Anti-social worker; loan sharks; just in time for Tax Day; and other highlights of recent tax cases.
Westminster, California: Tax preparer Anton Nguyen, 54, of Fountain Valley, California, has been sentenced to 41 months in prison for participating in a scheme orchestrated by a corrupt social worker who stole clients’ IDs to fraudulently obtain tax refunds, welfare benefits and credit cards.
Nguyen conspired with John Tran, also of Fountain Valley and an Orange County Social Services Agency case worker, from July 1994 to October 2018. Tran stole Social Security numbers and other personal ID information from his clients, many of them recent immigrants. From August 2010 to June 2019, Tran and his conspirators used the stolen information to steal money from the federal government, the State of California, Orange County and financial institutions.
Nguyen owned and operated Century Travel & Tax, a tax prep company in Westminster. He joined the conspiracy in 2012 and used the Tran-provided stolen IDs to create 1099-MISCs purporting to show payments made to the victims by companies, including those controlled by Tran and other conspirators. He also helped accomplices set up shell companies to promote the scheme.
Nguyen prepared and filed federal income tax returns using the stolen IDs. He also used the purported payments on the fraudulent 1099s as income to the victims, making them appear to qualify for tax credits, including the Earned Income Tax Credit and the Child Tax Credit. In turn, the reported payments to the victims were used by Nguyen’s clients to offset business revenues and reduce taxes they owed by making it appear that the victims worked for them. In exchange for the fabrication of the 1099s, Nguyen’s clients paid him a fee.
Tran and his conspirators filed 433 returns using information belonging to others, generating at least $973,153 in fraudulently obtained federal refunds. In total, Nguyen, aided by accomplices, defrauded the U.S. out of at least $3,773,282 in taxes.
Tran pleaded guilty in 2019 to conspiracy to defraud the United States with respect to claims, mail fraud and aggravated-ID theft. Sentencing is Sept. 19.
Among others connected to the case, Rosemary Pham, 65, of Midway City, California, owner and operator of Victory Tax Service in Westminster, pleaded guilty on July 14 to one count of conspiracy to defraud the United States and one count of aiding and advising the filing of false returns. She faces up to eight years in federal prison at her sentencing on Oct. 30.
Kevin Le, 57, of Anaheim Hills, California, pleaded guilty in May 2021 to one count of evasion of assessment of tax. On May 10, Le was sentenced to six months in federal prison, fined $15,000 and ordered to pay $2,936,088 in restitution.
Thomas Nguyen, 62, of Santa Ana, California, pleaded guilty in June 2021 to one count of tax evasion. In May 2022, he was fined $30,000 and ordered to pay $133,796 in restitution.
Van Quach, 43, of Monterey Park, California, pleaded guilty in May 2021 to one count of evasion of assessment of tax. Quach was sentenced to two years of probation, fined $5,500 and ordered to pay $231,340 in restitution.
Peter Duc Nguyen, 63, of Garden Grove, California, pleaded guilty in April 2022 to one count of tax evasion. He has been sentenced to two years of probation and was ordered to pay $187,295 in restitution.
Two remaining defendants, Chau Nguyen, 69, of Garden Grove, California, and Sophie Thuy Nguyen, 48, of Westminster, have pleaded guilty to evasion of assessment of taxes and are scheduled to be sentenced later this year, when they will each face up to five years in prison. Nguyen, who pleaded guilty in April, was sentenced to pay $3,773,282 in restitution.
Washington: Gholam and Karen Kowkabi, of Vienna, Virginia, have pleaded guilty to tax offenses relating to their failure to pay more than $1.35 million in taxes arising from their operation of several area restaurants.
Gholam Kowkabi also pleaded guilty to stealing more than $738,000 from the emergency small-business relief funds that his Georgetown restaurant, Ristorante Piccolo, received during the pandemic. He acknowledged having spent the money, which was intended to help his business, on a condo as well as personal investments, vacations for his family and college tuition for his child.
The Kowkabis have owned and operated Ristorante Piccolo since 1986; the Kowkabis also owned and operated restaurants Catch 15 and Tuscana West in Washington, D.C. From 1998 to 2018, the Kowkabis amassed an unpaid tax balance of $1,351,038.51, including federal income and employment taxes and trust fund recovery penalties. Gholam Kowkabi admitted attempting to evade payment of those taxes by concealing assets and obscuring the large sums of money he took from the businesses by, among other things, purchasing property in the name of a nominee entity and causing false entries in the businesses’ books and records to hide personal purchases using business bank accounts. Karen Kowkabi admitted that she willfully failed to pay these taxes as well.
They have agreed to pay $1,351,038.51 in restitution to the IRS.
From May 13, 2020, to July 27, 2021, Gholam Kowkabi obtained more than $1.6 million in COVID-19 relief funds including $474,000 from Paycheck Protection Program loans, an Economic Injury Disaster Loan for $499,900 and a Restaurant Revitalization Fund grant for $631,823.28.
In applications and loan agreements, Gholam Kowkabi lied that the PPP, EIDL, and RRF proceeds would be used only for business-related and eligible purposes. Instead, Gholam Kowkabi used a portion of the money for unauthorized purposes and for his own enrichment, including the purchase of a waterfront condo in Ocean City, Maryland, for more than $500,000; two investments totaling more than $237,000 for the construction of homes in Great Falls, Virginia; and more than $78,500 to open Divan Restaurant in McLean, Virginia. He also spent more than $11,000 of COVID relief funds on his home mortgage, more than $14,000 on vacations, more than $62,000 on personal legal expenses, more than $20,000 on home improvement and more than $5,500 on college tuition.
Gholam Kowkabi has agreed to pay $738,657.18 in restitution to the SBA and has agreed to a money judgment of $738,657.18 and to the forfeiture of the waterfront condo and two joint ventures funded with relief funds.
He pleaded guilty to wire fraud and tax evasion. Wire fraud carries a statutory penalty of 20 years and financial penalties, and tax evasion carries a statutory five years and financial penalties.
Karen Kowkabi pleaded guilty to five counts of willfully failing to pay taxes. Failing to pay tax carries a statutory one year and financial penalties.
Sentencings are Dec. 1.
Purvis, Mississippi: Terance Dewune Price, 41, has been sentenced to 34 months in prison for assisting in the preparation of a materially false return.
Price was identified in an IRS investigation as a tax preparer who willfully assisted in the preparation and presentation to the IRS of a false 1040 for an individual for 2017. Investigation revealed that the return was false and fraudulent concerning information on Line 53, a Residential Energy Credit, and information on Line 64, for federal income tax withheld from Form 1099.
He pleaded guilty on April 17, 2023, to assisting in the preparation of a materially false return.
He was also ordered to pay a $15,000 fine and $58,582 in restitution to the IRS.
Tampa, Florida: International fraudsters Adetunji Adejumo and Ibrahim Jinadu have pleaded guilty to conspiracy to commit wire fraud in a transnational tax fraud.
Each faces up to 20 years in prison. A third conspirator, Olufemi Odedeyi, of London, is pending extradition for his role in the scheme. All three were arrested in September 2021.
The conspirators (including Odedeyi) obtained unauthorized access to the computer servers of businesses in the U.S.; stole the personal ID information of U.S. residents from those servers; and used that information to file false and fraudulent federal tax forms seeking income tax refunds from the IRS.
Adejumo and Jinadu, who were residing in the United States, collected fraud proceeds that were directed to prepaid debit cards in their possession or to bank accounts they controlled or to which they had access. They then transferred a share of the fraud money to other conspirators. The conspirators filed phony returns claiming millions of dollars in refunds.