TAX PREPARERS INDICTED ON FEDERAL FRAUD CHARGES

 

Federal grand jury meeting in Kansas City, Kan.,
also returns indictments including case alleging conspiracy to distribute more than 2,000 pounds of marijuana

KANSAS CITY, KAN. – The owner of a tax preparation business and an accountant who worked for him were indicted Thursday on charges of helping clients prepare fraudulent tax returns.

Gene Franklin , 37, Gladstone, Mo., and Donald Chapin, 53, Shawnee, Kan., are charged with one count of conspiracy to file fraudulent tax returns, and nine counts of preparing false or fraudulent tax returns.

According to the indictment, Franklin owned Franklin & Company, Inc., an income tax preparation business with offices in Kansas City, Mo., Butler, Mo., and Overland Park, Kan. Chapin was a certified public accountant working for Franklin & Company. Franklin and Chapin prepared fraudulent tax returns by using methods advocated by Renaissance, The Tax People, Inc., a Topeka-based multi-level marketing company that purportedly specialized in sales and service of home-based business packages involving tax strategies and tax services. Renaissance offered tax support to its members in the form of tax return preparation, tax advice and so-called “audit protection.”

The indictment charges that from Sept. 8, 1999, through Oct. 14, 2001, Franklin and Chapin conspired to commit tax fraud by counseling clients and assisting clients in the preparation or presentation of false and fraudulent tax returns. The conspiracy included:

– Recruiting people to become members of Renaissance.
– Counseling clients to increase the number of withholding allowances on W-4 forms in order to decrease the amount of taxes withheld.
– Providing misleading and false information to clients about the impact that operating a home-based business would have on the clients’ federal income tax liabilities.
– Encouraging clients to document personal expenditures for the purpose of fraudulently deducting them as business expenses.
– Providing false and misleading advice that virtually all of a client’s personal commuting mileage could be deducted as business mileage.
– Preparing false and fraudulent income tax returns and submitting them to the IRS.

The indictment cites 12 clients for whom Franklin and Chaplin aided and assisted the preparation of fraudulent income tax returns overstating Schedule C losses designed to reduce or eliminate tax liability.

If convicted, they face a maximum penalty of 5 years in federal prison and a fine up to $250,000 on the conspiracy charge, and a maximum penalty of 3 years in federal prison and a fine up to $250,000 on each of the counts of filing false returns. The Internal Revenue Service investigated the case. Assistant U.S. Attorney Scott Rask is prosecuting.

In a related case, the grand jury returned a superseding indictment against Michael Craig Cooper, Jesse Ayala Cota, Todd Eugene Strand, and Renaissance, the Tax People, Inc. The superseding indictment made mainly technical changes to an initial indictment that was unsealed Oct. 25, 2004, when Cooper was arrested crossing the border from Mexico to the United States near Laredo, Texas. Cooper was the founder of Renaissance, the Tax People., Inc. and the other defendants were employees and promoters of the company. One defendant in the initial indictment, Daniel Joel Gleason, has pleaded guilty to one count of conspiracy and one count of preparing a fraudulent tax return. He is set for sentencing June 18, 2007.

OTHER INDICTMENTS

A grand jury meeting in Kansas City, Kan., also returned the following indictments:

Victor Hugo Hernandez Rodriguez, 27, Kansas City, Kan., Ricardo Garcia Mejia, 29, Kansas City, Kan., Jose Ivan Salgado, 20, Kansas City, Kan., and Victor Hugo Ramos, 24, Kansas City, Kan., are charged with conspiracy to distribute more than 1,000 kilograms (more than 2,204 pounds) of marijuana. The crime is alleged to have occurred June 1, 2006, through Nov. 9, 2006, in Wyandotte County, Kan.

If convicted, they face a penalty of not less than 10 years and not more than life in federal prison and a fine up to $4 million. The Federal Bureau of Investigation worked on the case. Assistant U.S. Attorney Tris Hunt is prosecuting.

Jorge Arturo Nanez-Lopez, 21, Kansas City, Mo., is charged with one count of possession with intent to distribute 50 grams or more of methamphetamine. The crime is alleged to have occurred Nov. 28, 2006, in Kansas City, Kan.

If convicted, he faces a penalty of not less than 10 years and not more than life in federal prison and a fine up to $4 million. The Drug Enforcement Administration investigated. Special Assistant U.S. Attorney David Zabel is prosecuting.

Guillermo Pena-Baez, 26, Olathe, Kan., is charged with one count of possession with intent to distribute more than 50 grams of methamphetamine. The crime is alleged to have occurred Oct. 14, 2006, in Johnson County, Kan.

If convicted, he faces a penalty of not less than 10 years and not more than life in federal prison and a fine up to $4 million. The Drug Enforcement Administration investigated. Assistant U.S. Attorney Sheri McCracken is prosecuting.

Shannon Aguirre, 35, Ottawa, Kan., is charged with two counts of possession with intent to distribute methamphetamine. The crimes are alleged to have occurred in March and October 2006 in Franklin County, Kan.

If convicted, Aguirre faces a penalty of not less than 5 years and not more than 40 years in federal prison and a fine up to $2 million. The Drug Enforcement Administration investigated. Assistant U.S. Attorney Sheri McCracken is prosecuting.

Berney Edlin, 50, Kansas City, Kan., Mary Potter, 37, and Bryan Shelton, 36, Kansas City, Kan., are charged in a drug trafficking case. Edlin is charged with one count of possession with intent to distribute more than 5 grams of methamphetamine. Potter is charged with two counts of distributing more than 5 grams of methamphetamine. Shelton is charged with possession with possession with intent to distribute more than 50 grams of methamphetamine. The crimes are alleged to have occurred in June, July and August 2004 in Kansas City, Kan.

Upon conviction, the crimes carry the following penalties:
– Possession with intent to distribute more than 5 grams of methamphetamine: Not less than 5 years and not more than 40 years in federal prison and a fine up to $2 million.
– Distribution of more than 5 grams of methamphetamine: Not less than 5 years and not more than 40 years in federal prison and a fine up to $2 million.
– Possession with intent to distribute more than 50 grams of methamphetamine: Not less than 10 years and not more than life in federal prison and a fine up to $4 million.

The Drug Enforcement Administration investigated. Assistant U.S. Attorney Sheri McCracken is prosecuting.

Jahbou Rudolph Drakes, 35, who is in the custody of the U.S. Marshal Service, is charged with two counts of distributing crack cocaine. The crimes are alleged to have occurred on Nov. 17 and Nov. 21, 2006.

If convicted, he faces a penalty of not less than 5 years and not more than 40 years in federal prison, and a fine up to $2 million. The Bureau of Alcohol, Tobacco, Firearms and Explosives and the ATF Task Force investigated. Special Assistant U.S. Attorney Greg Hough is prosecuting.

John Scott Johnson, 47, Olathe, Kan., is charged with two counts of fraudulent use of a Social Security number. The indictment alleges he used a Social Security number that was not his own to open an account at U.S. Bank, 16665 W. 151st in Olathe, Kan., and gave the false Social Security number again when a bank employee asked him to confirm the number. The crimes are alleged to have occurred Dec. 29, 2003, and May 5, 2004, in Olathe, Kan.

If convicted, he faces a maximum penalty of 5 years in federal prison and a fine up to $250,000 on each count. The U.S. Postal Inspection Service investigated. Assistant U.S. Attorney Leon Patton is prosecuting.


Myron J. Mitchell, 26, Kansas City, Kan., is charged with unlawfully possessing a firearm after a felony conviction. The crime is alleged to have occurred Sept. 21, 2006, in Kansas City, Kan.

If convicted, he faces a maximum penalty of 10 years in federal prison and a fine up to $250,000. The Bureau of Alcohol, Tobacco, Firearms and Explosives investigated. Assistant U.S. Attorney Terra Morehead is prosecuting.

Marvin Lee Ellis, 29, Kansas City, Kan., is charged with unlawfully possessing a firearm after felony convictions. The crime is alleged to have occurred Nov. 24, 2006, in Kansas City, Kan.

If convicted, he faces a maximum penalty of 10 years in federal prison and a fine up to $250,000. The Bureau of Alcohol, Tobacco, Firearms and Explosives investigated. Assistant U.S. Attorney Terra Morehead is prosecuting.
As in any criminal case, a person is presumed innocent until and unless proven guilty. The indictments filed merely contain allegations of criminal conduct.

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