jury convicts oak grove couple of $800,000 tax fraud scheme
KANSAS CITY, Mo. – David M. Ketchmark, Acting United States Attorney for the Western District of Missouri, announced today that an Oak Grove, Mo., husband and wife have been convicted in federal court of an $800,000 tax fraud scheme and related charges of mail fraud, money laundering and using fictitious financial instruments.
Joshua Simonson, 34, and his wife, Kristen Simonson, 35, of Oak Grove, were found guilty on Wednesday, Dec. 5, 2012, of all 11 counts contained in a Sept. 21, 2011, federal indictment.
Evidence introduced during the trial indicated that Joshua and Kristen Simonson participated in a conspiracy to defraud the government by filing fraudulent tax returns. They received more than $800,000 in refunds for taxes they claimed were withheld on interest income they earned. In reality, they had not earned – or paid tax on – any interest income. None of the banks, creditors or lenders that were listed on their submitted Forms 1099-OID actually issued those fictitious documents. The Simonsons calculated those fraudulent Forms 1099-OID according to an arbitrary and capricious formula (they aggregated their debts), which in no way constituted actual interest income.
In addition to the conspiracy, Joshua Simonson was convicted of one count of filing false claims for tax returns and Kristen Simonson was convicted of two counts of filing false claims for tax returns.
The Simonsons recruited a former tax preparer in California to prepare their tax returns for 2006 and 2007. The Simonsons reviewed and signed their fraudulent tax returns. Kristen Simonson mailed her 2006 and 2007 returns to the IRS, for which she was convicted of two counts of mail fraud. Joshua Simonson submitted his 2007 return electronically.
As a result of their fraudulent claims, the Simonsons received three refund checks totaling $810,218. Kristen Simonson received a $582,277 refund check and a $4,215 refund check. Joshua Simonson received a $223,726 refund check.
In an effort to prevent the IRS from seizing the fraudulent refunds, Joshua Simonson tried to conceal the money by moving it among various dummy bank accounts and trusts. As a result, Joshua Simonson was convicted of two counts of money laundering. Joshua Simonson used criminally derived proceeds to purchase a $50,529 sport utility vehicle, for which he was convicted of a third count of money laundering.
The IRS repeatedly called, sent letters and visited the Simonsons, indicating the government’s intention to recover the fraudulent funds. In response, Joshua Simonson mailed a package to the IRS containing two signed, fictitious checks totaling more than $1.3 million. The checks were purportedly drawn on the Federal Reserve Bank of Atlanta, Ga. As a result, Joshua Simonson was convicted of two counts of uttering fictitious obligations.
Following the presentation of evidence, the jury in the U.S. District Court in Kansas City, Mo., deliberated for about two hours before returning the guilty verdict Wednesday evening to U.S. District Judge Dean Whipple, ending a trial that began Monday, Dec. 3, 2012.
Under federal statutes, Joshua Simonson is subject to a sentence of up to 95 years in federal prison without parole and Kristen Simonson is subject to a sentence of up to 60 years in federal prison without parole. The Simonsons are also subject to a fine and an order of restitution. The government has seized $129,000 from the Simonsons; after learning of the federal investigation, they repaid $2,000.
Sentencing hearings will be scheduled after the completion of presentence investigations by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorneys Daniel M. Nelson and Roseann Ketchmark. It was investigated by IRS-Criminal Investigation and the Treasury Inspector General for Tax Administration (TIGTA).