Justice Department Sues to Shut Down Houston Tax Preparer
Before Incarceration, Defendants Used False Art Appraisals to Purportedly Reduce Customers’ Liabilities
The United States has filed a lawsuit asking a federal district court in Houston, Texas, to permanently bar two men from preparing false tax returns, the Justice Department announced today. The defendants named in the lawsuit are John E. Carter, individually and doing business as Midwestern Financial Group Inc., and Sulayman Mamadou Jarra, individually and doing business as African Art Appraisal Services.
According to the complaint, Carter promoted a tax evasion scheme to his clients, telling them they could reduce their federal tax liability by supposedly donating African tribal art to an educational institution or museum. The complaint states that Carter provided his clients with an appraisal by Jarra that substantially overvalued the art, and that for many of the returns, the signature was forged on the Internal Revenue Service (IRS) form where the institution purportedly acknowledged receipt of the art. Carter then used the false appraisal to prepare tax returns for his customers, claiming false deductions for charitable donations, according to the complaint.
Carter was convicted in 2014 of five counts of willfully aiding and assisting in the preparation and presentation of false tax returns. He was sentenced to 41 months in prison. In 2013, Jarra pleaded guilty to one count of aiding and assisting in the preparation and presentation of false tax returns; he received a sentence of probation.
Return preparer fraud is one of the Internal Revenue Service’s Dirty Dozen Tax Scams for 2016. The IRS has some tips on their website for choosing a tax preparer and has launched a free directory of federal tax preparers. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.