Canadian nationals charged in $9 million tax refund scheme
ROCHESTER, N.Y.--U.S. Attorney William J. Hochul, Jr. and Assistant Attorney General Kathryn Keneally of the U.S. Department of Justice, Tax Division, announced today that a federal grand jury in Rochester has returned a 19-count superseding indictment charging Daveanan Sookdeo, Kevin Cyster, Jonathan Neufeld, Christina Starkbaum, Renee Jarvis, Jose Compuesto, all of Ontario, Canada, and Timothy Johnston, of Nova Scotia, Canada with conspiring to defraud the Internal Revenue Service, stealing government funds, filing false claims against the United States and transporting money taken by fraud in foreign commerce. The charges each carry a maximum penalty of between five and 10 years in prison, a fine of $250,000 or both.
Assistant U.S. Attorney Marisa J. Miller, who is handling the case, stated that according to the superseding indictment, the defendants conspired to defraud the United States by filing at least 18 false non-resident federal income tax returns, claiming more than $9,000,000 in false federal income tax refunds. In response to the false returns, the IRS sent Treasury Checks totaling more than $3.5 million to the defendants in Canada.
"We've said before that both individuals and companies in this country must play by the rules," said U.S. Attorney Hochul. "This is particularly true for foreign nationals who would seek to defraud the American public out of their hard earned tax dollars."
According to the indictment, the defendants are Canadian citizens and residents. Daveanan Sookdeo served as a middleman between the other Canadian defendants and Ronald Brekke, a previously convicted California fraud promoter. Brekke made false IRS Forms 1099-OID for the defendants and electronically transmitted them to the IRS. The Forms 1099-OID reported that the defendants creditors, such as banks and mortgage companies, had withheld large amounts of federal income taxes and paid the taxes over to the IRS. In fact, there were no such withholdings or payments to the IRS. The defendants then filed individual income tax returns with the IRS, attaching copies of false Forms 1099 and fraudulently claiming refunds of the nonexistent tax withholdings.
The indictment further states that during 2009 and 2010, the defendants crossed the border from Canada into the United States and opened bank accounts in Niagara Falls, Rochester, Brockport, and Kenmore, N.Y. The defendants deposited the tax refund checks in those accounts and then transferred funds to financial institutions in Canada and the United States.
According to court filings, the grand jury previously returned a one count indictment against Kevin Cyster in November 2012, charging him with filing a false claim to the United States, after Cyster was arrested while attending the "2012 Family Reunion" of the Global Information Network in Nashville, Tennessee.
This case is just the latest in a continuing series of multi-million dollars tax cases prosecuted by the Western District of New York in the last 45 days. On July 30, 2013, defendant John Gizzi pleaded guilty to filing false tax returns and agreed to pay $11,000,000 to the Government in criminal restitution and to settle civil claims.
The superseding indictment is the result of an investigation on the part of Special Agents of the Internal Revenue Service - Criminal Investigation, under the direction of Special Agent In Charge Toni Weirach. The evidence was presented to the Grand Jury by Assistant U.S. Attorney Marisa J. Miller and Jeffrey A. McLellan, Tax Division Trial Attorney, who will handle the trial of the case.
The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.