent tax returns. Muhammad admitted that she became involved in the conspiracy in 2005, with her now-deceased stepfather, and that she recruited individuals whose name and social security number were used to prepare false tax returns that falsely claimed earned income credit.

During court proceedings and in court documents, Drake admitted that in December 2006 he became involved in his now deceased brother-in-law’s fraud conspiracy scheme by recruiting individuals whose names and social security numbers were used to prepare false tax returns. Drake admitted that he allowed his personal address to be used on some of the returns where the refund checks were sent; that he opened a post office box in Springfield for the purpose of receiving tax refund checks; that he paid others to allow their addresses to be used on some of the returns where the refund checks were sent; and that he took individuals to a check cashing facility to cash the checks. The amount of the tax refund checks varied between $2,200 and $2,600. Typically, the individual whose name was on the return was given a small portion of the refund check, generally no more than $600, and the balance was received by Drake and his brother-in-law. According to court documents, for the period from Dec. 15, 2006, to April 18, 2008, when Drake was involved in the conspiracy, approximately 300 fraudulent returns associated with the scheme were filed with the IRS. The returns claimed refunds of more than $1,000,000 and more than $700,000 in refunds were issued by the IRS.

Typically, the fraudulent tax returns falsely claimed earned income credit. Generally, the earned income credit is available to low income wage-earning or self-employed taxpayers to reduce the amount of tax due; however, if the amount of the credit exceeded the tax due, the taxpayer received the excess as a refund.

At sentencing, Drake faces statutory penalties of up to 20 years in prison and fines of up to $250,000 for mail fraud, and up to three years in prison and fines of $100,000 for aiding and assisting in the preparation of false tax returns. Muhammad faces statutory penalties of up to five years in prison for conspiracy to commit fraud; for aiding and assisting in the preparation of false tax returns, the penalty is up to three years in prison and fines of up to $100,000. The defendants, who remain on bond pending sentencing, may also be ordered to pay restitution.

The charges are the result of an investigation by the Criminal Investigation Division of the Internal Revenue Service. The cases are being prosecuted by Assistant U.S. Attorney Gregory K. Harris.

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