March 13, 2003 - PHILADELPHIA Patrick L. Meehan, United States Attorney for the Eastern District of Pennsylvania and Jerome D. Lisuzzo, Special Agent-in Charge, Philadelphia Field Office, Internal Revenue Service Criminal Investigation, today announced the filing of an indictment and separate criminal information charging three defendants with preparing false income tax returns, which resulted in an attempted, combined loss to the United States of more than $720,000. In one case, Vernon Walker and Pearl Scott prepared tax returns for hundreds of clients, many of whom spoke little or no English. The indictment alleges that the defendants ensured refunds for their clients by inventing deductions. The clients would then receive discounts if they returned to the defendants for preparation the following year.
In the second case, Rosemarie Loftus Burnett advised some of her clients that they were entitled to claim a slavery reparation tax credit in excess of $8,000 on their federal income taxes if the taxpayers were the descendants of slaves, when in fact the defendant knew that such a tax credit was fraudulent and did not exist. She also requested that satisfied customers refer others to her for preparation.
"As the charges allege, these are cases in which client bases were built on deception," said Meehan. "As the April 15th deadline approaches, these prosecutions should send the message that profiting at the expense of the law or a client's trust cannot and will not be tolerated."
Lisuzzo warns consumers to select wisely. "Taxpayers should be as careful in choosing their preparer as they would in choosing a doctor or a lawyer. Even if someone else prepares your return, you are ultimately financially responsible for any taxes or penalties owed," he said.
"VMW Tax"
Vernon Walker and Pearl Scott are charged with conspiracy to defraud the United States by interfering with the Internal Revenue Service (IRS) in the ascertainment and computation of taxes in violation of Title 18, United States Code, Section 371 (Count 1) and aiding the preparation of false tax returns in violation of Title 26, United States Code, Section 7206(2) (Counts 2-14).
The indictment alleges that from in or about 1988 until Spring 2001, Walker was the owner and operator of a tax preparation business, VMW Tax and Financial Consultants ("VMW Tax"), located at 1425 Point Breeze Avenue, in Philadelphia, Pennsylvania. It is further alleged that from in or about 1996 until in or about 1999, Scott worked at VMW Tax as a tax preparer. From at least 1996 through at least in or about April 15, 1999, Walker and Scott allegedly prepared false tax returns for hundreds of clients, many of whom were members of the Philadelphia area's immigrant Vietnamese and Cambodian community and spoke little English. Walker and Scott did not speak either language, and their customers relied on Walker's and Scott's expertise to prepare their tax returns properly. The indictment alleges that the defendants ensured that their clients would receive sizable refunds generally by inventing Schedule A itemized deductions and Schedule C business loss that were false. It is alleged that the clients paid cash fees to Walker and Scott, and would receive discounts if they returned to VMW Tax for preparation of the following year's returns.
"The language barrier made these clients vulnerable," said Meehan. "They had no choice but to trust that those preparing their returns were doing it property. Instead, as the indictment alleges, that trust was betrayed and converted to cash."
In total, from in or about 1997 until on or about April 15, 1999, Walker and Scott allegedly falsely prepared approximately 312 tax returns for tax years 1996, 1997, and 1998 on behalf of approximately 241 taxpayers, which caused the IRS to calculate and provide refunds to which the taxpayers were not entitled and resulted in a tax loss of approximately $546,042.
If convicted, Walker faces a maximum penalty of 35 years imprisonment, a three year period of supervised release, a $1,250,000 fine, and a $1100 special assessment. Scott faces a maximum penalty of 26 years imprisonment, a three year period of supervised release, a $950,000 fine, and a $800 special assessment.
|
|
|
|
|
|
|
|
|
Rosemarie Loftus Burnett
Rosemarie Loftus Burnett is charged with knowingly preparing false federal income tax returns for others, in violation of Title 26, United States Code, Section 7206. The information alleges that Loftus Burnett prepared tax returns for clients which claimed deductions and/or tax credits which were false and fraudulent, resulting in an attempted tax loss to the United States of at least $175,133.
Burnett advised her clients which deductions could be inflated and how much those deductions could be inflated without creating undue suspicion by the Internal Revenue Service. She also told some of her clients that they were entitled to claim a slavery reparation tax credit in excess of $8,000 on their federal income taxes if the taxpayers were the descendants of slaves, when in fact the defendant knew that such a tax credit was fraudulent and did not exist. She charged her clients approximately $50 to prepare each amended federal income tax return and requested that satisfied customers refer others to her.
If convicted of these offenses, the defendant faces a maximum sentence of 117 years imprisonment, a $390,000 fine, 1 year of supervised release, and a $3,900 special assessment.
|
|
|
|
Philadelphia, PA 19130 |
|
This case has been assigned to Assistant United States Attorney Wendy Kelly and was investigated by Internal Revenue Service Criminal Investigation and the Pennsylvania Department of Revenue, Office of Criminal Tax Investigations.
UNITED
STATES ATTORNEY'S OFFICE EASTERN DISTRICT, PENNSYLVANIA Suite 1250, 615 Chestnut Street Philadelphia, PA 19106 |
Contact: RICH MANIERI Public Affairs 215.861.8525 |