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Justice News

Department of Justice
U.S. Attorney’s Office
Western District of Missouri

FOR IMMEDIATE RELEASE
Friday, December 1, 2017

Former NBA Player Pleads Guilty to False Tax Returns, Identity Theft Related to Charity Fraud Scheme

KANSAS CITY, Mo. – Tom Larson, Acting United States Attorney for the Western District of Missouri, announced today that a former professional basketball player and representative for the National Basketball Players Association (NBPA) has pleaded guilty in federal court to charges related to a charity fraud scheme.

Kermit Alan Washington, 66, of Las Vegas, Nev., pleaded guilty before U.S. District Judge Greg Kays on Thursday, Nov. 30, 2017, to two counts of making a false statement in a tax return and one count of aggravated identity theft.

Co-defendant Patricia Harris, 65, of Las Vegas, also pleaded guilty yesterday. Harris pleaded guilty to making false declarations before a grand jury.

Washington and Harris are among 11 defendants who have pleaded guilty in several cases related to the investigations of an international software piracy conspiracy and charity fraud scheme.

Washington agreed to refer professional athletes to attorney Ronald Jack Mix, 78, of San Diego, Calif., so that Mix could file workers’ compensation claims in the state of California on behalf of the athletes. Mix then agreed to make donations to Washington’s charity, The Sixth Man Foundation, doing business as Project Contact Africa.

Washington accepted approximately $155,000 in donations to his charity, which were actually illegal referral payments from Mix and his law firm. Washington diverted those funds from the charity’s bank account to pay himself or for personal spending. Washington admitted that he failed to account for this income to the charity on Project Contact Africa’s IRS filings during those years.

In a separate but related case, Mix pleaded guilty on May 23, 2016, to filing a false tax return. Mix admitted that he made donations ranging from $5,000 to $25,000 for referrals of athletes, some of whom lived in the Western District of Missouri. Mix then claimed those payments as charitable contributions on his individual tax returns from 2010 to 2013.

Washington also admitted that he accepted approximately $82,025 in contributions to his charity from Reza Davachi, 43, of Damascus, Md., and likewise diverted those funds from the charity’s bank account to pay himself or for personal spending.

In a separate but related case, Davachi pleaded guilty on Oct. 20, 2015, to his role in one of the largest software piracy schemes ever prosecuted by the U.S. Department of Justice. Investigators seized more than $20 million in assets from conspirators who are estimated to have sold in excess of $100 million worth of illicit, unauthorized and counterfeit software products to thousands of online customers.

Davachi admitted that he managed the on-line presence of the Project Contact Africa eBay/PayPal charity. Davachi actively used the Project Contact Africa charity’s eBay/PayPal account to sell unauthorized, illicit, and counterfeit software and software components through eBay, and used the charity’s PayPal account to facilitate payments for these software components. By using the charity’s account to sell his items through the eBay charity store, Davachi saved thousands of dollars per month that he would have otherwise had to pay eBay in the form of various fees. During this time, the Project Contact Africa eBay/PayPal account took in approximately $12 million in revenue, and eBay/PayPal sustained losses of approximately $908,231 due to the waived fees.

Customers of the Project Contact Africa eBay charity store were under the impression that “100 percent” of the proceeds of sales were intended to go to the charity when, in fact, only a portion of the proceeds actually went to the charity. The remainder went to Davachi and his company, Rez Candles, Inc. Davachi also admitted that he allowed numerous other individuals to use the Project Contact Africa eBay/PayPal charity store to sell their own items at a significantly reduced amount as compared to other for-profit sales methods on eBay, with the understanding that they would pay back to Davachi a portion of their savings.

By pleading guilty, Washington specifically admitted that he filed a materially false individual tax return on Feb. 18, 2014, and that he filed a materially false Form 990-EZ for his tax-exempt organization on Aug. 20, 2012. On this Form 990-EZ, Washington claimed that Project Contact Africa received $52,069 in income; in reality these charity accounts received approximately $114,774 in income, some of which Washington diverted to his personal accounts and used towards his personal spending.

Washington also admitted that used the name, personal address and business address of another person without lawful authority in numerous state and federal filings on behalf of the charity. The identity theft victim, identified in court documents as “T.G.”, was a resident of Oregon. Washington admitted that he used her identity information so that Project Contact Africa could maintain its active status within the state of Oregon, which enabled the charity to receive the charitable donations from Mix and permitted Davachi to maintain the charity store for his sales on eBay.

Harris admitted that, while under oath before a federal grand jury, she made materially false statements by denying that she played any role in creating and co-authoring false and fictitious board minutes for the Sixth Man Foundation d/b/a Project Contact Africa charity. Harris admitted that she created and co-authored false and fictitious board minutes for purported board of directors meetings in 2012, 2013, 2014 and 2015, which never actually occurred. The information and content contained within these falsified board minutes was relayed to Harris by Washington. She aided in the preparation and falsification of these minutes at Washington’s direction.
 
Under federal statutes, Washington is subject to a sentence of up to six years in federal prison without parole for the tax counts, plus a mandatory consecutive sentence of two years in federal prison without parole on the identity theft count. Harris is subject to a sentence of up to five years in federal prison without parole. By pleading guilty today, Washington acknowledged that the court may order restitution as related conduct in connection with his personal tax years 2010, 2011, 2012, and 2014, and for the tax years 2010, 2012, and 2013 for the tax returns filed for the Sixth Man Foundation, D/B/A Project Contact Africa.

The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors. Sentencing hearings will be scheduled after the completion of presentence investigations by the United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorneys Patrick Daly and Curt Bohling and Assistant U.S. Attorney Ryan Raybould of the Middle District of Tennessee (formerly of the Department of Justice Tax Division). It was investigated by IRS-Criminal Investigation and Immigration and Customs Enforcement’s Homeland Security Investigations.
 

Topic(s): 
Tax
Identity Theft
Updated December 1, 2017