Baltimore Tax Preparer Sentenced for Preparing False Tax Returns
Provided Clients with False Documents During IRS Audits to Conceal Fraudulent Tax Deductions
Baltimore, Maryland - U.S. District Judge Andre M. Davis sentenced Jerome McFadden, age 47, of Baltimore, today to 15 months in prison, followed by 1 year of supervised release, for preparing false income tax returns and attempting to interfere with the administration of tax laws, announced United States Attorney for the District of Maryland Rod J. Rosenstein.
According to his guilty plea, McFadden has operated a tax return preparation business for 30 years. Between 2000 to 2004, McFadden prepared 30 tax returns for 11 taxpayers, which falsely claimed dependents, charitable contributions and business expenses in order to increase his clients’ refunds. The scheme resulted in a total tax loss to the United States of $92,148.
For example, on February 1, 2003, McFadden prepared a false tax return for a client, and charged a higher tax-preparation fee for including the false information. The client received notice in November 2004 that the IRS was auditing the return, and asked McFadden what to do. McFadden told the client: to lie to the auditor by claiming that a flooded basement had destroyed certain records; to forge a letter from the client’s supervisor stating that the client had unreimbursed business expenses; and to forge a letter on church letterhead stating that the client had tithed $6,985 to the church. McFadden provided the client with hand-written notes of what the forged letters from the supervisor and church should say, and blank church letterhead. On November 24, 2004, the client provided the IRS auditor with the forged documents and false story, as McFadden had instructed, but then immediately admitted the truth.
On at least three other occasions, McFadden gave his clients similar false documentation to use at their audits.
United States Attorney Rod J. Rosenstein thanked the Internal Revenue Service - Criminal Investigation for its investigative work, and commended Assistant United States Attorney Michael J. Leotta, who prosecuted the case.