Bergen County Tax Preparer Charged in COVID-19 Employment Tax Credit Scheme

Normal
0

false
false
false

EN-US
X-NONE
X-NONE

/* Style Definitions */
table.MsoNormalTable
{mso-style-name:”Table Normal”;
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-parent:””;
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin-top:0in;
mso-para-margin-right:0in;
mso-para-margin-bottom:8.0pt;
mso-para-margin-left:0in;
line-height:107%;
mso-pagination:widow-orphan;
font-size:11.0pt;
font-family:”Calibri”,sans-serif;
mso-ascii-font-family:Calibri;
mso-ascii-theme-font:minor-latin;
mso-hansi-font-family:Calibri;
mso-hansi-theme-font:minor-latin;
mso-bidi-font-family:”Times New Roman”;
mso-bidi-theme-font:minor-bidi;}

U.S. Attorney’s Office, District of New Jersey

Defendant Allegedly Sought $150 Million in Refunds – a IRS Paid Out More Than $40 Million Based on False Claims

NEWARK N.J. – A federal grand jury returned an indictment today charging a Bergen County, New Jersey, tax preparer with fraudulently seeking more than $150 million from the IRS by filing more than 1,600 false tax returns for himself and his clients that claimed COVID-19-related employment tax credits, U.S. Attorney Phillip R. Sellinger for the District of New Jersey and Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division announced.

Leon Haynes of Teaneck, New Jersey, is charged with 55 counts of aiding and assisting in the preparation of false tax returns, five counts of mail fraud, one count of aggravated identity theft, and two counts of tax evasion. Haynes was previously charged by complaint in relation to the same scheme.

“As alleged in the indictment, Haynes filed over 1,600 phony tax forms seeking more than $150 million dollars in refunds to which he and his clients were not entitled. He allegedly took advantage of programs earmarked for struggling small businesses who needed financial relief during the COVID 19 pandemic and  used them to generate illicit profits for himself. Combatting pandemic fraud in all of its forms is a top priority for this office and our law enforcement partners.”

U.S. Attorney Philip R. Sellinger

“This is precisely the type of conduct IRS Criminal Investigation and our law enforcement partners are committed to deterring,” Jenifer L. Piovesan, Acting Special Agent in Charge of IRS – Criminal Investigation, Newark Field Office, said. “The defendant’s alleged abuse of a program designed for those in need is appalling. Today’s indictment sends a clear message that we are committed to protecting the integrity of our tax system and relief programs.”

In response to the COVID-19 pandemic and its economic impact, Congress authorized an employee retention tax credit that an eligible small business could use to reduce the employment tax it owed to the IRS, also known as the “employee retention credit” or ERC.

Congress also authorized a credit that a business could take against employment taxes to reimburse businesses for the wages paid to employees who were on sick or family leave and could not work because of COVID-19. This “paid sick and family leave credit” was equal to the wages the business paid the employees during their leave.

As charged in the indictment, from November 2020 to May 2023, Haynes repeatedly exploited these programs that were intended to help small businesses impacted by the COVID-19 pandemic. Acting as a tax preparer, Haynes allegedly filed more than 1,600 false employment tax returns with the IRS claiming COVID-related tax credits on behalf of himself and his clients.

Haynes allegedly falsely told his clients that the government was giving out COVID-relief money for businesses and that they were eligible for it simply because they had a business. Haynes allegedly submitted forms to the IRS on behalf of his client’s businesses, often without consulting his clients, that grossly overstated the number of employees and the amount of wages paid to fraudulently claim these COVID-related tax credits. Haynes allegedly submitted similarly false forms for four of his own companies.

According to the indictment, based on these and other misrepresentations, Haynes fraudulently sought more than $150 million in tax refunds on behalf of his companies and numerous other businesses in his clients’ names. 

The IRS allegedly disbursed at least $40 million in tax refunds to Haynes’ clients based on the false tax forms that Haynes filed. Haynes allegedly collected a percentage of the tax refunds the client received from the IRS as a fee. At Haynes’ request, many clients allegedly paid him those fees in cash. Haynes allegedly did not report on his or his businesses’ tax returns some of the income he received from clients as his share of the fraudulent obtained tax refunds.  The IRS also allegedly directly mailed Haynes multiple tax refund checks totaling approximately $1.43 million based on false claims he submitted relating to his businesses.

Each count of aiding and assisting in the preparation of false returns carries a maximum penalty of three years in prison and a $250,000 fine; each mail fraud count carries a maximum penalty of 20 years in prison and a $250,000 fine; both tax evasion counts carry a maximum penalty of five years in prison and a $250,000 fine; and the count of aggravated identity theft carries a mandatory two year term of imprisonment to run consecutively to any other sentence imposed by the court.

U.S. Attorney Sellinger credited special agents of IRS – Criminal Investigation, under the direction of Acting Special Agent in Charge Jenifer L. Piovesan; special agents of the Social Security Administration, Office of the Inspector General, under the direction of Special Agent in Charge Sharon MacDermott, and postal inspectors from the U.S. Postal Service, under the direction of Inspector in Charge Christopher Nielsen, Philadelphia Division, with the investigation.

The government is represented by Assistant U.S. Attorney Fatime Meka Cano of the Economic Crimes Unit in Newark and Trial Attorney Samuel Bean of the U.S. Justice Department’s Tax Division.

The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

The District of New Jersey COVID-19 Fraud Enforcement Strike Force is one of five strike forces established throughout the United States by the U.S. Department of Justice to investigate and prosecute COVID-19 fraud. The strike forces focus on large-scale, multi-state pandemic relief fraud perpetrated by criminal organizations and transnational actors. The strike forces are interagency law enforcement efforts, using prosecutor-led and data analyst-driven teams designed to identify and bring to justice those who stole pandemic relief funds.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

Read more from the SSA: Read More