New Jersey Man Indicted for Promoting Tax Fraud Scheme
Allegedly Caused IRS to Issue More Than $3 Million in Refunds on False Claims
A Pemberton, New Jersey, man appeared in court yesterday on a federal grand jury indictment charging him with conspiring to defraud the United States, assisting in the filing of false tax returns, obstructing the internal revenue laws, and failing to file a tax return, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division. The Sept. 2, 2020 indictment was unsealed following the court appearance.
According to the indictment, John W. Barry, Jr., conspired with individuals in Georgia, North Carolina, Virginia, and New York to promote a “mortgage recovery” tax fraud scheme in which they obtained for their clients tax refunds from the IRS based on fraudulent tax returns. Barry and his coconspirators allegedly represented to clients that they could extinguish their outstanding mortgage debts by filing forms with the IRS and then caused clients to file forms and tax returns that fraudulently claimed that a substantial amount of taxes had already been withheld from them. These false withholding claims allegedly caused the IRS to issue more than $3 million in refunds to clients. According to the indictment, Barry typically charged each client a fee of between 20 and 35 percent of the refund the client obtained, and then split those fees with his coconspirators. The indictment also charges that Barry did not file his own 2016 return, and thus did not report or pay any taxes on any income generated from his scheme.
The indictment further alleges that when the IRS discovered the fraud and attempted to recover the wrongfully paid refunds, Barry took steps to obstruct the agency by: providing clients with fraudulent documents to send to the IRS, directing clients to conceal from the IRS his role in filing their false returns, and advising a client to remove funds from his bank account in order to thwart IRS collection efforts.
If convicted, Barry faces a maximum sentence of five years in prison for conspiracy, three years in prison for each false tax return count, three years in prison for obstructing the internal revenue laws, and one year in prison for failing to file a tax return. He also faces a period of supervised release, restitution, and monetary penalties.
An indictment merely alleges that crimes have been committed. The defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Acting Deputy Assistant Attorney General Goldberg thanked special agents of IRS-Criminal Investigation, who conducted the investigation, and Assistant Chief John Kane and Trial Attorney Sean Green of the Tax Division, who are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.