12/02/2008

News / Four Indicted by New York Grand Jury in Conspiracy to File False Claims for Tax Refunds

Scheme Allegedly Involved Filing False Income Tax Returns Using Names of Clients of NYC Human Resources Administration & Center for Employment Opportunities

WASHINGTON - An 18-count indictment charging Odell Folks of Brooklyn, N.Y., Sharon Smith of Bronx, N.Y., Tanya Smith of Waterbury, Conn., and Keith Terry of Dallas, Ga., with conspiracy to file false claims for refund in the form of false income tax returns was unsealed today, the Justice Department and Internal Revenue Service (IRS) announced. The indictment was returned on Nov. 26, 2008, by a federal grand jury in the Eastern District of New York.

According to the indictment, between approximately May 1, 2003, and Feb. 28, 2005, Folks and others engaged in a scheme to defraud the IRS through the submission of false income tax returns filed in the names of other individuals. The indictment alleges that Folks and Sharon Smith submitted the false income tax returns to the IRS in the names of clients of the New York City Human Resources Administration (HRA) and the Center for Employment Opportunities (CEO). HRA offers a wide range of social service programs to individuals receiving public assistance. CEO provides comprehensive employment services for persons with criminal records, including temporary jobs for individuals recently released from prison. The indictment states that both Folks and Sharon Smith were employed as job counselors at CEO.

According to the indictment, Folks and Sharon Smith obtained names and information of HRA and CEO clients and used that information to seek refunds by filing false tax returns with the IRS. Based on the false documents, the indictment alleges that the IRS issued income tax refunds in the form of U.S. Treasury checks and mailed the refunds to false addresses. The indictment further asserts that Folks and his co-conspirators obtained and cashed the refund checks. The indictment also states that Tanya Smith and Keith Terry used their bank accounts to cash some of those false Treasury checks.

Folks also was charged with eight counts of mail fraud, five counts of presenting false claims, and three counts of making and subscribing false income tax returns. Sharon Smith also was charged with seven counts of mail fraud and five counts of presenting false claims. Terry also was charged with five counts of presenting false claims and one count of making and subscribing a false income tax return.

"Stamping out tax refund fraud wherever it is found is a top priority for the Department of Justice and IRS," said Nathan J. Hochman, Assistant Attorney General of the Justice Department's Tax Division. "Those who try to steal the taxpayers’ money should know that there are severe consequences, including the potential for incarceration, steep fines and having to pay back all the stolen refund money."

If convicted of the conspiracy, defendants face the following maximum penalties: false claims – 10 years imprisonment and a $250,000 fine; presenting false claims – five years imprisonment and a $250,000 fine per count; mail fraud – 20 years imprisonment and a $250,000 fine per count; and making or subscribing a false tax return – three years imprisonment and up to a $250,000 fine.

"Refunds are issued to taxpayers who are entitled to them," said Eileen Mayer, Chief, IRS Criminal Investigation. "Criminal Investigation and the Department of Justice will continue to work to aggressively investigate and prosecute those who prepare false tax returns to claim improper refunds."

This case is being prosecuted by Tax Division trial attorney Mark F. Daly and Assistant U.S. Attorney Shreve Ariail of the Eastern District of New York. This case was investigated by the IRS Criminal Investigation Division office in Bridgeport, Conn., and the U.S. Postal Inspection Service in New Haven, Conn.

An indictment is merely a formal charge by the grand jury. Each defendant is presumed innocent unless and until proven guilty in U.S. District Court.

More information about the Justice Department’s Tax Division is available at www.usdoj.gov/tax
http://www.usdoj.gov/opa/pr/2008/December/08-tax-1056.html

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