MANHATTAN (CN) - A federal judge must keep five convicted fraudsters from tax-preparation work to prevent future crimes, the U.S. government says.
The United States filed the complaint for injunctive relief Thursday against five tax preparers convicted of various frauds: Lester Morrison; Morrison's onetime wife, Paulette Bullock; and three of Morrison's former employees, Gary Hanna, Joy David and Kevin Vaden.
Morrison ran two tax-preparation businesses that he opened in the Bronx and Englewood, N.J., in 2000 and 2001, respectively.
The scheme that the defendants ran through Morrison's business brought them "hundreds of thousands of dollars in fees in connection with filing thousands of false or fraudulent tax returns that sought deductions based on false and/or fraudulent information," according to the complaint.
Some of the fraudulent activities by the defendants included "using stolen identities of deceased children to falsely claim those children as dependents on their customers' tax returns," "claiming phony business losses for phony businesses that defendants concocted for their customers," "falsely claiming deductions for charitable contributions and employee business expenses," "falsely claiming education credits," and "falsely claiming credits for child and dependent care expenses," the complaint continues.
The complaint also describes how the defendants tried to subvert the Internal Revenue Service's ensuing investigation.
When criminal investigators revoked the electronic-filing identification numbers assigned to Morrison's business after the 2007 tax filing season, for example, defendant Hanna obtained "electronic filing identification numbers in his name, so that defendants could continue filing fraudulent federal tax returns in the 2008 season," the complaint states.
Morrison "claimed that certain records subpoenaed by the IRS had been discarded," but "a search of the Bronx location of Morrison's tax preparation business revealed that those records remained in defendants' possession," the United States says.
All told, the defendants filed more than 8,000 federal income-tax returns between 2000 and 2008, and "a significant majority of those tax returns sought false and/or fraudulent deductions," according to the complaint.
The defendants pleaded guilty to various counts of conspiracy to defraud the IRS after they were indicted in 2009, the government says. Morrison received a 72-month prison sentence and is expected to be released in April 2016, while the other defendants all received shorter sentences.
Now the government wants U.S. District Judge Alison Nathan to bar each defendant "permanently from preparing federal tax returns for others."
"Injunctive relief is necessary and appropriate to prevent the recurrence of misconduct by Morrison, Bullock, Hanna, David and Vaden because, absent an injunction, they are likely to continue preparing false tax returns," the complaint says.
Without an injunction, "the United States will be put at risk of providing tax refunds to taxpayers not entitled to such refunds due to defendants preparing for those taxpayers tax returns that do not report and/or pay the correct amounts of federal taxes owed," the complaint continues. Uncle Sam says that "pursuing all of the defendants individual customers may be impossible given the IRS's limited resources."
The filing seeks the injunction for violations of several sections of Title 26. Assistant U.S. Attorney Li Yu from the Southern District of New York signed the action.
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