KC Woman Sentenced for 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 was sentenced in federal court today for a tax fraud scheme in which she stole portions of her client’s inflated tax refunds.
Dinette Kay Cadenhead, also known as Kay Taylor, 47, of Kansas City, was sentenced by U.S. Chief District Judge Greg Kays to 18 months in federal prison without parole. The court also ordered Cadenhead to pay $14,082 in restitution to the Internal Revenue Service, which represents the amount Cadenhead skimmed from the inflated tax refunds of nine of her clients.
On July 16, 2014, Cadenhead pleaded guilty to the theft of public money. 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. 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. She reported net business losses, false energy credits and fraudulent dependents for some clients. Cadenhead electronically filed many of the returns from her home computer, but 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 nine 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. 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 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, 2010, and March 14, 2012.
This case was 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.