Two Convicted in Conspiracy to Claim over $5.5 Million in False Tax Refunds

August 11, 2010

Greenbelt, Maryland - A federal jury today convicted Thomas Arrona Johnson, age 56, of Burtonsville, Maryland, and Harry James Williams, age 46, of Clarksburg, Maryland, on charges of conspiring to defraud the United States and making false claims for tax refunds.

The guilty verdict was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Acting Assistant Attorney General John DiCicco of the Department of Justice, Tax Division; and Special Agent in Charge Rebecca Sparkman of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office.

According to testimony at their one week trial, throughout 2008 and 2009, Johnson and Williams filed and caused others to file with the IRS false individual and trust tax returns, which claimed refunds to which the taxpayer named on the return was not entitled. According to trial evidence the returns falsely reported that, among other things, certain federal taxes had been withheld, which increased the amount of taxes purportedly paid to the IRS. By increasing the amount of taxes reportedly paid to the IRS, the defendants caused the returns to claim a refund to which neither they nor the purported trust was entitled. Based on the false returns, the U.S. Treasury paid over $1 million in fraudulently claimed refunds.

Witnesses also testified that Johnson and Williams also claimed to third parties that they could reduce or eliminate their debt, including mortgage, credit card and other debt. The evidence showed that Williams and Johnson would prepare amended individual income tax returns which falsely reported that income tax had been withheld in amounts that substantially exceeded the amount of tax paid. On that basis, the returns claimed tax refunds, the amount of which approximated the debt to be eliminated. According to trial testimony, the defendants charged fees, which ranged up to tens of thousands of dollars per claim, to prepare the false forms.

The evidence presented at trial showed that the defendants filed and caused others to file more than a dozen tax returns that reported $7 million in phony withholding taxes and claimed $5.5 million in fraudulent tax refunds.

In a related case, on July 23, 2010, Al David Toler, age 41, of Silver Spring, Maryland, entered a guilty plea for conspiring to defraud the United States and submitting a false claim for a tax refund of more than $48,000.

The defendants face a maximum sentence of 10 years in prison for the conspiracy and five years in prison on each of eight counts of submitting false claims. Chief U.S. District Judge Deborah K. Chasanow has scheduled sentencing for November 15, 2010 at 11:00 a.m.

United States Attorney Rod J. Rosenstein and Acting Assistant Attorney General John DiCicco commended Assistant United States Attorney Michael Pauzé and Trial Attorney Jessica Nuzzelillo of the Department of Justice Tax Division, who are prosecuting the case.

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