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Manhattan U.S. Attorney Charges Bronx Tax Preparer In Scheme Involving $7 Million In Fraudulent Deductions

FOR IMMEDIATE RELEASE
Tuesday, November 20, 2012

Defendant Charged With 46 Counts For Filing Tax Returns With The IRS And New York State That Contained Over $7 Million In Fraudulent Deductions And Credits Resulting in Over $2.5 Million in Fraudulent Refunds

Preet Bharara, the United States Attorney for the Southern District of New York, Robert Johnson, the District Attorney for Bronx County, Toni Weirauch, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), and Thomas H. Mattox, Commissioner of the New York State Department of Taxation and Finance (“DTF”), announced today the Indictment of MARK GOLDBERG, a Bronx tax preparer, for his participation in a multi-year tax fraud scheme during which he prepared for clients thousands of tax returns that contained millions of dollars in fraudulent, itemized deductions and tax credits. GOLDBERG surrendered to the IRS this morning and is scheduled to appear before Chief U.S. District Judge Loretta A. Preska this afternoon for arraignment.

Manhattan U.S. Attorney Preet Bharara said: “As alleged, Mark Goldberg consistently, systematically, and brazenly cheated both the United States and New York State treasuries out of $2.5 million in tax revenue by claiming fraudulent credits and deductions for his clients and himself. However, thanks to the coordinated efforts of law enforcement, Goldberg’s alleged seven-year tax crime spree has ended, and he will have to answer for his conduct.”

Bronx District Attorney Robert T. Johnson said: “The greed-driven crimes that are alleged here are particularly offensive in light of the recent years of economic difficulty. Fraudulent tax filings have deprived federal, state and local governments of millions of dollars that could have been used to provide communities, families and individuals with much needed services. If these allegations are determined to be true, this defendant must be held accountable and punished appropriately.”

IRS-CI Special Agent-in-Charge Toni Weirauch said: “Today’s indictment illustrates how seriously federal and state tax authorities take return preparer fraud and how they can work cooperatively to investigate unscrupulous tax return prepares. The public is reminded to choose a tax return preparer carefully, as a taxpayer is ultimately responsible for what is reported on his or her tax return. Taxpayers should use common sense and ask questions, especially if a refund or a deduction sounds too good to be true.”

NYS Dept. of Taxation and Finance Commissioner Thomas Mattox said: “I commend United States Attorney Bharara and District Attorney Johnson for their ongoing work to prosecute this individual. Each year, millions of New Yorkers trust that their tax preparers are adhering to honest and ethical business practices. Mr. Goldberg allegedly betrayed that confidence and, on behalf of the victims of his crimes, must be brought to justice. Our Department will continue to work closely with local, state and federal law enforcement to detect and prosecute tax-related crimes, such as this.”

According to the allegations in the Indictment returned yesterday in Manhattan federal court and other documents in the public record:

GOLDBERG was in the business of preparing U.S. Individual Income Tax Returns and New York State Income Tax Returns for his clients (the “Clients”) in exchange for fees. He carried out his tax preparation business principally through various Bronx, New York, business entities he owned and controlled, including E & M Multi Services, Inc. and MG Business Group, Inc. As part of the scheme, GOLDBERG typically filed his Clients’ tax returns electronically, using Electronic Filing Identification Numbers (“EFINs”) and a Preparer Tax Identification Number (“PTIN”) obtained from the Internal Revenue Service (“IRS”) in the names of other people, including his father –who had no involvement in GOLDBERG’s tax preparation activities—in an effort to avoid having his own name associated with the Client tax returns he prepared. After he procured the EFINs and PTIN in other people’s names, GOLDBERG prepared thousands of false and fraudulent income tax returns to be filed with the IRS and the New York State Department of Taxation and Finance.

Between 2005 and April 2012, the tax returns GOLDBERG prepared and filed for his clients contained numerous fabricated and fraudulently inflated items, including: (i) higher education, or “tuition” credits; (ii) tuition expenses; (iii) un-reimbursed employee business expenses; (iv) medical and dental expenses; (v) gifts to charity; (vi) business income and losses; (vii) rental real estate losses; and (viii) earned income tax credits. GOLDBERG also prepared and filed tax returns for himself that fraudulently claimed: (i) that he had received significant amounts of wage income from which taxes had been withheld; (ii) that he had paid significant amounts of state and local taxes; (iii) tuition credits; and (iv) significant refunds.

Because GOLDBERG included fabricated and inflated items on the Clients’ Federal and New York State tax returns, the Clients’ tax liabilities were incorrectly reduced and they received IRS and New York State refunds to which they were not entitled. In addition, in return for preparing the aforementioned tax returns GOLDBERG received over $400,000 in fees from Clients. In total, GOLDBERG filed tax returns with the IRS and New York State that contained over $7 million in fraudulent deductions, expenses, and credits, thereby allowing his clients to receive over $2.5 million in refunds to which they were not entitled.

In order to prevent GOLDBERG from receiving the proceeds of his tax preparation scheme, investigators seized approximately $402,000 that had been contained in a bank account that GOLDBERG utilized to hold the fees he was paid by Clients. Yesterday, a civil Complaint was filed in Manhattan federal court seeking to forfeit these funds, as well as the contents of a bank account containing refunds distributed to clients of GOLDBERG’s tax preparation business using prepaid cards. The civil forfeiture action has been assigned to Judge Andrew L. Carter, Jr.

GOLDBERG was previously charged with personal tax offenses in Bronx Supreme Court after an investigation was undertaken by DTF and the Bronx District Attorney’s Office. The investigation and prosecution of GOLDBERG’s tax preparation fraud was taken over by federal authorities pursuant to an agreement reached between Manhattan Federal prosecutors, the Bronx District Attorney’s Office, and DTF.

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GOLDBERG, 39, of Bronx, NY, is charged with 40 counts of aiding and assisting the preparation of false and fraudulent tax returns for his clients; four counts of signing and filing fraudulent tax returns for himself, one count of obstructing the IRS, and one count of engaging in a wire fraud scheme to defraud the IRS and DTF. Each of the 44 false return counts carries a maximum sentence of three years in prison, as does the IRS obstruction count. The wire fraud count carries a maximum sentence of 20 years in prison. In total, GOLDBERG faces a maximum jail term of 155 years.

Mr. Bharara praised the investigative work of the IRS and DTF. He also stressed that the investigation is ongoing.

This case is being handled by the Office's Complex Frauds Unit. Assistant U.S. Attorneys Stanley Okula and Paul Monteleoni, and Graham Van Epps, an Assistant District Attorney with the Bronx District Attorney’s Office who is designated as a Special Assistant United States Attorney in this case, are in charge of the prosecution.

The charges contained in the Indictment are merely accusations and the defendant is presumed innocent unless and until proven guilty.

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U.S. v. Mark Goldberg Indictment(PDF)

 

 

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