KC Woman Pleads Guilty to Tax Fraud Scheme, Stealing Clients' Refunds
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Kansas City, Mo., woman pleaded guilty in federal court today to a tax fraud scheme in which she stole portions of her client’s inflated tax refunds.
Dinette Kay Cadenhead, also known as Kay Taylor, 46, of Kansas City, pleaded guilty before U.S. Chief District Judge Greg Kays to the theft of public money.
By pleading guilty today, Cadenhead admitted that she prepared federal income tax returns for clients containing material false and fraudulent claims. Cadenhead, working at her office in Raytown, Mo., or from her residence, assisted at least 12 individuals to file at least 29 false and fraudulent income tax returns for the tax years 2008 through 2010. The tax loss associated with those false returns is $109,627. The aggregate tax loss, including relevant conduct is $134,237.
Cadenhead admitted that she utilized false deductions to increase her clients’ refunds without the clients’ knowledge. The false entries included fraudulent charitable deductions, medical expenses, accounting expenses, attorney expenses, unreimbursed employee expenses and other expenses. She also included false IRA deductions on 18 of the returns without the clients’ knowledge. She reported net business losses, false energy credits and fraudulent dependents for some clients, all without their knowledge. Cadenhead electronically filed returns and indicated the returns were self-prepared.
Cadenhead charged her clients a return preparation fee of between $65 and $600 per return. However, without the knowledge of her clients, Cadenhead diverted a portion of the fraudulent refund into her own bank account, which increased the amount she actually received for each return. She fraudulently received up to $2,600 for preparing a return. Cadenhead directed over $14,000 into her bank accounts by splitting her clients’ refunds without their knowledge or permission.
The specific charge to which Cadenhead pleaded guilty today is related to her unauthorized splitting of her clients’ refunds without their knowledge or permission. Cadenhead admitted that she stole portions of her clients’ inflated tax refunds, totaling $14,082, between Feb. 12 and March 14, 2012.
Under federal statutes, Cadenhead is subject to a sentence of up to 10 years in federal prison without parole, plus a fine up to $250,000. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.This case is being prosecuted by Assistant U.S. Attorney Roseann A. Ketchmark. It was investigated by IRS-Criminal Investigation and the Missouri Department of Revenue Criminal Tax Investigation Bureau.