Family Enterprise

242
36657376 - tax refund paper text on assorted cash

Family-owned businesses generally have multiple generations involved in the decision-making process when it comes to determining how the enterprise is operated. Family leaders, either related by blood or marriage, have the unique ability to sway other family members working for the enterprise. This is the case for a couple who owned a Grand Rapids, Michigan-based tax return business. This grandmother and grandfather duo used their children and grandchildren to carry out a tax refund fraud scheme that stole more than $3.6 million from the Internal Revenue Service (IRS).

This crime family turned out to be a sole enterprise with no other links to a larger scam. (They kept it all in the family.) The couple, their children, grandchildren and others who worked for the family business carried out the tax fraud scam over 10 months by tricking their customers into providing personal identification information in exchange for “free stimulus money.” (The question to ask here is, “Is anything ever free?”)

Court documents show that the company submitted 3,228 fake tax returns that falsely reported undocumented income and abused the use of the earned income credit. They filed the tax returns on others’ behalf with the IRS. (The family business sought to collect more than $4.5 million in tax refunds. It got close by collecting $3.6 million.)

The grandmother had the perfect background to commit such a crime. She had an undergraduate degree in accounting and prior work experience in the banking and tax return preparation industries. (It appears that the couple created the company to carry out their criminal activities under the guise of their family business.) The motive? Court documents show that the couple was delinquent on their mortgage payments. (Apparently, they also had a gambling habit.)

Complaints by local citizens set off an investigation by the Federal Bureau of Investigation (FBI) and the IRS. After searching the couple’s home and business, more than 20 bank accounts traced to the fraudulent scam were seized along with cash and four vehicles purchased with the illegally-gained funds. During the six years that the investigation was on-going, the government recovered more than $1.5 million in fraud proceeds. (The matriarch of the company tried to dissolve the company while the investigation was pending, but was unsuccessful.)

The 64-year old grandmother from Okemos, Michigan and her 75-year-old husband both pleaded guilty to tax refund fraud by filing false tax returns. The woman was sentenced to 10 years in prison (the maximum penalty allowed), but her husband passed away before being sentenced. Grandma was also ordered to pay full restitution of $3,627,401.16 to the IRS.

But, there’s more folks. Other relatives from the extended family enterprise include two daughters, two grandsons and one granddaughter, who all received prison sentences varying from 12 to 72 months for assisting with the filing of fraudulent tax returns.

This woman’s scam preyed on poor and vulnerable citizens, who were conned into thinking they were getting free money. While this woman did not have prior experience with breaking the law, she committed a very large crime. (She went big and now she’s going to jail.) Not only did she victimize her clients, but she effectively ruined her children’s and grandchildren’s lives. (Future family get togethers could be tense.) Congratulations to the FBI and IRS for successfully putting this criminal family enterprise out of business indefinitely.

Today’s “Fraud of the Day” is based on a Department of Justice press release entitled, Okemos Woman Guilty of Defrauding the U.S. Treasury of Over $3.6 Million Sentenced to 10 Year in Prison,” released on September 14, 2017.

GRAND RAPIDS, MICHIGAN — Callista Suzena Chiwocha, of Okemos, Michigan was sentenced in U.S. District Court to ten years in prison for conspiring to defraud the government by filing false tax returns, announced Acting U.S. Attorney Andrew Birge. The ten-year prison sentence imposed by Chief U.S. District Judge Robert J. Jonker was the maximum penalty available. Callista Chiwocha was also ordered to pay full restitution in the amount of $3,627,401.16 to the Internal Revenue Service. Callista Chiwocha, her husband, Tapera Albert Chiwocha, Sr., and their company, Human Services Associates, LLC pled guilty in March 2017. Tapera Albert Chiwocha, Sr. passed away in July 2017 pending sentencing. The Court also ordered Human Services Associates, LLC, which Callista Chiwocha attempted to dissolve while the federal investigation was pending, to pay full restitution.

Over approximately ten months during 2011, Callista Chiwocha, age 64, and her husband, Tapera Albert Chiwocha, Sr., age 75, requested over $4.5 million in federal tax refunds from the United States Treasury by causing 3,228 false tax returns to be filed on behalf of others with the Internal Revenue Service. The Chiwochas and those who worked for them at Human Services Associates, LLC tricked individuals into providing their personal identification information after being promised “free stimulus money.” The tax returns typically contained false reporting of undocumented income and abusive use of the earned income credit. The Chiwochas’ scam preyed on the poorest and most vulnerable citizens of the district. The Chiwochas created Human Services Associates, LLC to facilitate and conceal their criminal activities. Before perpetrating the fraud, Callista Chiwocha had prior work experience in the banking industry and the tax return preparation industry.

SHARE
Previous articleHot Potato
Next articleNot a Coincidence
Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.