KC tax preparer indicted for false tax returns,
stealing refunds from clients
KANSAS CITY, Mo. – Beth Phillips, United States Attorney for the Western District of Missouri, announced today that a Kansas City, Mo., tax preparer has been indicted by a federal grand jury for filing fraudulent tax returns over a five-year period while paying herself exorbitant fees by stealing the inflated refunds from her clients, which resulted in a tax loss to the United States of more than $100,000.
Vera Irene Smith, also known as Vera S. Bradley, 39, of Kansas City, was charged in a 56-count indictment that was returned under seal by a federal grand jury on Wednesday, Feb. 9, 2011. The indictment was unsealed and made public today upon Smith’s arrest and initial court appearance.
According to the indictment, Smith prepared and filed federal and state income tax returns for friends, family members, and others for tax years 2004 through 2008. Those returns allegedly contained false claims for credits and deductions to which the clients were not entitled, as well as falsified income claims. Smith prepared at least 53 fraudulent income tax returns, the indictment says, resulting in a tax loss to the government of approximately $112,300.
As part of her scheme, the indictment alleges, Smith generally told her clients that her fee was between $50 and $75, which she received in cash. However, Smith typically had her client’s tax refunds paid directly to bank accounts in her control or to debit cards for her own personal use, the indictment says, paying herself exorbitant fees frequently in the range of $700 to $1,700 per return.
As part of the scheme, Smith allegedly used information she improperly obtained through her employment with Full Employment Council (FEC) in Kansas City, Mo. Smith was employed in an accounting role at the FEC for several years before resigning in late 2005.
The federal indictment charges Smith with 53 counts of aiding and assisting in the preparation and filing of false and fraudulent tax returns.
The indictment also charges Smith with one count of stealing public money. The indictment alleges that Smith stole more than $19,000 that belonged to the United States by taking portions of inflated tax refunds without the knowledge or authorization of the taxpayers.
The indictment also charges Smith with two counts of aggravated identity theft. Smith allegedly used stolen identity information in order to fraudulently claim dependents for two of her clients, which resulted in those clients receiving inflated refunds. In one instance, the indictment alleges that a client received $4,331 and Smith diverted $2,331 of the refund to herself without the client’s knowledge or consent. In another instance, the indictment alleges that a client received $4,592 and Smith diverted $ 1,300 of the refund to herself without the client’s knowledge or consent.
According to the indictment, Smith has never claimed any income from her tax preparation activities on any of her personal federal income tax returns. The returns that she prepared, the indictment says, did not provide any information that would identify her as the return preparer.
Phillips cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.This case is being prosecuted by Assistant U.S. Attorney Roseann A. Ketchmark. It was investigated by IRS-Criminal Investigation and the Department of Labor – Office of Inspector General.