By any other name; a different kind of clearing house; dodgy digital; and other highlights of recent tax cases.
New York: David Motovich has been sentenced in federal court in Brooklyn to 15 years in prison for operating an illegal money transmitting business, failure to file currency transaction reports, bank fraud, conspiracy to commit bank fraud, money laundering, aggravated ID theft and conspiracy to defraud the U.S.
Motovich, convicted by jury in July 2024, used his family-run business in Brooklyn as a front for an illegal, unlicensed check-cashing operation. He offered his services primarily to owners and operators of construction companies, cashing millions of dollars in checks to fund off-the-books payrolls for those businesses. He cashed checks for his customers in exchange for a fee or a percentage of the face amount of the checks, typically 4% to 15%. Motovich’s customers paid a higher fee with the understanding that Motovich would not file Suspicious Activity Reports or Currency Transaction Reports for cash transactions in amounts greater than $10,000. Motovich supplied his customers with fraudulent documents to disguise the transactions.
He also created shell companies to facilitate his illegal business and allow himself and his associates to evade taxes. Motovich instructed his customers to issue checks drawn against their business accounts and to make the checks payable to one of the companies, then deposited the checks into bank accounts that he created at several financial institutions, which he’d opened in the names of others. In one instance, he stole the ID of a low-level worker and then bribed a banker to open accounts in the victim’s name and funnel millions of dollars through the accounts.
In total, between 2012 and 2019 Motovich deposited more than $55 million into these accounts and used the money to buy real estate; pay personal and corporate credit card accounts; purchase such luxury items as millions of dollars of diamonds, watches, jewelry and clothing; make lease and purchase payments for Porsche and Lexus vehicles; pay premiums on multimillion-dollar life insurance policies for himself, his wife and others; renovate his penthouse apartment in Manhattan to include a swimming pool; and to fund other business ventures.
Motovich was also to forfeit some $38 million, including his interests in a Manhattan penthouse apartment featuring a private indoor swimming pool, commercial real estate buildings in Brooklyn, and luxury jewelry and handbags. Co-defendants Marina Kuyan, Kemal Sarkinovic and Joshua Markovics previously pleaded guilty and await sentencing.
Pensacola, Florida: Tax preparer Khristine N. Harper has pleaded guilty to 20 counts of aiding and assisting the preparation of false returns and one count of ID theft.
Between 2018 and 2024, Harper routinely prepared and filed fraudulent income tax returns for her clients by listing false amounts for various deductions, credits, and other items that were never provided to her by those clients. After Harper became aware in July 2023 that the IRS was investigating her, she changed the name of her prep business from Kings Tax Service to Echelon Tax.
She also obtained a PTIN in another person’s name without permission and filed her clients’ 2023 returns using that fraudulently obtained PTIN. For just the twenty specific returns listed in the indictment that were the basis of the counts to which Harper pled guilty, she caused more than $103,000 in federal tax loss.
Sentencing is Dec 17.
Savannah, Missouri: Tax preparer and school official Anthony S. Moon, 44, has been sentenced for theft concerning programs receiving federal funds, wire fraud, and embezzlement from an employee benefit plan.
Moon worked as the district accountant for the Savannah R-III School District and was also owner and president of Parker and Associates, a tax prep and bookkeeping company.
Beginning about January 2023 and continuing through about November 2023, Moon embezzled from the district. He used his position to write unauthorized checks to himself and his business from the district checking account; he also used the district’s checking account to make Automated Clearing House payments to his and his wife’s personal credit card accounts.
Moon also devised a scheme as president of his accounting business to embezzle funds from his employees’ retirement savings plan. For his employees, Moon sponsored an employee pension plan subject to the Employee Retirement Income Security Act of 1974, the Simple IRA Plan. For nearly two years, he caused tens of thousands of dollars to be withheld from salaries of his employees but failed to transfer those funds to the plan. Moon failed to deposit funds in employer matching contributions to the plan.
He used those embezzled funds to pay for his and his wife’s personal expenses, including, among other things, Kansas City Chiefs tickets, food, travel, gas and entertainment.
He was sentenced to a total of a year and a day in prison and ordered to pay $92,746.99 in restitution to the District and $29,695.77 to his two employee-victims. The court also entered a final order of money judgment forfeiture of $122,442.76.
Sewell, New Jersey: Businessman Jose Camilo Perez, Jr., 54, has been sentenced to a year in prison for evading more than $3.4 million in taxes.
Perez controlled a company that digitized medical records for hospitals and other healthcare entities. From 2016 through 2023, the business received more than $8 million for the services it performed. Perez attempted to evade assessment of federal income taxes by cashing checks payable to the business at a check cashing business rather than depositing those checks into the business’s bank account or his personal bank account, and then he used the cash for personal expenses and to pay payroll.
During those years, Perez reported none of the income he received from the business to the IRS.
Perez was also sentenced to three years of supervised release and ordered to pay $3,434,066 in restitution.
