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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of California

FOR IMMEDIATE RELEASE
Thursday, April 16, 2015

“Tax Day” Was Not Business As Usual For Naval Preparer Who Filed False Tax Returns For Fellow Service Members

Former U.S. Navy sailor Leonard Damon Washington was arraigned today on charges that he prepared and filed false tax returns that resulted in inflated refunds for fellow service members and big fees for him.

Leonard Damon Washington, who was assigned to the USS Higgins in 2010 when the alleged crimes began, was arrested on Tax Day, April 15, 2015, in Springdale, Arkansas. He was arraigned in federal court in the Western District of Arkansas before U.S. Magistrate Judge Erin Setser on charges of tax evasion and aiding and assisting in the preparation of false tax returns. The judge set bond at $50,000.

According to the indictment, which was unsealed today, Washington marketed himself to Navy service members as someone who could assist in preparing and filing income tax returns in exchange for a fee. During 2010, Washington convinced fellow Navy service members to let him prepare their income tax returns, but concealed his role as a paid tax preparer from the Internal Revenue Service (IRS). Among the false and misleading representations he made to his fellow Navy service members, Washington stated that he could obtain special tax deductions that other tax preparation services could not obtain or were unaware. The indictment also alleges that Washington created false and fraudulent income tax returns and tax forms for his clients and generated substantial false tax refunds. These false refunds allowed Washington to charge tax preparation fees in excess of $100,000. Washington directed these fees into multiple bank accounts (both in his name and in the name of nominees) in order to frustrate and impede the IRS’s efforts at determining his true income.

“Navy service members place a substantial amount of trust in their colleagues, especially while they are protecting our freedoms. It is intolerable when one of their own defrauds both his fellow Navy service members and the IRS,” said U.S. Attorney Laura E. Duffy. She reminded the public to always review a copy of any tax return prepared and filed on their behalf.

Erick Martinez, Special Agent in Charge for IRS Criminal Investigation commented, “The IRS wants everyone who files a tax return to take advantage of the deductions and credits to which they are entitled by law; however, no one is entitled to defraud the government or other American taxpayers. As the traditional tax filing season concludes, the IRS reminds you to always review your return before signing it, and question any items you do not understand.” The government is seeking the removal of Washington to face charges in the Southern District of California.


DEFENDANT   Case Number: 15CR0951-JM
Leonard D. Washington Age: 42  
 
CHARGES

Count 1: Title 26, United States Code, Section 7201 B Tax Evasion.
 Maximum penalties: 5 years’ imprisonment, $250,000 fine, $100 special assessment, 3 years of supervised release

Counts 2-7: Title 26, United States Code, Section 7206(2) – Aiding and Assisting Preparation of False Tax Returns. 
Maximum penalties per count: 3 years’ imprisonment, $100,000 fine, $100 special assessment, 1 year of supervised release

 
INVESTIGATING AGENCIES

Internal Revenue Service-Criminal Investigation

* An indictment is not evidence that the defendant committed the crimes charged. The defendant is presumed innocent until the Government meets its burden in court of proving guilt beyond a reasonable doubt.

Updated July 23, 2015