Two Indicted For Operating $700,000 "Payday Loan" Tax Scheme
The managers of two Instant Tax Service offices in Toledo were indicted on several charges related to a $700,000 “payday loan” tax-refund scheme, said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
“These defendants preyed upon clients who were in some cases desperate and in other cases not financially experienced,” Dettelbach said. “We will continue to work with the IRS to prosecute those who would abuse tax laws.”
IRS Criminal Investigation Special Agent in Charge Kathy A. Enstrom said: “Individuals who commit refund fraud and identity theft of this magnitude and with this degree of trickery, dishonesty and deceit, deserve to be punished to the fullest extent of the law. Be assured that IRS Criminal Investigation, together with our partners at the U.S. Attorney's Office, will hold those who engage in similar behavior fully accountable."
Adonay Mehreteab, age 27, of Fort Wayne, Indiana and Miranda Parr, age 32, of Heath, Ohio, are charged with conspiracy, wire fraud and making false, fictitious, or fraudulent claims to the Internal Revenue Service for tax year 2011. Parr faces an additional charge of aggravated identity theft.
Mehreteab owned and operated two Instant Tax Service franchise offices, one on Monroe Street and the other on Airport Highway. Mehreteab and Parr managed the offices, according to the indictment.
Mehreteab and Parr prepared and submitted tax returns claiming refund amounts in excess of what the taxpayers were entitled to. Mehreteab and Parr’s conspiracy resulted in at least 114 false, fictitious and fraudulent claims to be filed, causing a total refund of $700,974 and a loss to the government of $265,510, according to the indictment.
As part of the conspiracy, Corporate ITS advertised “$1,000 holiday loans” to potential clients at the end of 2011. While ITS advertised $1,000 loans, most were in the range of $50 to $100, according to the indictment.
Mehreteab required clients applying for an ITS loan to provide information including their name, Social Security number, address, paystub, names of dependants and their Social Security numbers. Mehreteab indicated the loan would be a partial advance on their estimated 2011 tax return, according to the indictment.
Mehreteab, Parr, and others both known and unknown to the Grand Jury, then used personal and employment information of the loan clients to file 2011 individual income tax returns of behalf of loan clients, sometimes without their knowledge or authorization, according to the indictment.
Sometimes Mehreteab and Parr prepared correct returns when the client was present but later added false items to the return, such as false wages or incorrect dependants, to increase the refund amount. They also added false credits and deductions without verification and, in some instances, without authorization, according to the indictment.
ITS also charged exorbitant fees, typically $500 to $1,000, which were deducted from the clients’ refunds without disclosing to the taxpayer clients the fee amount prior to the return being filed, according to the indictment.
If convicted, the defendants’ sentence will be determined by the Court after reviewing factors unique to this case, including the defendants’ prior criminal record, if any, the defendants’ role in the offense and the characteristics of the violation. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
The investigating agency in this case is the Internal Revenue Service Criminal Investigation, Toledo, Ohio. The case is being handled by Assistant United States Attorney Joseph R. Wilson.
An indictment is only a charge and is not evidence of guilt. Defendants are entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.