Vertigo; not workin’ on the railroad; bad company; and other highlights of recent tax cases.
Washington, D.C.: Recent IRS Office of Professional Responsibility disciplinary actions sanctions include censure, suspension or disbarment from practice before the IRS. Individuals disciplined this year are:
Florida: CPA Ralph J. Anderson, Naples, indefinite from June 23.
Georgia: CPA Herbert E. Lewis, Peachtree Corners, indefinite from April 21.
Illinois: Enrolled Agent Holly M. Wilson, Granville, indefinite from April 7.
Michigan: Attorney Jeffrey S. Freeman, West Bloomfield, indefinite from May 21.
Puerto Rico: Appraiser Milton E. Martinez-Rodriguez, San German, indefinite from April 25.
Ozark, Missouri: Salesman Ryan J. McMillin has pleaded guilty to one count of attempting to evade or defeat taxation.
McMillin did not report income he received while employed as a timeshare salesman with four companies from 2018 to 2023, claiming exempt status on his W-4s. He also failed to file an income tax return or pay federal income taxes for those years.
McMillin owes the IRS an estimated $581,981 in unpaid taxes and faces up to five years in prison.
Philadelphia: Businessman John “Jack” Griffin has pleaded guilty to wire fraud and tax evasion.
Griffin was the principal and founder of Second Story Farming, which had several lines of business, including growing crops in vertical farms to sell to customers, developing sustainable vertical farming technologies and selling vertical farming systems to customers. (Vertical farming is a practice of growing crops vertically and in horizontally stacked layers.)
In 2017, Griffin, through Second Story, sold vertical farming systems along with the equipment, supplies, materials and operational instructions necessary to operate them to two companies. Before entering into the contracts, he provided financial projections that overstated anticipated revenues and understated anticipated expenses. Relying on the financial projections, the companies paid Second Story Farming to set up vertical farms for them.
Griffin used most of the money to pay his personal expenses and operate Second Story’s R&D. In 2017, Griffin earned income from Second Story but didn’t file an income tax return. He tried to conceal that he received any income in 2017 by, among other things, withdrawing cash and paying personal expenses from his business’s bank accounts, transferring funds from his business to his wife and withdrawing cash from Second Story’s business account.
Sentencing is Oct. 22. He faces up to 20 years in prison on each of the wire fraud charges and up to five years on the tax evasion charge. He also faces a period of supervised release, restitution and monetary penalties.
Kansas City, Kansas: Tax preparer Hophine Bwosinde, 61, of Lenexa, Kansas, has been sentenced to three years in prison for filing false income tax returns for his clients leading to a tax loss of more than $1.5 million to the IRS.
From 2018 through 2022, Bwosinde, who previously pleaded guilty, used his tax prep business to file fraudulent returns for clients. He either inflated legitimate business expenses or claimed losses related to fake businesses. He also falsely reported negative income on clients’ returns.
Gillette, Wyoming: Resident James M. Alexander has been sentenced to a year in prison, to be followed by two years of supervised release, for theft of government property (disability benefits) and for filing a false income tax return.
As a result of an injury suffered on his railroad job, Alexander applied for and received disability benefits from the U.S. Railroad Retirement Board. He agreed to inform the RRB if he earned any income or his condition improved. From 2016 to 2024, Alexander failed to report that his disability did not prevent him from working and that he had received almost $331,000 for construction and remodeling work. He also admitted to filing returns that underreported his income.
The court also ordered him to pay $409,422.28 in restitution and a special assessment of $200.
Seattle: Nigerian citizen Onomen Uduebor, a.k.a. Onomen Onohi, 30, has been sentenced to 40 months in prison after pleading guilty to conspiracy to commit wire fraud and aggravated ID theft in the scheme to steal and use income tax data for fraud.
Between February 2016 and April 2017, the scheme’s conspirators targeted companies nationwide, creating emails that appeared to come from a company exec asking human resources recipients for W-2 data. The conspirators then used the information to file more than 300 bogus returns claiming more than $1 million in refunds.
Uduebor filed 150 of the false returns and tracked the refunds and payments to bank accounts that the conspirators had set up in the names of the victims. While the IRS paid about $140,000 to the fraudsters, Uduebor claimed he received only $10,000 from the scheme. The IRS was able to seize some of the money back from the conspirators, so the total restitution owed to the U.S. Treasury is $122,720.
Uduebor, who previously pleaded guilty and will likely be deported to Nigeria after his prison term, was also ordered to forfeit the $10,000 and to pay $122,720 in restitution to the IRS.
West Berlin, New Jersey: Tax preparer Michael Sigall, 55, has pleaded guilty to two counts of aiding or assisting the preparation of false returns for clients and causing more than $16 million in tax losses.
From 2018 through 2024, Sigall operated a tax prep business and during this period prepared and filed income tax returns for hundreds of clients that contained materially false statements relating to tax credits for residential energy improvements.
Each count of aiding or assisting the preparation of false returns carries a maximum of three years in prison and a maximum fine of $250,000, or twice the gross loss or gain from the offense, whichever is greater. Sentencing is Dec. 2.
Chicago: Tax preparer Farooq Khan, 31, has been sentenced to 42 months in prison for his role in a scheme to fraudulently obtain more than $3.6 million in loans under the Paycheck Protection Program and Economic Injury Disaster Loan programs.
He owned and operated Hannan Tax Services and from approximately May 2020 through October 2021 prepared and facilitated submission of at least 30 fraudulent applications for loans. Kahn knew that the companies for which he sought the loans were non-operational and did not qualify; he falsified information in the applications, including the number of employees and tax records of the defunct companies.
Khan caused approximately $3.6 million to be fraudulently distributed by the Small Business Administration and PPP lenders. He also attempted to obtain at least an additional $588,900 in loans through other EIDL applications for non-existent companies that were never funded. He personally obtained some $1.2 million of the fraudulent loan proceeds.
Khan was also ordered to pay $3,645,104 in restitution.
