kC business owner pleads guilty to filing false tax refund claims
nationwide scheme attempted to gain nearly $100 million in fraudulent refunds
KANSAS CITY, Mo. – David M. Ketchmark, Acting United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., business owner pleaded guilty in federal court today to her role in a nationwide tax fraud scheme that attempted to receive nearly $100 million in fraudulent refunds from the IRS in the largest federal false claims case that has ever been prosecuted in Missouri.
Shirley J. Oyer, 71, of Overland Park, Kan., pleaded guilty before U.S. District Judge Brian C. Wimes to filing false claims for tax refunds. Oyer is the owner of ABC Seamless Siding in Kansas City, Mo.
Oyer admitted she participated in a tax refund scheme that was promoted across the United States from July 1, 2008, to Sept. 21, 2011. Conspirators received more than $3.5 million of the total $96 million in attempted fraudulent refunds.
1099-OID Tax Fraud Scheme
Oyer and the other conspirators utilized 1099-Original Issue Discount forms as part of their scheme.
These forms are legitimately used by tax filers who must pay taxes on income they receive from the interest on certain investments, such as some types of bonds. Tax on certain bonds must be paid as income accrues. Such bond holders receive annual forms, called 1099-Original Issue Discount (OID), from the debt issuers. Bond holders then file these OID forms with the IRS, along with their income tax forms.
However, the scheme to which Oyer pleaded guilty today utilized the 1099-OID forms in a nonsensical manner. Clients of the conspirators, working with their branch managers, assembled financial documents such as mortgage and loan statements, car payments, foreclosure records, bank statements, credit card statements, and other records of debt and spending. This debt information – rather than any actual bond income – was used to prepare and/or finalize false tax returns and fictitious Forms 1099-OID.
Oyer was a promoter and branch manager who recruited at least a dozen clients in furtherance of the scheme. She helped these individuals prepare and file at least 26 fraudulent returns, claiming $12.4 million in refunds. Of those attempts, the IRS paid out $92,974 and denied the remainder. Oyer did not file any returns in her name, and her personal total profit from the scheme was $2,862.
When her clients received letters from the IRS alerting them that their filings were frivolous and potentially fraudulent, Oyer assisted her clients by responding to those letters. However, according to today’s plea agreement, one of Oyer’s clients received a warning letter from the IRS in the summer of 2009 advising that her return was frivolous and she would be charged a $5,000 penalty. Oyer told her client that she would send a response letter that would “absolve” her client from the penalty. Oyer never apologized or offered to refund her 10 percent fee or reimburse her client for a subsequent $5,000 penalty.
Oyer’s former accountant had worked for her and ABC Seamless Siding since 1996, including by preparing payroll taxes for the company. For years, according to the plea agreement, he argued with Oyer about taxes. He describes Oyer as one of the most intelligent and manipulative women that he knows. She frequently asked him questions about taxes. Often, she made claims such as that she was a citizen of Kansas and not of the United States and thus she was not responsible for paying federal taxes. That is why she refuses to file any personal tax returns. He explained that everyone has to pay their share, which was fair because everyone has access to roads, hospitals, sewer systems, and other things that our taxes go to pay for. In late 2007 or early 2008, Oyer asked him about 1099-OIDs. Her accountant responded that she could not be making up OID numbers in the manner she described because she was not a bank and this approach was wrong. Oyer later told him that she was helping people send in responses to the IRS about OID returns. On other occasions, the plea agreement says, he explained to her that the way ABC Seamless Siding was set up, as a trust, was a scam and was a classic textbook example of misuse of a trust. That is the same reason that he would not prepare ABC Seamless Siding’s 1041 corporate or partnership returns, nor would he have been willing to sign them. In late 2011, the plea agreement says, he had issues with Oyer getting other people involved in her tax schemes and getting hurt. He told Oyer that he would not work with her anymore because other people were being manipulated and hurt by her tax scams.
Six additional co-defendants have also pleaded guilty. Karen A. Olson, 41, of Wood Dale, Ill., and Mark J. Murray, 50, of Newton, Ala., pleaded guilty on Aug. 7, 2012, to their roles in the scheme. Murray also pleaded guilty to filing false claims for tax refunds. John V. Perdido, 56, of Temecula, Calif., acted as a “branch manager” and recruited clients for the scheme. Perdido received the largest single refund from the scheme – $805,749, which must be forfeited to the government. Robert E. Morris, 66, of Rocklin, Calif., and Earl Lee Davis, 53, of Monroe, La., also pleaded guilty to their roles in the conspiracy. Co-defendant Jennifer S. Wilson, 35, of Cumming, Ga., was sentenced on Aug. 2, 2012, to one year and one day in federal prison without parole after pleading guilty to filing a false claim for a tax refund. The court also ordered Wilson to pay $161,514 in restitution.
Under the terms of today’s binding plea agreement, the government and Oyer jointly ask the court to impose a split custodial sentence of six months in prison plus six months of home detention, followed by three years of supervised release. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
OID Fraud Web Site
A Web site has been established to provide updated information about the status of this investigation. Updates about this investigation and related cases will be posted at www.justice.gov/usao/mow/divisions/OIDfraud.htmlThis case is being prosecuted by Assistant U.S. Attorneys Daniel M. Nelson and Thomas Larson. It was investigated by IRS-Criminal Investigation and the Treasury Inspector General for Tax Administration (TIGTA).