Canadian Man Pleads Guilty to Conspiring to Defraud the United States and Steal Government Funds
A Canadian man pleaded guilty today in Rochester, New York to conspiring to defraud the United States and commit theft of government funds, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney James P. Kennedy Jr. for the Western District of New York.
According to documents filed with the court, Timothy Johnston, 36, of Calgary, Alberta, Canada, along with other Canadian citizens, participated in a scheme to file fraudulent claims for refund with the Internal Revenue Service (IRS). In March 2009, Johnston filed a fraudulent nonresident alien income tax return seeking a refund of $642,947.26. On this return, Johnston falsely claimed that the requested refund represented the amount of income taxes that had been withheld and paid to the IRS on his behalf. After the IRS issued the refund to Johnston, he entered the United States and opened a bank account in Rochester, New York to deposit the fraudulently obtained check. Between August 2009 and December 2011, Johnston caused funds to be transferred from this account to a bank account in Canada and accounts in the United States in the names of his co-conspirators.
U.S. District Judge Frank P. Geraci Jr. of the Western District of New York scheduled sentencing for Sept. 12. Johnston faces a statutory maximum sentence of five years in prison, a period of supervised release and monetary penalties. As part of his plea agreement, Johnston agreed to pay restitution to the IRS in the amount of $642,947.26.
Johnston is the third Canadian citizen to be convicted for his role in this scheme. In January 2016, Kevin Cyster of Burlington, Ontario, was sentenced to 135 months in prison after a jury convicted him of conspiring to defraud the United States and commit theft of government funds, making a false claim against the United States and transferring stolen money in foreign commerce. In June 2014, Renee Jarvis, also of Ontario, pleaded guilty to conspiring to defraud the United States and commit theft of government funds. She is awaiting sentencing.
Acting Deputy Assistant Attorney General Goldberg and Acting U.S. Attorney Kennedy thanked special agents of IRS Criminal Investigation, who conducted the investigation, and Trial Attorneys Melissa S. Siskind and Thomas F. Koelbl of the Tax Division, and Assistant U.S. Attorney John Field of the Western District of New York, who are prosecuting this case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.