Chief Executive Officer Of Tax Preparation Firm Charged With Federal Tax Offenses

United States Attorney for the Southern District of New York, Jay Clayton, and Special Agent in Charge of the New York Field Office of Internal Revenue Service-Criminal Investigation (“IRS-CI”), Harry T. Chavis, Jr., announced today the unsealing of an Indictment charging STEVEN HOLTZ, ISRAEL PELLOT, and ALTON SCOTT with conspiracy to defraud the United States and aiding and assisting in the preparation and filing of false federal tax returns.  The charges relate to a tax fraud scheme operated by several tax return preparers of The Holtz Group, Inc. and Zirin Tax Company, Inc., doing business as SL Tax Centers (together, “The Holtz Group” or “Holtz Group”).  HOLTZ is the owner and chief executive officer of The Holtz Group and was the leader of the fraudulent scheme in which tax preparers at The Holtz Group, including HOLTZ, PELLOT, and SCOTT, falsified information on Holtz Group clients’ federal income tax returns in order to fraudulently reduce the tax liability of the clients and improperly increase the tax refunds they claimed from the Internal Revenue Service (“IRS”).  This, in turn, allowed HOLTZ to charge tax preparation fees that were, at times, tens of thousands of dollars and, in some instances, more than one hundred thousand dollars for certain clients.  The case has been assigned to U.S. District Judge Mary Kay Vyskocil.

“As alleged, Steven Holtz led a massive tax fraud scheme that deprived the American people of significant tax revenue,” said U.S. Attorney Jay Clayton. “The false tax returns Holtz and other tax preparers at the Holtz Group are alleged to have filed generated substantial refunds to which clients were not entitled and enormous fees for the firm.  According to the indictment, Holtz funded a lavish lifestyle, including homes in Manhattan and East Hampton, at the expense of the tens of millions of honest, hardworking American taxpayers.  Our Office will have zero tolerance for fraudsters who steal from the public to enrich themselves.”

“For more than a decade, Holtz used the backdrop of a successful and legitimate tax business to hide a fraud that concealed significant income from the IRS,” said IRS-CI Special Agent in Charge Harry T. Chavis, Jr.  “Holtz and his cohorts were creative in their alleged scheme, using various deductions and expenses to evade taxes for their clients.  While Holtz told his clients they should be happy to pay him rather than pay the government, he failed to remind them that the money to the government means benefits for the American people.  Now is the time that they each face justice for their alleged criminal acts.”

As alleged in the Indictment unsealed in Manhattan federal court:[1]

From at least in or about 2014 through at least in or about 2025, HOLTZ, PELLOT, SCOTT, and other co-conspirators executed a fraudulent scheme led by HOLTZ in which they falsified information on Holtz Group clients’ federal income tax returns.  Each year, Holtz Group clients—at least some of whom have professional degrees and annual income of hundreds of thousands of dollars—met with Holtz Group personnel at one of the Holtz Group’s offices (or, at times, remotely by videoconference and/or telephone).  At these meetings, and during the course of any necessary follow-up discussions, HOLTZ, PELLOT, SCOTT, or other Holtz Group personnel, prepared the clients’ tax returns.

HOLTZ, PELLOT, SCOTT, and others included materially false and fraudulent information on the Holtz Group clients’ tax returns in order to reduce the clients’ tax liabilities or increase their refunds.  The false items included on income tax returns for Holtz Group clients included inflated and fictitious deductions, including but not limited to: itemized deductions, such as charitable contributions and unreimbursed employee expenses; business expense deductions; capital losses, such as deductions for bad debt; losses and expenses from rental real estate businesses and unreimbursed partnership expenses; casualty and theft losses; losses from sales of business property; and losses from sales and other dispositions of capital assets.  These false items were reported on Schedules A, C, D, and E as well as other tax forms.  At times, the defendants also inflated and falsified clients’ income in order to improperly qualify clients for refundable Earned Income Tax Credits and/or fraudulently elected “head of household” filing status for married clients and other clients who did not qualify for that filing status, among other things. 

As the owner of The Holtz Group and its affiliated entities, HOLTZ trained PELLOT, SCOTT, and others on how to falsify tax returns to carry out the scheme.  For example, HOLTZ instructed PELLOT, SCOTT, and others to urge clients to set up business entities, such as partnerships and S Corporations, through the Holtz Group, for which clients paid additional fees.  HOLTZ then directed the return preparers to use these business entities to fraudulently claim additional tax deductions, such as deductions for unreimbursed partnership expenses, meals, travel, gifts, and other expenses.

The Holtz Group based the fees charged to the clients on the amount of purported “tax savings” the firm supposedly generated for clients.  HOLTZ used these purported “tax savings” to justify The Holtz Group’s fees, which were as high as tens of thousands or even more than one hundred thousand dollars for certain clients.  For example, after billing a fee of $175,000 for preparing a client’s 2021 return, HOLTZ emailed the client explaining that the fee charged “is 25% of the tax savings.  Always has been . . . I realize the bill is very high but honestly you sou [sic] should be happy to pay me that rather than paying the government what you owed them . . . [T]he fee is determined by the tax savings, not by your earnings.”  In the same exchange, HOLTZ later went on to state: “You really aren’t paying my fee. The IRS is.”

By filing fraudulent returns on behalf of numerous Holtz Group clients, HOLTZ, PELLOT, SCOTT, and others defrauded the IRS of tax revenue and generated significant revenue for The Holtz Group.  This significant revenue facilitated HOLTZ’s lavish lifestyle, including use of homes in Manhattan and East Hampton.

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Steven Holtz, 63, of New York, New York, and East Hampton, New York, is charged with one count of conspiracy to defraud the United States, which carries a maximum sentence of five years in prison, and 30 counts of aiding and assisting in the preparation of false and fraudulent U.S. individual income tax returns, each of which carries a maximum sentence of three years in prison.

Israel Pellot, 50, of Ormond Beach, Florida, is charged with one count of conspiracy to defraud the United States, which carries a maximum sentence of five years in prison, and 9 counts of aiding and assisting in the preparation of false and fraudulent U.S. individual income tax returns, each of which carries a maximum sentence of three years in prison.

Alton Scott, 33, of Brooklyn, New York, is charged with one count of conspiracy to defraud the United States, which carries a maximum sentence of five years in prison, and 13 counts of aiding and assisting in the preparation of false and fraudulent U.S. individual income tax returns, each of which carries a maximum sentence of three years in prison.

The maximum potential sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Clayton praised the investigative work of the IRS-CI.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit and the Department of Justice, Criminal Division, Tax Section.  Assistant U.S. Attorney Matthew Weinberg, Southern District of New York, and Assistant Deputy Chief Jorge Almonte and Trial Attorney Alexandra K. Fleszar of the Criminal Division’s Tax Section are in charge of the prosecution.

The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.