Under the counter; a New Look but an old story; unAffordable behavior; and other highlights of recent tax cases.
South El Monte, California: Former sales manager Wing Hong Lee, 50, of Alhambra, California, has been sentenced to 18 months in prison for embezzlement and for filing false returns.
Lee, who pleaded guilty in March, exploited his position to embezzle $478,434 from his employer and then failed to report the stolen money to the IRS. He was employed by Maxtrade LLC, a wholesaler and retailer of recreational vehicles and motorsports accessories. He processed customer orders for the company.
After the goods had been shipped and received by the customers, Lee fraudulently informed the company’s accounting department that the customers had canceled the orders and as a result the accounting department expected no payment from the customers. The customers had not in fact canceled the orders, Maxtrade had already shipped the goods and Lee pocketed the money that customers paid.
He further lied on his federal income tax returns for tax years 2010 through 2015 and owes $180,743 in income tax.
Lee was also ordered to pay $659,177 in restitution to his former employer and to the IRS.
Atlanta: Engineering exec Lohrasb “Jeff” Jafari, 72, of Alpharetta, Georgia, has been sentenced to five years in prison for bribing local officials and evading more than $1.5 million in taxes.
Jafari was the executive vice president of PRAD Group, an architectural, design and construction management firm that performed services for the City of Atlanta and DeKalb County. Jafari also oversaw PRAD Group’s finances and gave cash and other items of value to two Atlanta officials to obtain business with the city.
From at least 2014 to January 2017, Jafari paid one of the officials more than $40,000 in cash. He later tried to convince one of the officials to lie to FBI investigators; he promised another official a lucrative job with PRAD Group and gave that official $10,000 cash, jewelry, a room at a luxury hotel in Dubai and a luxury shopping trip there and had landscaping work at her home. Shortly after the City of Atlanta fired her, the second official began working for Jafari and PRAD Group. In 2016, Jafari or PRAD paid the official $30,000.
From 2014 to 2016, Jafari neither filed personal returns nor paid any federal income taxes. During those years, he withdrew large amounts of cash from corporate bank accounts and used money from the PRAD Group’s corporate accounts to pay for personal expenses, including several luxury vehicles.
Gadsden, Alabama: Pharmacist Nathan Thomas Carter has been convicted of drug distribution conspiracy and tax crimes.
Carter pleaded guilty to one count of conspiracy to distribute controlled substances and three counts of filing false federal income tax returns.
Between 2015 and late 2021, he conspired with others to distribute controlled substances including oxycodone and hydrocodone. Between February 2018 and 2023, Carter worked as the pharmacist at a local pharmacy; between 2018 and 2021, that pharmacy ordered at least 80,000 more dosage units of oxycodone than it dispensed to patients. Carter diverted opioid pills from the pharmacy and sold those pills to other drug distributors. He regularly took distributor bottles from his pharmacy to his house, where he repackaged the pills in plastic bags for resale.
He earned about $150,000 in illicit income annually, which he failed to report or include on his income tax returns in 2019, 2020 and 2021. Authorities also found more than $110,000 in cash in his home.
The penalty for conspiracy to distribute controlled substances is up to 20 years in prison. The maximum for each count of filing false federal income tax returns is three years in prison.
Rochester, Minnesota: Jewelry business owner Bernard James Benavidez, 62, has been sentenced to six months in prison, to be followed by a year of supervised release, for tax crimes.
Benavidez, who pleaded guilty in February, is the sole owner and operator of Master Jewelers Inc. Because of its corporate structure, Master was responsible for paying its own corporate taxes while Benavidez was independently responsible for reporting any salary, wages or other compensation that Master paid to him personally.
Benavidez regularly and intentionally diverted significant portions of Master’s gross sales into his personal bank accounts to reduce tax liabilities; he also occasionally directed customers to pay him personally for work he completed on behalf of the business.
Master also sold significant amounts of scrap metal as part of its business and Benavidez deposited the money into his personal bank account instead of the corporate account to avoid the funds from being on tax returns.
In total, between 2013 and 2017, he concealed $432,373.42 in Master’s sales, which resulted in unpaid tax liabilities of $147,006.96.
Alexandria, Virginia: Tax preparer Lawrence Appiah-Osei has pleaded guilty to defrauding the U.S. government out of some $1.4 million in tax revenue by preparing false returns for his unsuspecting clients.
Between 2016 and 2020, Appiah-Osei ran the tax prep business New Look Enterprise out of his home. From at least 2017 through 2020, he fraudulently inflated clients’ refunds by falsely claiming that his clients operated businesses that lost thousands of dollars each year.
Sentencing is Nov. 3. He faces up to six years in prison.
Quincy, Massachusetts: Business owner and former resident John Michael Sacco has agreed to plead guilty to concealing business income from the IRS.
Sacco managed construction projects under the name JMS Contracting. From 2014 through 2021 he allegedly received more than $9 million from JMS customers. Rather than depositing the company’s gross receipts into business bank accounts, Sacco allegedly cashed most checks from customers, used the proceeds to purchase supplies and pay subcontractors in cash, and then retained remaining cash to pay personal expenses.
Sacco allegedly also failed to issue tax forms to its subcontractors and to file required forms with the IRS with respect to amounts that JMS paid to its subcontractors. By not reporting JMS’s receipts on returns that he filed for certain years and by filing no returns in other years, he underreported his personal income tax, causing a loss to the IRS of more than $3 million.
The charge of tax evasion provides for up to five years in prison, three years of supervised release and a fine of up to $250,000 or twice the gross gain or loss, whichever is greater.
Everett, Washington: Tax preparer Abinet Onkiso has pleaded guilty to aiding and assisting with the filing of false returns.
Since at least 2012, Onkiso has operated the prep business Affordable Income Tax LLC. He intentionally exaggerated deductions for his clients: unreimbursed employee expenses, charitable deductions and payments for “other taxes.” Between 2016 and 2019, Onkiso submitted exaggerated deductions on more than 79 tax returns for 29 clients.
The tax loss was $212,395. Some of Onkiso’s clients were audited and paid approximately $12,000 of the taxes owed. The rest of the tax loss falls to Onkiso, who is required to make $200,277 in restitution to the IRS, with credit for any amounts already paid.
He pleaded guilty to four counts and faces up to three years in prison per count; under the terms of the plea agreement, prosecutors will recommend no more than six months in prison. Sentencing is Oct. 19.