PRESS RELEASE

CONTACT: James K. Vines
United States Attorney

Robert C. Watson
Assistant U.S. Attorney

NASHVILLE RETURN PREPARER PLEADS GUILTY IN TAX FRAUD CASE

Nashville, TN - August 14, 2003 – Jim Vines, U.S. Attorney for the Middle District of Tennessee, and Sherree W. Preston, Special Agent in Charge for IRS Criminal Investigation Nashville Field Office, announced that James Leon Wray entered a plea of guilty before U.S. District Judge John T. Nixon to one count of aiding or assisting in the preparation of a false tax return.

Wray was indicted on April 10, 2003, and charged with 29 counts of aiding or assisting in the preparation of fraudulent tax returns. According to the indictment, Wray prepared tax returns for other individuals who claimed deductions that he knew were false and that the individuals were not entitled to claim. The count that to which Wray pled guilty pertains to a 1999 federal income tax return for Terry Johnson dated June 29, 2000. This return claimed a business loss relating to an auto brokerage business and a loss on rental property, which resulted in a tax loss to the government of $18,950.

IRS Criminal Investigation Special Agent John Thompson testified during Wray's plea hearing that Wray marketed himself as a tax recover specialist and overstated his expertise by claiming to have formerly worked for the IRS. Wray orchestrated a scheme to place false information on tax returns to inflate the amount of his clients' refunds. Wray concentrated his practice through high-density employers such as Saturn Corporation and automotive dealerships.

Wray reclassified the employees' positions to make them appear to be self-employed or engaged in Schedule C businesses, Thompson told the court. Wray then prepared a completely false Schedule C, including fictitious income, expenses and net losses. Wray convinced clients that additional expenses could be deducted on their tax returns based upon their occupation and then he charged clients a preparation fee along with a percentage of the amended tax refunds. This percentage ranged between 10% and 50% of the tax refunds. According to testimony during the plea hearing, the potential tax loss to the government for years 1996 through 2000 from Wray's scheme was $561,998.

In July 2002, Judge Nixon ordered Wray to stop preparing federal income tax returns. In a permanent injunction issued by the court, Judge Nixon found that for a flat fee or a percentage of the refund, Wray prepared tax returns reporting fictitious expenses or claiming tax deductions that were not allowable under the Internal Revenue Code. At that time Wray was ordered by the court to notify his clients that he could no longer prepare tax returns and to provide the IRS with a list of those clients.

Wray faces a maximum penalty of up to three years in prison and a fine of up to $250,000. Wray will be sentenced by on October 23, 2003.
This investigation was conducted by IRS Criminal Investigation. Assistant U.S. Attorney Robert C. Watson prosecuted the case for the government.