oak grove couple sentenced for $800,000 tax fraud scheme
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that an Oak Grove, Mo., husband and wife were sentenced in federal court today for an $800,000 tax fraud scheme and related charges of mail fraud, money laundering and using fictitious financial instruments.
Joshua Simonson, 35, and his wife, Kristen Simonson, 35, of Oak Grove, were sentenced by U.S. District Judge Dean Whipple. Joshua Simonson was sentenced to 12 years and seven months in federal prison without parole. Kristen Simonson was sentenced to five years and 11 months in federal prison without parole. The court also ordered the Simonsons to pay $810,218 in restitution (the government has already seized $129,000 from the Simonsons).
The Simonsons were convicted by a federal jury on Dec. 5, 2012, of all 11 counts contained in a 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 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 utilizing fictitious obligations.
This case was 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).