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Tuesday, March 9, 2010

Federal Court in Los Angeles Shuts Down Tax Firm for Requesting $23 Million in Bogus Tax Refunds

Covina, Calif. Woman Requested Fraudulent Refunds By Falsifying Tax Returns and Other IRS Forms

A federal court in Los Angeles has permanently barred Nyla McIntyre of Covina, Calif. and her business, Approved Financial Services, Inc., from preparing tax returns for others, the Justice Department announced today. U.S. District Judge George H. King found that McIntyre requested more than $23 million in fraudulent income tax refunds for customers using "a tax fraud scheme that involves filing fraudulent federal income tax returns and other documents, including Forms 1099-OID and Forms Schedule B, with the IRS...." McIntyre "advised a number of clients that they could file fraudulent IRS Forms 1099-OID in order to secure refunds that would help pay off mortgage and/or credit card debts," according to the court.

The court found that McIntyre requested at least 62 fraudulent refunds using her tax scheme, which "is based in part on McIntyre’s apparent belief that secret accounts exist that can be accessed to pay these bogus refund claims." For example, court papers filed in the case showed that McIntyre requested a $2.7 million dollar fraudulent refund for a married couple residing in La Quinta, California, and a $1.1 million dollar bogus refund for a couple from Pine Grove, California. The court permanently barred McIntyre from preparing returns because "her continued work as a professional tax preparer will permit her to perpetuate this fraudulent scheme and succeed with respect to a fraction of the submissions."

On January 4, 2010, an Idaho court shut down tax preparer Penny Lea Jones for using the same OID scheme to claim $93 million in bogus refunds for customers. On September 9, 2009, a Sacramento court found that preparer Teresa Marty had been using the same scheme to generate bogus refunds for her customers, and permanently barred her from preparing tax returns for others.

John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, thanked Grayson Hoffman, the Justice Department trial attorney who handled the case, and Shauna Henline, the IRS senior technical advisor who conducted the investigation.

In the past decade, the Justice Department’s Tax Division has obtained more than 455 injunctions against tax fraud promoters and dishonest tax return preparers. Information about these cases is available on the Justice Department’s Web Site.

Press Release Number: 
Updated September 15, 2014