New Orleans tax preparer arrested for fraud

BATON ROUGE – A New Orleans woman faces charges of defrauding the State of Louisiana of more than $900,000 through the filing of false tax returns, the Louisiana Department of Revenue (LDR) announced Thursday.

Kenshika Sade Jiles, of 5209 Spain Street in New Orleans, was arrested by investigators from the Louisiana Department of Justice (DOJ) on April 16 and booked into the East Baton Rouge Parish Prison. She faces two felony counts of computer fraud and injuring public records.

Investigators say Jiles, owner of S&A Tax Service, prepared and submitted tax returns containing false information including phony business expenses, unreimbursed employee expenses and improper child care tax credit claims. Her alleged actions resulted in $923,751 in unpaid taxes and fraudulent refunds.

Jiles is the 17th person arrested since March 2013 under an anti-fraud initiative by the Department of Revenue and state Department of Justice.

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Bossier Parish tax preparer arrested on fraud charges

BATON ROUGE – A Bossier Parish tax preparer faces felony charges related to tax fraud, the Louisiana Department of Revenue (LDR) announced Wednesday.

Marie Kemp, known also as Marie Devers, of 430 Kingston Road in Benton, was arrested in Bossier City on April 3, 2014, and transported to Baton Rouge on April 7, where she was booked into the East Baton Rouge Parish Prison.

Kemp is the 16th person arrested under a joint anti-fraud initiative by the Department of Revenue and the Louisiana Department of Justice (DOJ). She faces 21 counts of identity theft, computer fraud, and filing or maintaining false public records.

Kemp is accused of falsifying tax returns filed through Marie’s Tax Service, a tax preparation business with two locations in Bossier City. She allegedly inflated income tax refunds for her clients by improperly claiming the state’s Child Care Expense Tax Credit. Investigators contacted the providers listed on the falsified returns, who denied providing the services.

“The abuse of state tax credits is fraud,” Secretary of Revenue Tim Barfield said. “This anti-fraud initiative helps to ensure valuable programs such as the Child Care Expense Tax Credit remain available for those who need them.”

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Department of Revenue investigations of tax preparers identify millions in fraudulent refunds

BATON ROUGE – A joint initiative of the Louisiana Department of Revenue (LDR) and the Attorney General’s office to prevent fraud committed by tax preparers has yielded numerous arrests and identified millions of dollars in potentially fraudulent income tax refunds.

The investigative focus on tax preparers has resulted in ten arrests since it began less than a year ago in March 2013.  All such cases involve a total of $1.8 million in fraudulent refunds to date. 

The LDR Taxpayer Refund Intercept Program (TRIP) analyzes income tax refunds as they are processed. When TRIP unit analysts observe suspicious patterns, they investigate to determine if fraud is involved.

The most recent TRIP arrests focus on alleged fraud connected to Quick Tax, a tax preparation business with locations in Baton Rouge and Baker.  Ebony C. Martin, of 17424 Airline Highway in Prairieville, was booked into the East Baton Rouge Parish Prison on Monday, October 7, 2013; Shantel Banks, of 8441 Betty Smothers Avenue in Baton Rouge, was arrested on Tuesday, October 8; and Alfreda Walker, of 4912 Longfellow Drive in Baton Rouge, was arrested on Thursday, October 10.  All three face felony counts including theft, computer fraud, tax evasion and filing or maintaining false public records.

“According to the arrest warrants, the suspects prepared tax returns with phony business loss information that resulted in fraudulently large income tax refunds for their clients,” said Barry Kelly, director of the LDR Criminal Investigations Division.

The alleged criminal activity in the Quick Tax case involved $210,422 in fraudulent refunds.

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In an unrelated case this month, Lawrence James Richard of 12535 Arnold Road in Walker was arrested on October 3, 2013, on charges of tax evasion and failure to file. He is accused of failing to report income to the state in 2009, 2010, 2011 and 2012.

 

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LDR News Release – AG and LDR Crack Down on Tax Fraud

BATON ROUGE – By the time the Taxpayer Refund Intercept Program (TRIP) singled out yet another tax return prepared by Innovative Professional Financial Services, Inc. (or IP Financial Services), a distinct pattern began to emerge. The Louisiana Department of Revenue (LDR) uses the TRIP program to monitor and carefully analyze tax returns as they are processed through their system. Unusually large refunds were rising to the top from returns prepared by IP Financial Services. Taxpayers who had their tax returns prepared by this firm were contacted by LDR to verify their income, taxes paid, and taxes withheld. The results confirmed the suspicion. Numerous discrepancies were identified, and a scam was discovered.

IP Financial Services president John Labee promised taxpayers that he was capable of finding new tax credits and write-offs that would greatly reduce a taxpayer’s liability and increase their refund. For the average cost of $500, he advertised he could discover hidden deductions and raise refund amounts in ways other preparers could not. Many taxpayers believed him – to their loss.

Labee created fake W-2 forms that reported false wages and payments to LDR that were never made. He overstated tax withholdings and falsified documents in an attempt to trick the computer system with such an elaborate process that taxpayers were unaware of his tactics. By claiming deductions not permitted by both the Internal Revenue Service (IRS) and LDR, the refunds he tabulated and transmitted to LDR were ultimately found to be merely a ploy against his customers who were the ones that were forced to reconcile the amount they actually owed LDR with the amount Labee said they were owed by LDR.

When contacted by angry taxpayers regarding the discrepancies on their returns, Labee provided them with checks written to LDR with which to pay their tax liabilities. 52 of those checks were returned for nonsufficient funds (NSF). Labee was arrested in September 2011 and charged with Filing and Maintaining False Public Records (La. R.S. 14:133) and Issuing Worthless Checks (La. R.S. 14:71). He pleaded guilty on August 19 in 19th Judicial District Court in Baton Rouge to six felony counts of issuing worthless checks.  He was ordered to pay $82,000 in restitution and faces a maximum 60 years in prison.  The sentencing hearing is scheduled for October 17, 2013.

Additional charges from federal prosecutors are pending against Labee, including 9 counts of aiding or assisting in preparation of false documents; 2 counts of making false statements on income tax returns; 1 count of attempted mail fraud; and 1 count of making false declarations before a grand jury.

A New Focus on Fraud

When this case came to the attention of Louisiana Secretary of Revenue Tim Barfield, he began to work with LDR’s Criminal Investigations Division (CID) for ways to combat this type of fraud. Data revealed that an increase in the number of tax preparers completing fraudulent returns on behalf of taxpayers was on the rise. A shift in focus was ordered that would target tax preparers who opened businesses only to illegally profit from the trust of taxpayers.

In partnership with the Louisiana Attorney General’s office, in March 2013, LDR officials detailed two commissioned criminal investigators to the LDR staff. These law enforcement officers are housed in the Louisiana Department of Justice (DOJ) and work with DOJ staff.

“This addition to our staff and our partnership with the Attorney General’s office has strengthened one of the core competencies of our department,” LDR Secretary Tim Barfield said. “We are charged by the taxpayers of this state to protect their interests and focus on tax fraud and similar issues. The investment in these law enforcement personnel is already paying off.

Last week, six other tax preparers were arrested on charges ranging from filing false public records to fraud:

  • LaKindra Williams – 143 E. Holly Street, Baton Rouge
  • Chandris Ferguson – 12457 Lockhaven Avenue, Baton Rouge
  • Duane Dufrene – 22 Parlange Drive, Destrehan
  • Leroi Jackson – 10909 Vienna Street, New Orleans
  • Edris Ferguson – 12171 Canterbury Park Drive, Geismar
  • Maletica Ferguson – 5155 Waterton Drive, Lithonia, GA

“Louisiana will not tolerate fraud, whether committed by pharmaceutical companies or by fraudulent tax return preparers who are stealing from their clients and from the state. We are committed to partnering with the Department of Revenue and other state agencies to track down these lawbreakers and recover the state’s funds,” stated Louisiana Attorney General Buddy Caldwell.

Secretary Barfield intends to strengthen and dedicate more personnel and resources to fraud detection that will ultimately provide direct benefit to Louisiana taxpayers.

“The widespread abuse by tax preparers should serve as a warning to taxpayers across the state,” Barfield said. “Do not trust someone who promises something that sounds too good to be true. Make sure you have done your homework on who prepares your tax returns.”

Barry Kelly, LDR’s Criminal Investigations Division (CID) director, plans to expand the scope of future investigations.  “There will be more arrests as we continue to aggressively move forward,” Kelly said. “We hope to discover everyone who commits tax fraud – especially those who put themselves forward as servants of the public trust. This is our stewardship to the people of Louisiana, and we will do it well.”

How to Select a Tax Preparer:

If you are going to pay someone to do your tax return, be sure to choose your tax preparer wisely. Remember that you are legally responsible for what is on your tax returns even if they are prepared by someone else. So, it is important to find a qualified tax professional.

Be sure to:

  1. Choose a preparer who will be available to answer questions after the return has been filed.
  2. Find out what the preparer’s service fees are before the return is prepared.
  3. Avoid preparers who base their fee on a percentage of the amount of your refund or who claim they can obtain larger refunds than other preparers without first reviewing your returns.
  4. Avoid tax preparers that ask you to sign a blank tax form.
  5. Before signing your return, carefully review it and ask questions.
  6. Ask any tax preparer for references.
  7. Check to see if the tax preparer has any questionable history with the Better Business Bureau, the state’s board of accountancy for CPAs or the state’s bar association.
  8. Check to see if the tax preparer belongs to a professional organization that requires its members to pursue continuing education and holds them accountable to a code of ethics.
  9. Check to see if the tax preparer has a proper Preparer Tax Identification Number (“PTIN”) from the Internal Revenue Service (“IRS”), which is required to file federal tax returns.
  10. Check to see if the IRS has not obtained a permanent injunction prohibiting the tax preparer from preparing federal tax returns.
  11. Always question entries on your return that you do not understand. Never sign a blank return.
  12. Insist that the tax preparer sign the return and provide appropriate taxpayer information on the return.

Traits of a reputable preparer:

  1. They ask multiple questions to determine whether expenses, deductions and other items qualify as legitimate tax deductions.
  2. They remind clients they should keep careful and complete records in order to substantiate information contained on their tax return.
  3. They provide their clients with a copy of their completed return for their records.
  4. They respond to contacts made by their clients in a reasonable period of time.

 

 

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New Computer System to Prevent Tax Fraud

BATON ROUGE – Recent actions by the US Congress regarding the fiscal cliff legislation, known as the American Taxpayer Relief Act (ATRA), delayed the date when Internal Revenue Service (IRS) tax returns may be filed. Today, January 30, is the first day when federal income returns will be accepted. The Louisiana Department of Revenue (LDR) will also begin to receive income tax returns today.

The majority of IRS tax returns are now filed electronically. In 2012, 80 percent of all federal tax returns were filed electronically, fulfilling a goal Congress set in 1998. Since 2007, the number of Louisiana taxpayers filing their taxes electronically has risen by 58 percent. In 2011, 1.6 million Louisiana taxpayers (82 percent of the total number of Louisiana taxpayers) e-filed filed their state income tax return.

With the increase in electronic filing, tax fraud has skyrocketed. At the federal level, tax fraud remains the third largest theft of federal funds (just behind Medicare/Medicaid and unemployment insurance fraud) and has risen to a record 1.1 million cases in 2011. With the rise in electronic filing of Louisiana state income tax returns, state tax fraud has also increased. Tax fraud cases in Louisiana directly discovered as a result of current theft protection measures have risen to almost 23,000 cases in 2012.

LDR has taken steps to prevent e-filing fraud in coordination with the IRS. When current Executive Counsel, Tim Barfield and Chief of Staff Jarrod Coniglio first arrived at the agency late in 2012, a priority was placed on protecting the public from tax fraud with the installation and integration of new fraud protection software.

“When I first saw the data and the growing possibility for millions of dollars to be stolen from the state of Louisiana, we wanted to put in measures that would immediately maximize LDR’s efficiency to prevent tax fraud,” Barfield said.

LDR worked during December 2012/January 2013 to develop a customized Louisiana-specific fraud protection computer interface. The new system required a significant testing phase to assure accuracy of the system, protect taxpayer identity, and secure all confidential taxpayer information.

All state income tax returns received on or after January 30, 2013, will be subject to identity verification through the new tax protection software. The first taxpayer returns will be processed February 15, 2013. Refunds will begin to be issued on February 26, 2013.

If a return is identified as questionable in the review process, the taxpayer will then be directed to a customized online data test or a telephone survey that will serve as a secure method to verify the identity and final certification of the return.

“We are confident this new system will help protect the public trust against tax fraud,” Barfield stated. “Our goal is to increase the efficiency and effectiveness of this agency as we serve Louisiana taxpayers during the tax season.”

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Louisiana man faces hundreds of felony counts related to tax fraud

BATON ROUGE – A Slidell business owner faces hundreds of felony charges for filing fraudulent tax returns and issuing worthless checks.

John Labee, 1642 Barrymore Street, Slidell, LA 70461

Source: East Baton Rouge Parish Sheriff's Office

Investigators with the Louisiana Attorney General’s Office arrested John Labee  as the result of a joint investigation between fraud investigators at the Louisiana Department of Revenue and the Attorney General’s Office.

“This arrest is a great example of Louisiana agencies working together to crack down on tax fraud,” said Secretary of Revenue Cynthia Bridges.

Attorney General Buddy Caldwell said, “This sends a clear message that fraud will not be tolerated in Louisiana.”

Investigators say Labee, owner of Innovative Professional Financial Services, submitted more than 500 fraudulent Louisiana Individual Income Tax returns on behalf of clients for tax periods in 2008 and 2009.  They say the returns contained incorrectly reported deductions, fabricated withholding statements and overstated withholdings. 

In addition, Labee faces charges of submitting fraudulent returns for himself for tax periods from 2007 to 2009.

The arrest warrant also accuses Labee of writing worthless checks to the Department of Revenue to pay taxes his clients owed to the state.

The charges against Labee include:

  • 530 counts of filing or maintaining false public records
  • 53 counts of issuing worthless checks

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Alexandria businessman faces felony tax fraud charges

BATON ROUGE – An Alexandria man faces four felony counts of tax fraud following a joint investigation by the Louisiana Department of Revenue (LDR), the Louisiana Attorney General’s office, and the Rapides Parish Sales and Use Tax Department.

Special agents from the Louisiana Department of Justice arrested Rajeshkuner Patel, of 5846 Navaho Trail, Alexandria, on Wednesday, December 9.  The arrest warrant was the result of a year-long investigation of alleged criminal tax violations at one of Patel’s businesses, NR Group, L.L.C.

The charges against Patel are:

  • Theft over $500.00 [La R.S. 14:67(B)(1)] – Two Counts
  • Failure to Account for State Tax Money [La. R.S. 47:1641] – One Count
  • Tax Evasion [La. R.S. 47:1642] – One Count

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LDR News Release – Alleged identity theft leads to tax fraud arrest

June 4, 2009

BATON ROUGE ‐ A Baton Rouge woman faces a charge related to felony tax fraud after she allegedly committed identity theft in the filing of fraudulent state income tax returns.

Baton Rouge police arrested 25‐year‐old Kathryn Foster, of 1358 North 23rd Street in Baton Rouge, on one count of Filing False Public Records. The arrest was the result of a joint investigation by the Criminal Investigations Division (CID) of the Louisiana Department of Revenue, the East Baton Rouge Parish District Attorneyʹs Office, and Baton Rouge City Police.

Investigators say Foster falsely claimed two individuals as dependents on her Louisiana State Individual Income Tax returns in 2006, 2007, and 2008.

If convicted, Foster faces up to five years in prison, a fine of up to $5,000, or both.
For more information, please contact:

Barry Kelly
Director, Criminal Investigations Division
Louisiana Department of Revenue
225.219.2280
Barry.kelly@la.gov

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