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NEWS RELEASE

OFFICE OF THE UNITED STATES ATTORNEY

WESTERN DISTRICT OF MISSOURI


JOHN F. WOOD


Contact Don Ledford, Public Affairs ● (816) 426-4220 ● 400 East Ninth Street, Room 5510 ● Kansas City, MO 64106

www.usdoj.gov/usao/mow/index.html


JANUARY 23, 2008

FOR IMMEDIATE RELEASE


LEE'S SUMMIT TAX PREPARER PLEADS GUILTY

TO STEALING IRS PAYMENTS


            KANSAS CITY, Mo. – John F. Wood, United States Attorney for the Western District of Missouri, announced that a Lee's Summit, Mo., tax preparer pleaded guilty in federal court today to charges related to a scheme to embezzle $389,000 that his clients entrusted to him to make their tax payments to the Internal Revenue Service.


            James C. Richards, 57, of Lee's Summit, waived his right to a grand jury and pleaded guilty before U.S. District Judge Gary A. Fenner this morning to a four-count federal information that charges him with embezzling funds that were intended for the IRS, attempting to defeat the assessment of tax, falsely claiming to the IRS that he was a CPA and fabricating documents purported to be from the IRS in an effort to conceal his theft.


            Richards is the owner of Holliday and Associates, a sole proprietorship performing general accounting services and tax preparation for various clients. Richards was hired by his clients to prepare and file their tax returns as well as make their federal tax deposits. Richards routinely asked his clients to make payments toward their anticipated tax liability. He further asked these clients to make their payments payable to him or his company, and told his clients that he would make the necessary payment to the IRS. Instead of following through with his obligation, however, Richards intentionally failed to make the clients' required tax deposits, pay over their estimated tax payments, or even file the required forms with the IRS.


            By pleading guilty today, Richards admitted that he embezzled $126,955 in taxes that were the property of the U.S. Treasury, and that he attempted to evade the assessment of taxes due and owing by his clients totaling $47,018, between January 2003 and April 2006.


            Included in the specific charges to which Richards pleaded guilty today, as well as relevant conduct identified in the course of the investigation, at least 20 victims paid a total of $389,000 to Richards or Holliday and Associates that was intended for taxes, yet the IRS had no record of receiving the funds or corresponding tax documents. Under the terms of today's plea agreement, Richards agrees to provide a full and complete list of all victims connected in any way to him or his business, who suffered losses at his hand through his acceptance of funds intended for the IRS that were converted to his own use, or who suffered a loss as the result of other actions taken by Richards in his business.


            Richards also admitted that he falsely represented himself to be a certified public accountant in documents submitted to the IRS, and represented taxpayers before the IRS based on that status. Thirty-eight records were identified where Richards designated himself a CPA, and many of his clients believed him to be a CPA.


            In an effort to conceal his theft with one couple, Richards fabricated IRS documents to stop collection activity. Twelve fabricated letters were identified that Richards sent to the victim's employer and bank, which were garnishing his client's funds, in order to stop the garnishments. Richards admitted to fabricating the letters in an attempt to stall IRS activity.


            Under federal statutes, Richards could be subject to a sentence of up to 23 years in federal prison without parole, plus a fine up to $850,000. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.


            This case is being prosecuted by Assistant U.S. Attorney Jane Pansing Brown. It was investigated by the Department of the Treasury, Treasury Inspector General for Tax Administration and IRS-Criminal Investigation.



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This news release, as well as additional information about the office of the United States Attorney for the Western District of Missouri, is available on-line at

www.usdoj.gov/usao/mow/index.html