WASHINGTON, D.C. - The Justice Department announced today that a federal court in Monroe, Louisiana, has permanently barred Eddie Ferrand of Monroe and two of his employees, Glenda Faye Elliott of Monroe and William Nathaniel Kennedy of Rayville, Louisiana, from preparing tax returns and ordered Ferrand, Elliott, and Kennedy to turn over or cooperate with the United States in identifying all tax returns and claims for refunds prepared for customers since the beginning of 1999. Ferrand operated his business under the name “Mr. Ed’s Tax Service.” Last month, a jury convicted Ferrand and Kennedy of multiple counts of preparing fraudulent income tax returns and Elliot pleaded guilty to conspiracy to commit the same offense.
The government noted in its complaint that the Internal Revenue Service (IRS) has estimated that taxpayers who filed returns prepared by Mr. Ed’s Tax Service in 2000 and 2001 understated their correct tax liability by more than $45 million. According to the complaint, the company filed more than 6,800 tax returns during that period.
The court adopted the report of a U.S. Magistrate Judge finding that Ferrand, Elliott and Kennedy grossly understated the income on their customers’ federal income tax returns and, when questioned, fraudulently told customers that the IRS was an illegal organization or that only foreigners owe federal income tax. The Magistrate Judge found that Ferrand, Elliott and Kennedy regularly understated customers’ tax liabilities, by claiming false dependents, reporting fictitious business expenses and deductions, and inflating other deductions.
In her report, the Magistrate Judge cited the testimony of a former employee who explained that the defendants’ goal was to create enough income-reducing items to bring their customers’ income to zero.
“People who prepare false or fraudulent tax returns unfairly shift the tax burden to honest taxpayers,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division. “The Department of Justice and the Internal Revenue Service are working vigorously to stop systematic abuses of the tax system.”
The Justice Department has sought and obtained injunctions against more than 170 return preparers and tax-fraud promoters since 2001. Information about this initiative is available at http://www.usdoj.gov/tax/taxpress2006.htm. Information on the Justice Department’s Tax Division is available at http://www.usdoj.gov/tax/tindex.html.