Playing defense; shocking stuff; to the cleaners; and other highlights of recent tax cases.
Washington, D.C.: Thomas G. Ehr, a longtime associate of a former defense contractor, has pleaded guilty to conspiring to defraud the United States.
From 2009 until about 2022, Ehr worked for or on behalf of a co-conspirator who was a defense contractor who owned 50% of a business that supplied jet fuel to U.S. troops in Afghanistan and the Middle East. Ehr, of the United Kingdom, was hired to manage music television and entertainment projects funded with proceeds from this business. Over time, Ehr played a role in several of his co-conspirator’s other investments, including a $60 million real estate investment in Mexico and a $50 million fuel infrastructure project.
Ehr agreed to conceal the contractor’s ownership and control of the company, primarily by falsely asserting that the contractor’s wife had founded the company, so that the contractor could obstruct the IRS’s ability to assess and collect the contractor’s taxes, including taxes on profits from contracts with the U.S. Department of Defense. Ehr acknowledged that because of the conspiracy, the contractor evaded taxes on more than $350 million of income and caused a tax loss to the United States of approximately $128 million.
Ehr also did not file returns for 2010 to 2015 nor make payments on taxes he owed for 2010 to 2023, causing a federal tax loss of more than $700,000.
Ehr, the sixth defendant associated with the defense company to plead guilty, faces up to five years in prison for a conspiracy count and a year in prison for a tax count. He also faces a period of supervised release, restitution and monetary penalties.
College Park, Maryland: Attorney James E. McCollum Jr. has pleaded guilty to not paying employment taxes withheld from employees of his law firm.
From 1998 to 2024, McCollum was the sole proprietor of a firm that he operated using a series of business names. From at least 2000 onward, he was responsible for withholding Social Security, Medicare, and federal income taxes from his employees’ wages and paying those funds over to the government each quarter. McCollum was also obligated to pay over the employer’s share of Social Security and Medicare taxes. McCollum was frequently not compliant with paying these taxes to the government or with filing returns.
Beginning in 2010, the IRS attempted to collect the unpaid employment taxes, issuing numerous notices and levies to the law firm. When the IRS was unable to collect the outstanding taxes from the firm, it assessed them against McCollum personally and tried to collect them from him as well. In 2020, McCollum sought to thwart ongoing collection efforts by transferring his business and its employees to a new entity. He continued to not file the requisite returns or pay over the employment taxes.
McCollum acknowledged that from 2000 through 2024, he did not pay over at least some $2,174,992.83 in employment taxes. He also acknowledged that he did not file his own individual income tax returns and did not pay $220,515 in individual income taxes for 2020 through 2022.
Sentencing is Sept. 29. He faces up to five years in prison.
Suffern, New York: Insurance broker Joseph Schwartz has been sentenced to three years in prison for his role in a $38 million employment tax fraud involving nursing homes he owned across the country.
He previously pleaded guilty to two counts of an indictment charging him with willfully failing to pay over employment taxes withheld from employees of his company and to willfully failing to file a Form 5500 with the Department of Labor for the employee 401(k) plan he sponsored.
Schwartz, operator of Skyline Management Group, failed to pay employment taxes relating to numerous health care and rehabilitation facilities that Skyline operated in 11 states. From October 2017 through May 2018, he caused taxes to be withheld from employees’ pay but failed to pay over more than $38 million in employment taxes to the IRS.
Attleboro, Massachusetts: Bookkeeper David Tetreault has been sentenced to 18 months in prison, to be followed by three years of supervised release, for concealing income from the IRS and for stealing disability benefits.
Tetreault, who pleaded guilty in October, was a bookkeeper for a Massachusetts-based electrical contractor between 2015 and 2021. He received wages in cash and used company funds to pay his personal credit card bills, manipulating the company’s accounting records and bank statements to disguise these payments as business expenses.
He underreported his personal income by at least $2.1 million, causing a loss to the IRS of more than $600,000. He also did not report his work for the contractor or his income to the Social Security Administration and submitted false information about his employment and income to the Employees’ Retirement System of Rhode Island. Between 2016 and 2024, he collected more than $320,000 in Social Security Disability Insurance benefits and ERSRI disability pension benefits to which he was not entitled.
Tetreault has also been ordered to pay $623,602 to the IRS, $159,816 to the Social Security Administration and $161,835 to the Employees’ Retirement System of Rhode Island in restitution.
Cooper City, Florida: A U.S. district court has issued a permanent injunction against tax preparer Sunil Ramchandani and his business, SR Chandra Inc. (d.b.a. AHS Income Tax Services).
The court ordered AHS Income Tax Services closed and barred Ramchandani from preparing or assisting in preparing federal income tax returns for others or from transferring his client lists. Ramchandani agreed to the injunction against him and his business; AHS had already agreed to a preliminary injunction before filing season.
The complaint alleged that Ramchandani prepared returns that fraudulently claimed false or inflated residential energy credits, false fuel tax credits, fictitious business losses and other false or inflated deductions and credits, including false education credits and fictitious child and dependent credits.
The IRS estimated a tax loss of more than $10 million in 2022 and 2023 alone.
Orlando, Florida: Tax preparer James Fednor Meristin has pleaded guilty to conspiracy to defraud the United States.
Between 2019 and 2023, Meristin and other co-conspirators operated the tax prep business Kings and Queens Multi Services, which prepared and filed false and fraudulent tax returns for its clients. These fraudulent returns were designed to maximize refunds by claiming undeserved pandemic-related sick and family leave credits. Meristin and his co-conspirators were able to charge and receive exorbitant fees for their services, including as much as $20,000 per return.
Meristin also admitted to deficiencies and fraudulent items in his own returns.
He has agreed to pay $2,338,675 in restitution to the IRS, and he faces up to five years in prison.
East Lyme, Connecticut: Business operator Analia Mountzoures, 48, has pleaded guilty to a tax offense.
Mountzoures operated Mountzoures Cleaning, with some 10 employees providing services to more than 200 commercial and residential clients in southeastern Connecticut. During the 2018 through 2023 tax years, she often paid employees in cash and did not report their wages to the state or federal government, did not file required IRS forms related to her employees nor issue W-2s, did not withhold employee taxes and did not pay federal employment taxes and withholding.
She also provided her tax preparer with false information that resulted in personal returns that significantly underreported her gross receipts, income and taxes due.
Mountzoures agreed to pay $380,167.60 in restitution to the IRS.
She pleaded guilty to aiding and assisting a false tax return, which carries a maximum of three years in prison. Sentencing is July 22.
