IRS Criminal Investigation’s Top Ten Cases of 2021

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Zachary J. Montgomery

Zachary J. Montgomery

Attorney

469.998.8484
zmontgomery@freemanlaw.com

Zachary J. Montgomery is a dual-credentialed attorney and CPA. He practices in the area of federal and state tax litigation, white-collar defense, business and tax planning, and litigation. Mr. Montgomery has experience representing both businesses and individuals in federal tax controversies, including appeals, examinations, penalty abatement and collection matters. He has also represented taxpayers—from small organizations to Fortune 500 companies—with Texas franchise tax refund claims, audits, penalty abatement, and corporate structuring.

Mr. Montgomery is a graduate of the University of Virginia School of Law where he focused his studies on corporate and tax law and served on the editorial board of the Virginia Tax Review. Prior to joining the firm, he gained experience with PricewaterhouseCoopers, LLP, and a regional firm, focusing on federal and state tax controversies. His previous experience also includes Ernst & Young, Deloitte & Touche, and a judicial student clerkship with the First Court of Appeals of Texas.

Mr. Montgomery is a graduate of Texas A&M University, where he graduated Summa Cum Laude and received his B.B.A. with a double major in Accounting and Business Honors and his M.S. in Management Information Systems. While attending Texas A&M, he developed his business acumen, working as an enterprise risk consultant and financial analyst.

IRS Criminal Investigation’s Top Ten Cases of 2021

Many (if not most) people and organizations approach a new year by setting new goals or implementing changes. This exercise, however, requires a reflection on the previous year’s events, successes, and failures. And government agencies are not exempt from taking time to reflect on the prior year’s accomplishments. IRS Criminal Investigation (CI) recently selected its “Top Ten Cases of 2021,” and the list involves quite a range of prominent investigations during the past tax year.

IRS CI, Generally

According to its mission statement, Criminal Investigation “serves the American public by investigating potential criminal violations of the Internal Revenue Code (IRC) and related financial crimes in a manner that fosters confidence in the tax system and compliance with the law.”[1] IRS CI’s four main strategies are compliance, money laundering, international, and terrorism.[2] Additionally, CI pursues investigations that align with its mission, considering factors, such as: whether the investigation is high profile, whether the investigation involves egregious allegations, the deterrent of the investigation, and conformity with the CI’s Annual Business Plan (ABP).[3]

Top Ten Cases of 2021

IRS CI selected the following ten cases as the top investigations of 2021:

 

 

 

 

 

 

 

  1. Albuquerque couple sentenced to federal prison in Ayudando Guardians case

Susan Harris and William Harris were sentenced to 47 and 15 years in federal prison, respectively. They stole funds from Ayudando Guardians Inc., a nonprofit organization that provided guardianship, conservatorship, and financial management to hundreds of people with special needs. For more details on this case, click here.

  1. Rochester man going to prison and ordered to pay millions in restitution for his role in Ponzi scheme that bilked investors out of millions of dollars

John Piccarreto Jr. was sentenced to 84 months in federal prison and ordered to pay restitution totaling $19,842,613.66 after he was convicted of conspiracy to commit mail fraud and filing a false tax return. He conspired with others to obtain money through an investment fraud Ponzi scheme. For more details on this case, click here.

  1. Orlando sisters sentenced in $25 million tax fraud scheme

Petra Gomez and her co-conspirator, her sister, Jakeline Lumucso, were sentenced to eight and four years in federal prison, respectively. They operated a tax preparation business with five locations in central Florida that filed more than 16,000 false tax returns for clients from 2012 to 2016 with a total estimated loss to the IRS of $25 million. For more details on this case, click here.

  1. Russian bank founder sentenced for evading exit tax upon renouncing U.S. citizenship

Oleg Tinkov, aka Oleg Tinkoff, was ordered to pay more than $248 million in taxes and sentenced to time-served and one year of supervised release after he renounced his U.S. citizenship in an effort to conceal large stock gains that were reportable to the IRS after the company he founded became a multibillion dollar, publicly traded company. For more details on this case, click here.

  1. Ontario man who ran multimillion-dollar unlicensed bitcoin exchange business sentenced to 3 years in federal prison

Hugo Sergio Mejia was sentenced to three years in federal prison and required to forfeit all assets derived from running an unlicensed business that exchanged at least $13 million in Bitcoin and cash, and vice versa, often for drug traffickers. He charged commissions for the transactions and established separate companies to mask his true activity. For more details on this case, click here.

  1. Owner of bitcoin exchange sentenced to prison for money laundering

Rossen G. Iossifov, a Bulgarian national, was sentenced to 121 months in federal prison for participating in a scheme where popular online auction and sales websites — such as Craigslist and eBay — falsely advertised high-cost goods (typically vehicles) that did not actually exist. Once victims sent payment for the goods, the conspiracy engaged in a complicated money laundering scheme where U.S.-based associates would accept victim funds, convert these funds to cryptocurrency, and transfer the cryptocurrency to foreign-based money launderers. For more details on this case, click here.

  1. Ex-pastor of Orange County church sentenced to 14 years in federal prison for orchestrating $33 million con that defrauded investors

Kent R.E. Whitney, the ex-pastor of the Church of the Health Self, was sentenced to 14 years in federal prison and ordered to pay $22.66 million in restitution to victims after defrauding investors of $33 million by orchestrating a church-based investment scam. At his direction, church representatives appeared on television and at live seminars to make false and misleading claims to lure investors to invest in church entities. Victims sent more than $33 million to the church and received fabricated monthly statements reassuring them that their funds had been invested, when in reality, little to no money ever was. For more details on this case, click here.

  1. Prairie Village Man Sentenced to 12 Years for $7.3 Million Dollar Payday Loan Fraud, $8 Million Tax Evasion

Joel Tucker was sentenced to 12 years and six months in federal prison and ordered to pay over $8 million in restitution to the IRS after selling false information or fictitious debts to payday loan businesses and not filing federal tax returns – for himself or his businesses – with the IRS for multiple years. For more details on this case, click here.

  1. DC Solar owner sentenced to 30 years in prison for billion-dollar Ponzi scheme

Jeff Carpoff, the owner of California-based DC Solar, was sentenced to 30 years in federal prison and forfeited $120 million in assets to the U.S. government for victim restitution after creating a Ponzi-scheme that involved the sale of thousands of manufactured mobile solar generator units (MSGs) that didn’t exist. He committed account and lease revenue fraud and purchased a sports team, luxury vehicles, real estate, and a NASCAR team with the proceeds. For more details on this case, click here.

  1. San Fernando Valley family members sentenced to years in prison for fraudulently obtaining tens of millions of dollars in COVID relief

The Ayvazyan family received sentences ranging from 17.5 years in prison to 10 months of probation for crimes ranging from bank and wire fraud to aggravated identity theft. The family used stolen and fictitious identities to submit 150 fraudulent applications for COVID-relief funds, based on phony payroll records and tax documents, to the Small Business Administration and then used the funds they received to purchase luxury homes, gold coins, jewelry designer handbags and more. Richard Ayvazyan and his wife Terabelian cut their ankle monitoring devices and absconded prior to their sentencing hearing; they are currently fugitives. For more details on this case, click here.

Conclusion

IRS CI was rather busy in 2021. Notably, CI’s top ten investigations included five cases based in California. Further, the investigations involved a range of activities, including operating bitcoin exchanges and applying for COVID-relief funds—activities that are garnering the attention of government and tax enforcement agencies. With a fresh new year, it will be interesting to see IRS CI’s new investigations and areas of focus, and taxpayers should be mindful of their tax and legal obligations, as well as potential criminal exposure.

 

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[1] IRM 9.1.1.2(1).

[2] IRM 9.1.1.3(1).

[3] IRM 9.1.1.4(1).