United States Attorney
Southern District of New York
FOR IMMEDIATE RELEASE CONTACT: U.S. ATTORNEY’S OFFICE
SEPTEMBER 21, 2011 ELLEN DAVIS, JERIKA RICHARDSON,
PREET BHARARA, the United States Attorney for the
Southern District of New York, announced that EUGENE OSUALA, a
tax preparer who operated in the Bronx, New York, was found
guilty by a jury on Tuesday of all 43 counts charged, including
corruptly impeding the enforcement of the Internal Revenue laws,
filing false tax returns for himself, and preparing numerous
false tax returns for others. OSUALA’s scheme generated over one
million dollars in undeserved refunds for his clients, and his
business took in more than $650,000 in fraud proceeds. Among
other things, OSUALA used various inflated and phony deductions,
including fake gifts to charity, fake business expenses, and fake
education credits, so that he could fraudulently increase the
refunds paid to his clients. OSUALA also had many of his clients
take out Refund Anticipation Loans, or “RALs,” which were paid
through his office, and from which he skimmed hundreds of
thousands of dollars of his clients’ refunds without their
Manhattan U.S. Attorney PREET BHARARA stated: “Eugene
Osuala was a serial liar who violated the tax laws with impunity.
This kind of fraud is never acceptable, but it is particularly
egregious in these times of tight budgets and federal deficits.”
According to the evidence presented during the 5-day
trial before U.S. District Judge SIDNEY H. STEIN:
OSUALA ran a tax preparation business in the Bronx
called Ogenes Tax Services, from which he prepared fraudulent tax
returns in order to generate large tax refunds for his clients
and skim hundreds of thousands of dollars from those refunds for
himself. From 2002 through 2005, OSUALA filed large numbers of
returns containing fabricated expenditures like gifts to charity,
tuition payments and uniform and dry cleaning expenses in order
to get his clients tax deductions and credits that increased the
size of their tax refunds. OSUALA provided his clients with
phony copies of their tax returns, showing a smaller amount of
deductions and a lower refund amount than was actually submitted
to the IRS. He then used a bank’s RAL program to pay himself the
difference between the refund his clients were expecting and the
refund that the IRS actually paid. In addition, for tax years
2003 and 2004, OSUALA falsely reported on his own tax returns
that his tax preparation business was losing money when, in fact,
it was making nearly $200,000 a year.
* * *
OSUALA, 59, was convicted of one count of corruptly
endeavoring to impede the Internal Revenue laws, two counts of
filing fraudulent tax returns for himself, for tax years 2003 and
2004, and forty counts of aiding in the preparation of false tax
returns for others. OSUALA faces a maximum sentence of three
years in prison on each count, for a total maximum sentence of
129 years in prison.
OSUALA is scheduled to be sentenced by Judge STEIN on
December 16, 2011, at 2:30 p.m.
The case was part of “Operation Brass Tax,” a joint
investigation conducted by the United States Attorney’s Office
for the Southern District of New York and the IRS. Operation
Brass Tax was the largest coordinated takedown of corrupt tax
preparers in recent history. OSUALA is the third defendant
convicted following trial. To date, 18 defendants have been
convicted –- fifteen by guilty plea and three after trial.
Charges remain pending against the remaining seven defendants,
four of whom are fugitives. They are presumed innocent unless
and until proven guilty.
Mr. BHARARA thanked the IRS for its outstanding work in
the investigation of Operation Brass Tax. He also thanked the
U.S. Department of Justice’s Tax Division for their assistance.
The prosecution of the cases arising from “Operation
Brass Tax” is being overseen by the Office’s Complex Frauds Unit,
assisted by the General Crimes Unit and the White Plains
Division. Assistant U.S. Attorneys E. DANYA PERRY and ANDREW D.
GOLDSTEIN are in charge of the prosecution.