New Jersey Man Sentenced to 12 Years in Prison for Promoting Tax Fraud Scheme
Deceived IRS Into Issuing More Than $4 Million in Fraudulent Refunds
A New Jersey mortgage underwriter was sentenced today to 12 years in prison for helping others file false tax returns claiming large refunds from the IRS, obstructing the IRS’s efforts to recover those illegal refunds and failing to file a tax return.
John Barry Jr., of Pemberton, was convicted by a jury on July 23 of conspiring to defraud the IRS, aiding and assisting the preparation of false tax returns, obstructing the IRS and failing to file a tax return. According to court documents and testimony, in 2015 and 2016, Barry conspired with individuals in Georgia, North Carolina, Virginia and New York to promote a “mortgage recovery” tax fraud scheme in which Barry and his co-conspirators obtained tax refunds for their clients based on fraudulent tax returns. Barry and his co-conspirators told the clients they could extinguish their outstanding mortgage debts by filing forms with the IRS claiming a large amount of taxes had been withheld. Those withholding claims, which Barry and his co-conspirators knew were false, caused the IRS to issue a total of more than $4 million in refunds to the clients. Barry typically charged each client a fee of between 20% to 35% of the refund the client obtained, and then he split those fees with some of his co-conspirators.
In addition to his role in the “mortgage recovery scheme,” Barry did not file his own 2016 return despite earning income in excess of the filing threshold, and he did not report or pay taxes on the income generated from the scheme in that tax year.
When the IRS discovered the fraud and attempted to recover the wrongfully paid refunds, Barry obstructed the agency by providing clients with fraudulent documents to send to the IRS, directing clients to conceal his role in filing their false returns and advising a client to remove funds from his bank account to prevent collection efforts.
In addition to the term of imprisonment, U.S. District Judge Robert B. Kugler ordered Barry to serve three years of supervised release and to pay approximately $4,240,733 in restitution to the United States.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division made the announcement.
The IRS Criminal Investigation Division investigated the case.
Trial Attorneys Sean Green and Samuel Bean of the Justice Department’s Tax Division prosecuted the case.