Uncovering a Major IRS Fraud: How Did Seven Individuals Get Caught?

Gavel with a dollar sign beside it.

Seven individuals face charges for an elaborate pandemic tax credit fraud scheme defrauding the IRS of millions in COVID-19 employment tax credits.

Key Takeaways

  • Seven individuals were charged with attempting to steal over $600 million in COVID-19 tax credits in the largest Employee Retention Credit scheme in the U.S.
  • The defendants allegedly filed over 8,000 false tax returns using shell companies and VPNs to conceal their activities.
  • The IRS paid approximately $45 million to the defendants and their clients; if convicted, they face up to 20 years for wire fraud charges.
  • The case highlights the federal government’s ongoing investigations into pandemic-related fraud.

Allegations Unveiled

The indictment against seven individuals reveals a bold attempt to exploit COVID-19 pandemic relief programs. The accused include Keith Williams, Jamari Lewis, Morais Dicks, Janine Davis, Tiffany Williams, James Hames Jr., and Ewendra Mathurin. Accusations indicate these individuals sought to illegally procure over $600 million through false claims by filing more than 8,000 fraudulent tax returns.

Functioning under a credit repair business, “Credit Reset,” they allegedly fabricated business documents and exploited pandemic credits like the Employee Retention Credit (ERC) to deceive the IRS. Their operation reportedly involved manipulating business registrations and inflating financial statements to obtain pandemic benefits meant for struggling businesses and employees.

The Mechanics of Fraud

To cover their tracks, defendants allegedly used Virtual Private Networks (VPNs) to obscure their identities while filing returns and concealed their roles as paid preparers. Documents suggest that they spent part of the $44 million secured on luxury goods, flaunting their plunder online. Allegedly, no legitimate business operations were ever attached to the shell companies utilized to fraudulently claim ERC and Sick and Family Leave Credits.

“Criminals have found ways to exploit every iteration of aid offered through the COVID-19 pandemic relief funds. The ERC was created to help businesses keep themselves and their employees afloat. Yet, the defendants allegedly stole $44 million from the relief pool and chose to spend their illicit gains on jewelry, designer clothing, and luxury cars. IRS-CI worked this case with our law enforcement partners to make sure that the egregious acts of those arrested today do not go unpunished. It’s time they face justice.” – IRS-CI New York Special Agent in Charge Chavis –

Their purported deceptive acts extended to submitting fraudulent Paycheck Protection Program (PPP) loan applications, adding to the misuse of funds intended to aid legitimate small businesses during the pandemic.

Legal Proceedings and Outlook

Their indictment includes charges of conspiracy to defraud the U.S., wire fraud, and aiding in preparing false tax returns. Proceedings initiated by the Eastern District of New York and the Department of Justice’s Tax Division could result in up to 20-year sentences if convictions are secured. The IRS-CI, USPIS, and other law enforcement continue to rigorously investigate pandemic relief fund misappropriations.

“This program was created to aide struggling small businesses during the pandemic, instead these individuals exploited it to fraudulently take money from taxpayers for their financial gain. USPIS will continue to aggressively investigate individuals who defraud the government.” – USPIS Acting Inspector in Charge Donahue

Defense attorneys for the charged individuals argue the prosecution is unfounded. The defendants, like Morais Dicks, declare they were honest in their business dealings and await the opportunity to clear their names. Nonetheless, the government’s crackdown on pandemic-related fraud continues, buttressed by legislative initiatives like Sen. Joni Ernst’s proposed “Complete COVID Collections Act,” aimed at extending the authority to pursue justice against fraudsters.

Sources:

  1. Defendants Charged With Filing Over 8,000 False Tax Returns In Largest COVID Tax Credit Case To Date
  2. Seven individuals charged in largest employee retention credit scheme case in the United States | Internal Revenue Service

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