Man Who Filed 26 False Tax Claims and Obstructed IRS Gets Significant Sentence
HOUSTON – A federal judge has ordered Kenneth Robert Bruce to federal prison following his numerous convictions of willfully filing a false claim and impeding the IRS, announced U.S. Attorney Kenneth Magidson along with Special Agent in Charge Rick Goss of IRS - Criminal Investigation (CI). A jury convicted Bruce on all counts as charged March 19, 2015, following a five-day trial and approximately 2.5 hours of deliberation.
Today, U.S. District Judge Nancy Atlas, who presided over the trial, handed Bruce a 15-year-sentence and further ordered he pay more than $3.3 million to the IRS. He must also serve three years of supervised release following completion of the prison term. In handing down the sentence, Judge Atlas noted Bruce’s sophisticated scheme and that his relevant conduct - his intended tax loss in the entire scheme - was between $65 million and $150 million.
During trial, the jury heard that Bruce prepared 26 false income tax returns or amended income tax returns claiming a total of more than $9 million in false income tax refunds. One return was for himself and 25 were for other taxpayers.
“Knowingly falsifying documents filed with the IRS is a serious crime,” said Goss. “This defendant not only created false income forms but used those forms to make fraudulent claims in excess of $9 million against the U.S. government. IRS-CI agents are committed to stopping this type of abuse of the tax system.”
Bruce attached false IRS forms 1099-OID (Original Issue Discount) to the tax returns, falsely reporting the taxpayers had received huge amounts of income from OID and had all or nearly all of the false amounts of income withheld for federal income taxes. The huge, false amounts of withholdings formed the bases for the claims for false claims for tax refunds.
The jury also convicted Bruce on one count of corruptly endeavoring to obstruct and impede the administration of the Internal Revenue Code.
Bruce was permitted to remain on bond and voluntarily surrender to a U.S. Bureau of Prisons facility to be determined in the near future.
The convictions were the result of an investigation by IRS - CI and the Treasury Inspector General for Tax Administration. Assistant U.S. Attorneys Charles J. Escher and Jim McAlister are prosecuting the case.