March 16, 10

NEWS / Justice Department Sues to Block Alleged $15 Million Dollar Tax Fraud Scheme Operating in Southern C

Family Tax Prep Business in Huntington Beach, Calif., Allegedly Requests Huge Fraudulent Tax Refunds By Claiming Bogus Withholdings

WASHINGTON - The United States has sued a father and two sons, all of Huntington Beach, Calif., seeking to bar them and their business from preparing federal tax returns for others, the Justice Department announced today. According to the government complaint, Alexander Adams and his two sons, Garrett and Brandon Adams, operate Adams Beach Income Tax in Huntington Beach. The suit alleges that the Adamses have attempted to siphon over $15 million in fraudulent refunds from the U.S. Treasury for customers and for themselves.

The complaint says the defendants prepare federal income tax returns claiming massive fraudulent tax refunds based on fabricated income tax withholdings. According to the complaint, Alexander and Garrett Adams requested two fraudulent refunds for $2.5 million a piece – one for Garrett Adams himself, and the other for a customer. Alexander Adams also requested a bogus refund for himself in the amount of $361,147, the suit alleges.

According to the government complaint, Alexander and Garrett Adams falsify Internal Revenue Service (IRS) documents, including IRS 1099-OID Forms with fictitious tax withholdings to claim the bogus refunds. Brandon Adams allegedly seeks new business by promoting the tax fraud scheme through live seminars, Web sites, conference calls, CDs and one-on-one instruction. The complaint says the defendants’ scheme is part of a growing trend of filing frivolous federal tax returns and forms to steal from the U.S. Treasury.

Last week, a federal judge in Sacramento found that tax preparer Teresa Marty had been using the same scheme to seek bogus refunds for her customers, and permanently barred her from preparing tax returns for others.

"Taxpayers thinking of participating in the illegal scheme described in this lawsuit should consider that, in addition to risking criminal prosecution, they also risk incurring civil penalties of as much as 20% of the amount of their bogus refund claim," said John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division. "For false claims on the scale described in this case, the 20% penalty could result in scheme customers losing their savings and their homes."

http://www.justice.gov/opa/pr/2010/March/10-tax-267.html

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