Four Individuals Prepared Over 11,000 False Returns Since 1999
WASHINGTON — LAWFUEL – Law News, Law Jobs – A federal grand jury in Los Angeles, Wednesday, indicted five individuals for orchestrating a $14 million tax fraud scheme, the Department of Justice and Internal Revenue Service (IRS) announced today. The defendants are Matthew Berry, Karen Berry, Carla Berry, Ivan Johnson and Valerie Dixon, all from San Bernardino County, Calif. The indictment charges all five defendants with conspiracy to defraud the United States and four defendants with aiding and assisting the filing of false tax returns. In addition, all of the defendants are charged with either failure to file an income tax return or filing a false income tax return as to their personal taxes during the years of the conspiracy.
The indictment alleges that the scheme to defraud operated simultaneously on three tracks: preparing thousands of fraudulent income tax returns, creating false documentation to use in IRS audits, and failing to report to the IRS the more than $1.5 million earned from the conspiracy. The indictment alleges that all of the defendants except, for Matthew Berry, prepared income tax returns that contained false “Schedule A” deductions for mortgage interest, real estate taxes, or un-reimbursed expenses. Further, the indictment alleges the defendants prepared more than 6,000 fraudulent income tax returns in 2003. The indictment also alleges that the entire scheme resulted in a tax loss that exceeds $14.4 million. Documents filed in a civil case against the defendants estimate a total tax loss in excess of $25 million.
Karen Berry, Carla Berry, and Ivan Johnson are also charged with making false statements to a financial institution for submitting mortgage applications that contained false statements about income. The defendants also filed false tax returns or Forms W-2 in support of the mortgage applications. Johnson is charged with submitting false documents to the IRS in 2005 during an audit of his 2003 taxes.
Earlier this year, the United States obtained a stipulated preliminary injunction against defendants Karen Berry, Carla Berry and Ivan Johnson, which barred them from continuing to prepare tax returns. Defendant Valerie Dixon also consented to an injunction and a final order barring her from continuing to prepare tax returns for ten years.
If convicted, the defendants face maximum potential sentences of five years’ imprisonment and a fine of $250,000 for the conspiracy, and three years’ imprisonment and a fine of $100,000 for each false preparation and false filing charge. Each of the failure-to-file counts and submitting-false-documents to IRS counts carries a maximum penalty of one year in prison and fines of $25,000 and $10,000, respectively. Each of the false statement to financial institution counts carries a maximum penalty of 30 years in prison and a fine of $1 million.
The charges contained in the indictment are only allegations. A defendant is entitled to a fair trial in which it will be the government’s burden to prove the defendants guilty beyond a reasonable doubt.
The stipulated preliminary injunction obtained against the defendants can be found at http://www.usdoj.gov/tax/txdv06146.htm. More information about the Justice Department’s efforts against tax scheme promoters can be found at http://www.usdoj.gov/tax/taxpress2006.htm. Information about the Justice Department’s Tax Division can be found at http://www.usdoj.gov/tax.