Federal Court Bars Individual Return Preparers and Sarasota Firms from Preparing Tax Returns

WASHINGTON - A federal court in Tampa, Fla., has permanently barred Daniel Prewett from preparing tax returns for others, the Justice Department announced today. The court also barred Prewett from helping customers hide income offshore to avoid taxes, and from promoting other tax-dodging schemes. The court has also enjoined Prewett’s wife, Elizabeth George; former Prewett employees Frances Carlson, Elsie Chouinard and Natalie Swaney; and Prewett’s three tax preparation businesses, listed below.  The injunctions against Chouinard and George permit them to continue preparing tax returns, but bar them from certain specified conduct when they do so.  The individual defendants agreed to the injunctions.

The government sued the defendants in September of 2007, alleging in the civil injunction complaint that Prewett controlled a company that bought Jackson Hewitt tax preparation franchises in Florida in 1993, using a friend as nominal owner to conceal Prewett’s criminal record and ownership from the franchiser Jackson Hewitt Tax Service Inc. —the nation’s second largest tax preparation firm.

In late 2006, Prewett was arrested on federal charges related to cocaine distribution and money laundering. A jury convicted Prewett and he was given an 18-year sentence last June.

According to the injunction complaint, Prewett and the other defendants used a number of schemes to under-report customers’ tax liabilities, including helping customers set up fictitious domestic businesses to disguise fraudulent business deductions for bogus business expenses and personal assets, such as motorcycles, ATVs and jet skis. According to the complaint, one customer – a dentist – used the defendants’ scheme to claim fraudulent deductions for the cost and operational expenses of his $781,000 47-foot yacht, which he used solely for his personal pleasure. The defendants’ schemes cost the U.S. Treasury more than $130 million dollars, according to the complaint.

Injunction Details

John A. DiCicco, Acting Assistant Attorney General in charge of the Justice Department’s Tax Division, thanked trial attorney Grayson Hoffman, who handled the case, and Ricky Poole and Heather Walters-Cole, revenue agents with the IRS’s Small Business / Self-Employed Division, who conducted the investigation.

In the past decade the Justice Department’s Tax Division has obtained injunctions against more than 395 tax preparers and tax-fraud promoters. Information about these cases is available on the Justice Department Web site.