False Deductions Cost IRS Over $10 Million in Taxes
LAWFUEL – The Law News Network – A Pacoima tax preparer has been sentenced to 11 years in federal prison for running a scheme in which he prepared fraudulent tax returns that claimed bogus business losses of more than $75 million.
James Earl Wynn, 66, was sentenced late Tuesday afternoon by United States District Judge J. Spencer Letts. Wynn has been in custody since April 2002. He was was convicted on April 22, 2005 of 24 counts of aiding and advising in the preparation of false income tax returns.
During a 10-day trial before Judge Letts, federal prosecutors presented evidence that Wynn solicited his clients by telling them that he operated a number of businesses in which they could invest. Wynn told his clients that if the businesses turned a loss, the clients could claim the loss on their tax return. As part of this arrangement, Wynn offered to prepare the clients’ tax returns. Wynn charged his clients a percentage of their tax refunds in addition to a return preparation fee.
Wynn did not tell his clients that many of the businesses listed on their tax returns did not exist at all. None of the businesses listed on their tax returns as part of the tax fraud scheme ever existed as a partnership, ever filed a partnership tax return or ever sustained the losses claimed on the taxpayers’ returns. Wynn caused more than 2,000 tax returns to be filed with the IRS claiming more than $75 million in false partnership losses. The tax loss to the government was more than $10 million.
The government also presented evidence that Wynn continued to engage in this scheme even after he was indicted on August 31, 2000, and while he was free on bond pending trial. In April 2002, after IRS agents learned that additional tax returns with the same false partnership losses were being prepared at Wynn’s tax preparer business at 12967 Van Nuys Boulevard in Pacoima, they executed a search warrant at Wynn’s business for the second time (the first search warrant was executed at this same location in September 1998). IRS agents also took Wynn into custody after the court revoked his bond. Based on this evidence, Wynn was convicted of 10 counts of committing an offense while on release pending trial.
On July 18, 2005, Linda M. Hall, 59, who once worked for Wynn, was sentenced to 70 months imprisonment and was ordered to pay restitution of $6,339,023.
This case is a result of an investigation by the Los Angeles Field Office of IRS-Criminal Investigation Division.
CONTACT: Assistant U.S. Attorney Dennis Mitchell