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Crypto fraud, international scheming, greedy families: All are in IRS CI's top 10 tax crime cases of 2023

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Photo by Grant Durr on Unsplash

 

๐ŸŒŸ Billions of dollars in fraud. ๐ŸŒŸ Victims across the globe. ๐ŸŒŸ
๐ŸŒŸ Criminals who are all about personal gain. ๐ŸŒŸ

No, that's not the opening voiceover in a trailer for a new Netflix true crime series, although I'd watch it if it were.

It's from IRS Criminal Investigation Chief Jim Lee's comments on his unit's top 10 cases of 2023. Those three opening elements, said Lee, are the crux of CI's biggest busts last year.

"When I say our team at CI is the best at following the money trail, I mean it," added Lee. "Our investigators took down international tax schemes that preyed on people's personal information, investigated multi-level marketing schemes involving cryptocurrency, and uncovered one of the largest fraud schemes in history centered around renewable fuel credits."

Want the details? IRS CI is sharing them as a countdown on social media, specifically its X, formerly (and still to me) Twitter, and LinkedIn accounts. And I'm making them this week's Tax Felon Friday focus.

Here they are, going from 10 to number 1.

10. French man sentenced to 34 years for international tax scheme that involved wire fraud and aggravated identity theft. The foreign felon coordinated a scheme to file 1,701 false tax returns and claim $9.1 million in refunds, which ultimately resulted in $2.2 million in refunds issued by the Internal Revenue Service. He then transferred the money to prepaid debit cards and checking accounts that he monitored.

9. LA man sentenced to more than 24 years in prison for $5.5 million COVID and tax fraud. The Californian used the identities of Golden State prison inmates and other third parties to fraudulently obtain more than $356,400 in tax refunds. Also, from May 2020 to March 2021, he and co-conspirators submitted approximately 459 fraudulent unemployment insurance claims tied to the COVID-19 pandemic. Finally, starting in March 2020, the man, who pleaded guilty, conspired with others to use stolen identities to file income tax returns to fraudulently claim coronavirus-related Economic Impact Payments (EIPs).

8. Cryptocurrency founder 'Bruno Block' sentenced to 4 years in prison. The founder of crypto coin "Oyster Pearl" secretly minted and sold Pearl tokens for his own gain. Specifically, the wannabe digital asset mogul spent more than $10 million on multiple yachts, $1.6 million at a carbon-fiber composite company, hundreds of thousands of dollars at a home improvement store, and more than $700,000 to buy two homes, one of which was titled in the name of a shell company and the other in the name of two of his associates. Despite having all that money, Bruno Block admitted in his plea deal (under his real name) that he did not file a tax return in 2018, and in fact reported he had no income to the IRS. IRS CI found that the Martinsburg, West Virginia, man's crypto schemes produced a $5.5 million federal tax loss. Per the court's sentence, in addition to the prison term, this felon was ordered to pay restitution of $5,523,794.

7. Silk Road dark web fraud defendant sentenced following seizure, forfeiture of more than $3.4 billion in cryptocurrency. This IRS CI case found that over a period of approximately 10 years, this Georgia felon executed a complex scheme to initially steal 50,000 bitcoin, then conceal his activities by transferring this bitcoin into a variety of separate addresses also under his control. As part of his sentencing, he was ordered to forfeit all of his Bitcoin, which was valued at approximately $3.4 billion at the time of forfeiture, as well as his 80 percent interest in a Memphis-based company with substantial real estate holdings; $661,900 in seized U.S. currency; and gold and silver bars and coins seized from his home.

6. Massachusetts father and son sentenced to prison for decade-long lottery, tax fraud scheme. Lotteries depend on our hopes of immediate riches. This family decided to give luck an illegal push. IRS CI's Boston team and partners uncovered the father and son duo's decade-long $20+ million lottery and tax fraud scheme. Between 2011 and 2020, the pair bought winning lottery tickets from individuals across the Bay State at a cash discount so the winners didn't have to claim their prizes, or pay tax on the winnings, from the Massachusetts State Lottery Commission. IRS CI also found that the Watertown, Massachusetts, pair recruited and paid the owners of dozens of convenience stores to facilitate the transactions. The father and son felons then claimed the full amount of the prize money as their own. In total, the pair unlawfully claimed more than 14,000 winning lottery tickets and laundered more than $20 million in proceeds, causing Uncle Sam to lose more than $6 million in taxes. More than $1.2 million of that lost U.S. Treasury money went directly to the pair as fraudulent federal tax refunds.

5. Leader of illegal copyright infringement scheme sentenced to 66 months in prison. The Philadelphia IRS CI team busted a large-scale internet TV pirate for crimes arising from a wide-ranging lucrative copyright infringement scheme. In addition to the prison time, the former YouTube star was ordered to pay more than $30 million in forfeiture and $15 million in restitution, including more than $5 million to the IRS. The tax loss came from the New Jersey man's wide-ranging copyright infringement scheme that involved piracy of cable TV, access device fraud, wire fraud, money laundering, and hundreds of thousands of dollars of copyright infringement. He used legitimate cable subscriptions to stream the content online on servers he and cohorts controlled. Customers simply had to pay a monthly $15 fee to subscribe to their illegal streaming services which showcased sporting events, shows and movies. This definitely is not the way to cut the cord.

Bitcoin batch (2)

4. New Hampshire man sentenced to 8 years in prison for operating a bitcoin money laundering scheme. Yes, more crypto crime in the top 10 IRS CI 2023 list. We head to New England again, where IRS CI's Boston special agent caught a New Hampshire man who laundered more than $10 million in proceeds from romance scams and other internet fraud by exchanging U.S. dollars for bitcoin. In addition to the prison time (and two years of supervised release), the faux beau bandit was ordered to pay a fine of $40,000 for laundering the millions obtained via romance scams and other internet fraud. The victims also should get some relief, as this felon also was ordered to pay restitution to them in an amount to be determined on a later date. It's no remedy for a broken heart, but it should help a bit.

3. Co-founder of multibillion-dollar cryptocurrency scheme OneCoin sentenced to 20 years in prison. There's obviously a digital tax crime trend for 2023, as evidenced by this case investigated by IRS CI's Newark team. Millions of victims invested more than $4 billion worldwide in the fraudulent crypto coin, according to investigators. The co-founder, a citizen of Sweden and the United Kingdom, also was ordered at sentencing to pay approximately $300 million in forfeiture for his orchestration of the massive OneCoin multi-level-marketing fraud scheme, which began its Sofia, Bulgaria-based operations in 2014.

2. Former CFO of Russian natural gas company sentenced to more than 7 years in prison for tax crimes. More international tax intrigue and crime. In addition to the seven-year jail term, the former chief financial officer of Novatek, who also was a certified public accountant, faces 36 months of probation, and was ordered to pay more than $4 million in restitution to the IRS for failing to file a Report of Foreign Bank and Financial Accounts (FBAR). Other crimes uncovered by IRS CI and for which the Naples, Florida, man was convicted following his federal trial included willfully failing to file federal tax returns. What he hid from the IRS was his ownership and control over offshore assets worth in excess of $93 million.

And now, drum roll please, we have the Number One top IRS CI case of 2023, which Special Agent in Charge Albert Childress of the IRS Phoenix Field Office describes as "one of the most egregious examples of tax fraud in U.S. history."

1. LA businessman, Utah fuel plant operators, and employees sentenced to prison for billion-dollar biofuel tax fraud scheme. In one of the largest fraud schemes in U.S. history, five individuals were sentenced in April 2023 to a range of six to 40 years in prison for their roles in a $1 billion biofuel tax conspiracy. From 2010 to 2018, the conspirators were involved in multiple fraudulent schemes, including money laundering, mail fraud, and fraudulently claiming more than $1 billion in refundable renewable fuel tax credits. The basis of the scheme was to create the appearance of biodiesel production and sale to claim tax credits from the IRS.

Four of the defendants pleaded guilty to the biofuel tax scheme charges against them.

Two were brothers. The court sentenced one sibling to 18 years in prison and imposed a $338 million money judgement against him. He also was ordered to pay $511 million in restitution. His brother got a 12-year jail sentence, and also was ordered to pay $511 million in restitution.

The brothers' mother pleaded guilty to her role in the scheme as "special projects manager" and received a seven-year prison sentence. Her daughter-in-law's guilty plea netted her a six year federal jail term.

The lone biofuel tax scheme participant to take his case before a jury ended up being found guilty in 2020 after a seven-week trial โ€” during which the brothers who earlier pled out testified against him โ€” on mail fraud, conspiracy to commit money laundering, and money laundering charges. The convicted felon finally was sentenced last year to 40 years in jail, as well as ordered to pay restitution of almost $443 million. The court also imposed a money judgment of more than $181 million against him.

Tax felon friday_smallerTax Felon Friday: That's it for this holiday bonus edition of the ol' blog's regular crime busting, or at least criminal related, tax tales.

And yes, I know it's the second consecutive week that IRS CI has been featured in Tax Felon Friday. But as noted earlier, those tax investigators are pretty darn good at their job.

You can catch up on previous tax crime posts, including those that were published long before I gave them a special designation, in the, what else, tax crimes category. You'll find this post at the top of that collection right now, so just scroll down for more.

 

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