You can check out but you can never leave; job experience; and other highlights of recent tax cases.
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Corona, California: Customs broker Frank Seung Noah, 63, has been sentenced to 51 months in prison and ordered to pay $7,579,141 in restitution for defrauding clients out of more than $5 million, including after he already had been indicted on federal fraud charges, and to committing more than $1 million in tax evasion.
Noah pleaded guilty in February to one count of tax evasion and two counts of wire fraud.
Noah, who previously pleaded guilty, owned and operated Comis International Inc., a logistics and supply-chain company in Cerritos, California, that offered customs import brokerage services on behalf of businesses. From 2007 to 2019, Comis was a customs import broker for Daiso, a Japan-based variety and value store with stores in the United States, including Southern California.
During that time, Noah provided Daiso with false customs duty forms and invoices in support of fraudulent requests for reimbursement for duty fees. These forms differed materially from those Noah submitted to U.S. Customs and Border Protection and inflated the total amounts, resulting in Daiso overpaying Noah nearly $3.4 million.
After Noah was indicted for defrauding Daiso in 2022, he continued to defraud his other clients out of more than $2 million using a different scheme.
Noah also willfully evaded payment of federal taxes resulting in a loss to the IRS of some $2.4 million, with penalties and interest. After agreeing with the IRS that he owed more than $1 million in taxes in 2014, he dodged attempts to collect the amount owed, included by paying for two homes in his former girlfriend’s name, using check-cashing businesses to avoid IRS levies of his bank accounts, lying to IRS collection agents, and spending thousands of dollars on country club memberships, travel and golf purchases.
Absecon, New Jersey: Two men admitted to conspiring to defraud the IRS by filing false returns that concealed their motels’ cash payroll.
Dhruvesh Patel, 37, and Mayank Ray, 36, both pleaded guilty. They operated two motels in Atlantic City, New Jersey, that generated substantial gross receipts from customers who paid for their rooms in cash. As part of the conspiracy, Patel and Ray used a large portion of the cash to pay employees in cash and kept some of the resulting cash for personal use.
The two caused to be prepared and filed with the IRS false employment returns that concealed the cash wages and false individual income tax returns that underreported the income they earned from the motels. Patel admitted that the conspiracy and his relevant conduct caused a loss greater than $250,000, and Ray admitted that the conspiracy and his relevant conduct caused a loss of approximately $129,512.
The count of conspiracy carries a maximum of five years in prison and a fine of up to $250,000. Sentencing is May 11.
San Antonio: Tax preparer and former IRS employee Hector Cavazos, 63, has been sentenced to two years in prison and a $150,000 fine for preparing false returns.
Cavazos owned and operated a tax preparation business where he aided and assisted in the preparation of 61 false returns on behalf of 13 taxpayer clients and one undercover agent for tax years 2016 through 2021. Defying IRS regulations, Cavazos did not sign any of the returns as a paid preparer. Additionally, the 61 returns contained false Schedule C losses unbeknownst to the taxpayers. The 61 violations amounted to a tax loss of $579,682.
Cavazos had been employed by the IRS until 1996, when he was arrested and charged with fraud in California. He pleaded guilty to conspiracy and collusion with another person to defraud the United States and was sentenced on Nov. 6, 2000, to two months in prison.
In addition to ordering the prison sentence and fine, Cavazos, who previously pleaded guilty, was barred from preparing, aiding and assisting in tax return prep.
