California Man Sentenced to Twelve Years for $100 Million Fraud

By | Tax Crimes, Tax Fraud

On Nov. 13, 2014, in Sacramento, California, Deepal Wannakuwatte was sentenced to 240 months in prison and ordered to forfeit multiple properties, vehicles, business interests, and bank accounts estimated to be at least $3.5 million to be used to repay victims. According to court documents, from 2002 to 2014, Wannakuwatte convinced nearly 200 victims, including individuals, corporate entities, and financial institutions, to invest in a number of business opportunities by misrepresenting the financial worth of himself and his companies. He falsely claimed that his companies did tens of millions of dollars in business with federal agencies every year, most notably the Department of Veterans Affairs. In 2013, Wannakuwatte claimed to have more than $125 million in VA contracts alone. In fact, while he did have a contract with the VA, it was only worth up to $25,000 a year. Ultimately, Wannakuwatte obtained well over $230 million from his victims. Contrary to his representations, Wannakuwatte used much of the money he obtained to pay himself and his family, make lulling payments to participants in his fraudulent investment schemes, and pay outstanding debts unrelated to his false representations. A former owner of the Sacramento Capitals professional tennis team, Wannakuwatte purchased properties in Hawaii, Oregon and California. In order to establish his financial credibility, Wannakuwatte showed investors his personal and corporate tax returns where he actually reported and paid taxes that falsely overstated his annual personal income and the annual gross receipts and sales for his companies. He used investors’ money to pay the overstated tax returns.

Wisconsin Tavern Owner Filed False Tax Returns

By | Tax Fraud

On Nov. 12, 2014, in Madison, Wisconsin, Jared Jerome Hart, of Eau Claire, was sentenced to 18 months in prison and ordered to pay a $100,000 fine. Hart pleaded guilty on Aug. 12, 2014, to filing false tax returns. Hart will have to work with the civil collection division of the IRS for repayment of taxes. Hart was also required to pay restitution to the Wisconsin Department of Revenue for non-payment of Wisconsin sales taxes. According to court documents, between 2008 and 2011, Hart owned a tavern in Eau Claire called The Pickle Bar. The Pickle Bar accepted payment only in the form of cash and at the end of each day, tavern employees would place daily sales in a safe for Hart to pick up. Hart would bring the cash home, count it using his cash-counting machine, and then record a number for the day in his own daily calendar. Hart would then deposit only some of the cash from the business into the business bank account. At the end of each month, Hart would give his accountants incomplete payroll information, the business bank statements, the business check register, and vendor invoices. Hart never told his accountants about the cash he was “skimming” from the tavern, or the second set of books he was keeping at home. Between 2008 and 2011, there was more than a $1 million discrepancy between the gross receipts of The Pickle Bar reflected in the books the accountants maintained and the second set of books Hart maintained at his home. Hart’s accountants used the incomplete information provided to them by Hart to generate the false Corporate Income Tax Forms for the tavern that were filed with his individual tax return for tax years 2008 through 2011. The artificially low business income was used on his personal income tax return. The total tax loss was $367,278.

Minneapolis Couple Jailed for False Income Tax Refunds

By | Tax Crimes, Tax Fraud

On Nov. 12, 2014, in Minneapolis, Minnesota, Mark Allen Garcia was sentenced to 30 months in prison and Patricia Ann McQuarry was sentenced to 40 months in prison. In addition, both defendants were ordered to serve three years of supervised release and to pay $226,000 in restitution. On May 20, 2014, a federal jury found the two defendants guilty of conspiracy to defraud the United States and false claims against the United States. According to trial evidence, beginning in 2007, Garcia and McQuarry engaged in a scheme to obstruct foreclosure proceedings on their house, avoid responsibility for repaying loans, and steal money from the United States Treasury by filing false individual income tax returns. Garcia and McQuarry attempted to obstruct foreclosure proceedings by sending a host of frivolous documents to their bank, including a “Bonded Promissory Note” for $10,000,000. For tax years 2007 and 2008, both defendants filed self-prepared tax returns falsely claiming to have received hundreds of thousands of dollars in 1099-OID income and that the entire amount had been withheld and paid over to the IRS on their behalf. Both defendants created fake forms 1099 showing false interest income and withholding from various financial institutions. In total, the defendants sought more than $500,000 in false refunds. They attempted to hide the proceeds of their fraud scheme by purchasing real estate near Pine City, Minn., and then transferring the property to a private trust. The defendants also used the stolen money to purchase gold coins and a motorhome.