Woman Who Defrauded IRS of $336,926 Sentenced to 24 Months in Prison
BOISE – Mary Galan, 66, of Twin Falls, Idaho, was sentenced today in United States District Court to 24 months in prison, followed by three years of supervised release, for the crime of conspiracy to defraud the United States, namely the Internal Revenue Service (“IRS”), U.S. Attorney Wendy J. Olson announced. Chief U.S. District Judge B. Lynn Winmill also ordered Galan to forfeit and pay restitution of $336,926 to the IRS. Galan pleaded guilty to one-count of conspiracy on October 19, 2016.
“This prosecution and sentence send the clear message that those who defraud the federal government by claiming tax credits to which they are not entitled will be swiftly and surely brought to justice,” said Olson. “This defendant’s scheme cheated all taxpayers, and therefore all Americans.”
According to the plea agreement, since approximately 2006, Galan owned and operated Galan Accounting in Twin Falls, Idaho, which prepared tax returns for clients. Beginning in or about 2013 and continuing through in or about 2015, Galan conspired to defraud the IRS in its collection of her clients’ income taxes. She did so by claiming education credits on clients’ tax returns, through the American Opportunity Credit, knowing that the clients did not pay qualified higher education expenses for an eligible student, and thereby, did not qualify to claim the credit.
As set forth in the plea agreement, for tax years 2012 through 2014, Galan and her co-conspirators prepared 187 tax returns for 165 taxpayer clients claiming $342,901 in education credits from the College of Southern Idaho. These returns claimed $787,630 in qualified expenses from the school. Records from the College of Southern Idaho show that, of the $787,630 in qualified expenses claimed, only $8,905 in qualified expenses for only six students were actually paid. These payments would have legitimately generated $5,975 in education credits, not $342,901, for a tax loss of $336,926.
According to the plea agreement, before claiming the education credits on their taxpayer clients' behalf, Galan did not ask taxpayer clients if they were paying for education or for documentation supporting the credits. Rather, Galan merely asked taxpayer clients' if they had children of college age. For some taxpayer clients, Galan prepared tax returns directing the IRS to deposit refunds - belonging to taxpayer clients - into personal bank accounts belonging to Galan and her co-conspirators. In total, Galan received direct deposits of taxpayer client refunds of $219,490.
“Tax return preparers have a duty to their clients to prepare tax returns that comply with the law and are complete and accurate,” said Steven Osborne, Special Agent in Charge, IRS-Criminal Investigation for the state of Idaho. "Our special agents use their investigative and financial expertise to detect and hold accountable abusive tax return preparers who falsely tell taxpayers they are eligible for tax credits that they are not entitled to receive.”
The case was investigated by the Internal Revenue Service, Criminal Investigation.
Today's announcement is part of efforts underway by the Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.