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Justice News

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

Wednesday, April 3, 2013

Prosecutors Warn Potential Tax Evaders: Tax Crimes Result In Lengthy Prison Sentences And Steep Fines

United States Attorney Anne M. Tompkins Western District Of North Carolina

Taxpayers Also Cautioned About Tax Preparer Fraud and Other Illegal Tax Schemes

CHARLOTTE, NC - With the deadline for filing income tax returns rapidly approaching, Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina, and Jeannine A. Hammett, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation Division (IRS-CID), jointly announce recent tax fraud prosecutions and sentencings, and deliver a powerful warning to those who are thinking about breaking the law by committing tax crimes.

“As April 15th approaches, honest taxpayers should rest assured: our office will work diligently to investigate and prosecute those individuals who try to cheat the tax system,” said U.S. Attorney Tompkins. “Whether dishonest taxpayers fail to report all of their income, attempt to obtain fraudulent refunds, or prepare bad tax returns for others,” Tompkins continued, “they face lengthy sentences and large fines.” Tompkins noted the importance of deterring others from committing tax crimes stating, “Our tax system is built on voluntary compliance, and tax criminals hurt all Americans by increasing the tax burden on honest taxpayers and refusing to pay their fair share.”

“The IRS fosters confidence in the American tax system through the investigation and prosecution of individuals and corporations who intentionally conceal income and evade taxes,” stated Charlotte Field Office Special Agent in Charge Jeannine A. Hammett, IRS Criminal Investigation. “Tax evasion is not a victimless crime. Honest, hardworking Americans pay the price when others choose to evade their tax obligations.”

In the last year, the U.S. Attorney’s Office, with the assistance of the IRS-CID, has prosecuted numerous individuals for criminal tax violations. Case highlights from the Western District of North Carolina’s tax enforcement prosecutions over the last year include:

Charles A. Davis - On September 10, 2012, Charles A. Davis, formerly of Mooresville, N.C., was sentenced to 10 years in prison for tax fraud. Davis, who was a pilot for U.S. Airways from 1983 through 2011, was convicted following trial of ten counts of filing false tax returns and one count of corruptly impeding the due administration of the IRS. Davis did not file timely income tax returns for 1996 through 2007 despite receipt of wages ranging from $129,950 to $190,510. Davis subsequently filed fraudulent amended income tax returns for 1996 through 2000, falsely claiming that he earned little or no adjusted gross income, and he later filed five fraudulent individual income tax returns for 2004 through 2008, reporting false amounts of federal income tax withheld for each of those years and requesting fraudulent refunds from the IRS in amounts up to approximately $1.5 million. (Case No. 5:11-cr-32)

Candida Figueroa, et al. - On October 24 and November 5, 2012 respectively, Cathy Cisneros and Candida Figueroa, both of Charlotte, pleaded guilty to a false claims conspiracy for their roles in a scheme to defraud the government by obtaining false and fraudulent income tax refunds. According to the superseding indictment, the co-conspirators obtained false tax refunds using fraudulently obtained Individual Taxpayer Identification Numbers. The co-conspirators directed that fraudulent tax refunds be sent to addresses at various apartment complexes in Charlotte. The total attempted fraudulent tax refunds associated with the scheme was more than $3.8 million. No sentencing dates have been set. Figueroa and Cisneros each face a maximum sentence of 10 years in prison. (Case No. 3:12-cr-260)

Cynthia Garris - On May 15, 2012, Cynthia Garris, of Wadesboro, N.C., pleaded guilty to one count of filing a false tax return. Beginning in 2008, Garris was the owner of Wadesboro Home Care, Inc. in Charlotte. From 2008 through 2010, Garris concealed some of her personal earnings from the IRS by diverting funds from Wadesboro Home Care to pay for personal expenditures and failing to provide her return preparer with information about all of her earnings. For tax years 2008 through 2010, Garris had total unreported income of more than $400,000. No sentencing date has been set. Garris faces a maximum of three years in prison. (Case No. 3:12-cr-150)

Yolanda Tiess Kitson – On April 2, 2013, Yolanda Tiess Kitson of Augusta, Ga. was indicted on charges of false claims conspiracy and aggravated identity theft. According to the bill of indictment filed, Kitson, who is the sister of Senita Birt Dill (listed below), stole identifying information from patients at the Eisenhower Army Medical Center in Augusta and provided them to her sister Dill for use in her stolen identity tax refund scheme. Kitson is awaiting her initial appearance in federal court in Asheville. (Case No. 1:13-cr-31)

Ronald Jeremy Knowles and Senita Birt Dill – On October 29, 2012, Ronald Jeremy Knowles and Senita Birt Dill, both residents of Mill Spring in Polk County, N.C., pleaded guilty to charges of false claims conspiracy, access device fraud, and aggravated identity theft. According to the bill of information filed, Knowles and Dill used stolen identities to file over $5 million in fraudulent tax refund claims. Both are in custody awaiting sentencing, but no sentencing date has been set. Dill faces a maximum of 17 years in prison; Knowles is facing a maximum of 15 years in prison. (Case No. 1:12-cr-105)

Anthony Nguyen - On May 30, 2012, Anthony Nguyen, of Charlotte, pleaded guilty to tax evasion. Nguyen was the owner of Empress of China II, a Chinese restaurant in Charlotte. For tax years 2006 through 2008, Nguyen diverted cash receipts from his business to his personal bank accounts and failed to provide his tax return preparer full information about his earnings. For 2006 through 2008, Nguyen failed to report approximately $421,751 in income on his tax returns. No sentencing date has been set. Nguyen faces a maximum sentence of five years in prison. (Case No. 3-12-cr-155)

Nelson Rodriguez – On November 26, 2012, Nelson Rodriguez, of Morganton, N.C. pleaded guilty to tax evasion. Rodriguez, a dentist, failed to file income tax returns from 2005 through 2010 despite receipt of more than $1.7 million in income for those years. According to the superseding indictment, Rodriguez used nominee entities including Practice Promoters, LLC to receive his dental income. Additionally, Rodriguez purchased assets in nominee names and used bank accounts in nominee names. No sentencing date has been set. Rodriguez faces a maximum of five years in prison. (Case No. 1-12-cr-41)

Federal penalties for each count of conviction of tax crimes range from a maximum of one year in prison and a $100,000 fine for failure to file a tax return, false withholding exemptions, and delivering or disclosing false tax documents, to a maximum of 10 years in prison and a $250,000 fine for conspiracy to defraud with respect to false refund claims. Other penalties include a maximum of three years in prison and a $250,000 fine for obstructing or impeding an investigation and filing or preparing a false tax return, and a maximum of five years in prison and a $250,000 fine for tax evasion, failure to pay taxes, conspiracy to commit a tax offense or conspiracy to defraud.

The U.S. Attorney’s Office and the IRS remind tax payers to exercise caution during tax season and to be vigilant in protecting themselves against a wide range of tax schemes. The IRS has issued its annual “Dirty Dozen” listing, which identifies common scams that taxpayers may encounter, particularly during filing season. Taxpayers are urged look out for, and to avoid, the following common schemes:

• Identity theft
• Phising
• Return Preparer Fraud
• Hiding Income Offshore
• “Free Money” from IRS & Tax Scams Involving Social Security
• Impersonation of Charitable Organizations
• False/Inflated Income and Expenses
• False Form 1099 Refund Claims
• Frivolous Arguments
• Falsely Claiming Zero Wages
• Disguised Corporate Ownership
• Misuse of Trusts

Education is the best way to avoid these common schemes. To learn more about the Dirty Dozen scams and for help with recognizing and avoiding abusive tax schemes, the IRS offers educational material at Suspected tax fraud can be reported to the IRS using Form 3949-A found on the website.

Updated March 19, 2015