SAN FRANCISCO – LAWFUEL – Law News Network – United States Attorney Kevin V. Ryan and IRS-Criminal Investigation Special Agent in Charge Roger L. Wirth announced today that KENNETH GRIMES and BRENDA ALLEN pleaded guilty to conspiracy and aiding and assisting in the preparation of false tax returns. Mr. Grimes also pleaded guilty to tax evasion.
In pleading guilty, Mr. Grimes and Ms. Allen admitted that beginning in the early 1990’s and continuing through at least 2003, Mr. Grimes owned and operated the Ken Grimes Company in Oakland, California which provided tax return preparation services to clients. Both Mr. Grimes and his sister, Ms. Allen, prepared false tax returns on behalf of others by overstating expenses through submitting false Schedules A and E on their clients’ returns. Mr. Grimes admitted that when Ms. Allen first began working for him, clients were hesitant to have their tax returns prepared by her. Mr. Grimes taught Ms. Allen how to prepare false tax returns which increased her clientele.
Mr. Grimes and Ms. Allen were indicted by a federal grand jury on April 13, 2006. Mr. Grimes was charged with one count of conspiracy, 14 counts of assisting in the preparation of a false tax return, and three counts of tax evasion. Ms. Allen was charged with one count of conspiracy and three counts of aiding and assisting in the preparation of a false tax return.
According IRS Criminal Investigation Special Agent in Charge, Roger L. Wirth, “Mr. Grimes and Ms. Allen’s guilty pleas demonstrate that the filing of false and fraudulent tax returns and tax evasion are serous crimes with serious consequences. This case also shows that fraudulent tax preparation schemes utilizing false and inflated deductions cost the government millions of dollars each year. IRS Criminal Investigation will aggressively investigate those who intentionally cause the preparation and filing of false tax returns. Taxpayers should be very careful in choosing their tax professional.”
According to the indictment, on April 8, 2003, an undercover operation was conducted by IRS special agents on the Ken Grimes Company. During that operation, Allen is alleged to have prepared a false and fictitious Schedule C on the undercover agent’s income tax return. According to the indictment, Allen told the undercover agent that she had manipulated the figures to get the most money back on the tax return.
After contacts by the IRS, both Grimes and Allen attempted to conceal their unscrupulous activities by leaving the return preparer signatures blank or stating that the tax returns were self-prepared.
The sentencing of Mr. Grimes and Ms. Allen is scheduled for February 6, 2007., 10:30 am before Judge Vaughn Walker.
The maximum statutory penalty for the count of conspiracy in violation of 18 U.S.C. § 371 is five years imprisonment and a fine of $250,000. The maximum statutory penalty for each count of aiding and assisting in the preparation of a false tax return in violation of 26 U.S.C. § 7206(2) is three years imprisonment and a fine of $100,000. The maximum statutory penalty for each count of tax evasion in violation of 26 U.S.C. § 7201 is five years imprisonment and a fine of $250,000. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Cynthia Stier is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Stefania Chin. These charges are the result of an investigation by IRS-Criminal Investigation.
