COLORADO TAX RETURN PREPARERS SENTENCED TO FEDERAL PRISON FOR PREPARING OVER 400 FALSE TAX RETURNS
DENVER – Loren Smith, age 64, of Broomfield, Colorado, and Curtis Duff, age 46, of Golden, Colorado, were sentenced last week by U.S. District Court Christine M. Arguello to serve prison terms for preparing false tax returns, Acting United States Attorney David Gaouette and Internal Revenue Service Criminal Investigation Special Agent in Charge Christopher M. Sigerson announced. Smith was sentenced to serve 24 months, and Duff was sentenced to serve 23 months. Following their release from prison, Smith and Duff were ordered to serve 3 years of supervised release. A hearing to determine the amount of restitution the two must pay is set for September 11, 2009. Judge Arguello ordered Smith and Duff to report to a facility designated by the U.S. Bureau of Prisons 15 days after the facility is designated.
On March 12, 2009, Smith and Duff pled guilty to an Information that was filed on January 29, 2009, for one count of mail fraud and two counts of aiding and abetting in the preparation and filing a false tax returns. The two were sentenced on Monday, July 6th, 2009.
According to information contained in the charging documents and the plea agreements, Duff and a co-conspirator owed and operated a Colorado Corporation named Windfall Tax and Financial Services ("Windfall"), located in Wheat Ridge, Colorado, whose primary business was to seek tax refunds for customers by preparing and filing amended, individual tax returns with the Internal Revenue Service (“IRS”) and the Colorado Department of Revenue (“CDR”) on behalf of such customers.
Smith and Duff filed, or assisted in the preparation and filing of over 400 amended tax returns with the IRS containing falsified information, resulting in the IRS improperly refunding $550,191 to taxpayers for tax years 2002 through 2004. The defendants also filed, or assisted in the preparation and filing of over 300 amended returns with the Colorado Department of Revenue (CDR), containing falsified information, resulting in the Colorado Department of Revenue refunding $111,495 to taxpayers for tax years 2002 through 2004. As a general practice, the defendants charged customers a percentage of the IRS and CDR refund payments, typically ranging from 40% to 50% of such government refund payment.
Duff and a co-conspirator started operating Windfall around March of 2005. Windfall ceased operations around March of 2006. Loren Smith served as the primary tax preparer during the approximately one year period that Windfall operated. Smith, among other things, was responsible for applying his expertise and knowledge regarding taxes to prepare amended tax returns for Windfall customers.
As part of the scheme, defendants Duff, a co-conspirator, and Smith, made or caused to be made, material false and fraudulent statements and representations on amended, individual tax returns filed with the IRS and CDR. Such false and fraudulent information typically related to the amount of the customers’ charitable contributions, business expenses, and business losses for a given tax year. On numerous returns, Windfall listed fictitious businesses for the taxpayers and claimed large business losses or expenses for such taxpayers as a way to generate a larger refund. After the fraudulent amended returns were created, Duff, a co-conspirator, and sometimes Smith would obtain a customer's signature on the returns without fully explaining or noting the various false entries and inflated numbers added to such returns. In a number of instances where customers questioned Duff, a co-conspirator or Smith regarding the legitimacy of certain figures on amended returns, Duff, a co-conspirator, and/or Smith typically misinformed such customers that the claimed deductions were legitimate and properly allowed for by IRS rules and regulations.
“Taxpayers need to thoroughly check out anyone who you let prepare your tax returns,” said Acting U.S. Attorney David Gaouette.
“Taxpayers should choose carefully when hiring a tax preparer and avoid preparers who base their fee on a percentage of the refund,” said Christopher M. Sigerson, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office. “Poor choices cost taxpayers as they are responsible for filing accurate returns.”
This case was investigated by the IRS Criminal Investigation and Colorado Department of Revenue.
The case was prosecuted by Assistant U.S. Attorney Tim Neff.
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