News and Press Releases

Man Pleads Guilty to Preparing a False Tax Return

   
March 30, 2012

HOUSTON - Kermit Woods has pleaded guilty to one count of willfully aiding and assisting in the preparation and presentation of a false U.S. Individual Income Tax Return, United States Attorney Kenneth Magidson announced today along with Lucy Cruz, special agent in charge of Internal Revenue Service – Criminal Investigations (IRS-CI).

"We want everyone who files a tax return to take advantage of the deductions and credits to which they are entitled by law; however, no one is entitled to defraud the government," said Cruz. “Tax return preparers and taxpayers thinking about preparing and filing false tax returns by failing to report all forms of income, claiming various false or inflated deductions should stop in their tracks and simply look at the consequences. The courts have overwhelmingly and consistently shown that you will be held accountable for such actions and today's guilty plea is a reminder of IRS-CI’s commitment to pursuing those who attempt to harm our tax system."

Today, Woods entered his plea before U.S. District Judge Gray H. Miller, admitting he prepared a false 2008 income tax return for a client resulting in a tax loss to the United States of $10,622. In the written plea agreement filed of record of the case, Woods further admitted he owned and operated an income tax preparation business in Houston, known as L&L Finance.  Woods agreed in the plea agreement to pay restitution to the United States in the amount of $362,340, which is the amount of the tax loss on false income tax returns he prepared at L&L Finance during years 2004 through 2008. Woods further admitted that four months after the IRS notified him he was under a criminal tax investigation, he filed amended income tax returns for his own personal income tax years 2005 through 2008 reporting previously unreported income, including unreported income from L&L Finance, and paid taxes with the amended returns of $346,479. Woods also admitted that in an attempt to conceal his income and assets from the IRS, he placed certain items he purchased in the name of another person, the home he built for himself, his investment real estate, the title to his Jaguar automobile and the title to his boat.

Judge Miller has set sentencing for June 29, 2012, at which time Woods faces up to three years of imprisonment and a $250,000 fine.

This matter was investigated by IRS-CI and is being prosecuted by Assistant U.S. Attorney Charles J. Escher and by Department of Justice Tax Division Trial Attorney Tracy Gostyla.

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