BROTHER AND SISTER TAX PREPARERS PLEAD GUILTY IN FRAUDULENT TAX RETURN SCHEME
TUESDAY OCTOBER 25, 2011
Public Affairs Officer
COLUMBUS – Sherrel D. Smith, 42, and her brother Stephen Eugene Brooks, Jr., 40, pleaded guilty here today to charges of aiding and assisting in the preparation and filing of false federal income tax returns with the Internal Revenue Service (IRS).
Carter M. Stewart, United States Attorney for the Southern District of Ohio, and Darryl Williams, Special Agent in Charge of the Cincinnati Field Office of the Internal Revenue Service Criminal Investigation, announced the guilty pleas entered today before U.S District Judge Algenon L. Marbley.
According to court documents, Smith pleaded guilty to two counts of willfully aiding and assisting in the preparation of false federal income tax returns with the IRS. Brooks pleaded guilty to one count of aiding and assisting in the filing of a false federal income tax return. Smith, who operated a tax preparation service under the name Executive Decisions at 5848 Emporium Square in Columbus, and Brooks, who brought in clients on a part-time basis, filed federal income tax returns using inflated or false Schedule A deductions, Schedule C business expenses with respect to purported sole proprietorships, Schedule E rental expenses regarding partnerships and rental real estate businesses, and use of an inappropriate filing status in order to obtain a false Earned Income Tax Credit.
To further her scheme and conceal her fraudulent activities, Smith altered documents and created false documents in support of the bogus and inflated deductions she placed on her clients’ income tax returns, one of which was submitted to an IRS Revenue Agent on behalf of a client under audit.
Pursuant to the plea agreement, Smith and Brooks agreed to be permanently enjoined from preparing or filing federal income tax returns on behalf of third parties.
Smith’s and Brook’s actions resulted in hundreds of their clients being audited and assessed income taxes by the IRS. Brooks agreed to pay restitution to the IRS in the amount of $13,933, and Smith agreed to pay restitution to the IRS in the amount of $241,886.
Smith and Brooks were released on bond pending sentencing which will be set at a later date. Both face a maximum prison sentence of 3 years and a fine of up to $100,000.
Stewart commended the IRS agents who investigated the case and Assistant U.S. Attorney Dan Brown who is prosecuting the case.