Pawning off the Kids

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53466460 - computer keyboard with a lack and white danger sign with text tax fraud

There are some parents who pawn their kids off to other relatives or friends to watch and take care of them as often as possible. Perhaps this is fun for grandparents who love to have their grandchildren visit on a regular basis, but today’s fraudster takes pawning off his kids to a whole new level. The operator of a Des Moines tax preparation business used his children and the identities of other children to file bogus tax returns for his clients. Read on to see how he pulled off his scam for more than two years.

The tax preparer falsely inflated his clients’ refunds by thousands of dollars by claiming false dependents on their annual tax returns. (The dependents listed were his own children as well as other children, for which he had stolen personal identification information.) Obviously, these children did not have any relationship whatsoever with the taxpayers, nor did they live with the taxpayers or receive financial support from them as stated on the multiple fake tax returns.

The illegal tax preparer charged his clients an average of $1,500 for each false dependent he added. (The taxpayers were taking a huge risk by lying on their tax returns.) When the fraudster’s clients were audited by the Internal Revenue Service (IRS), he asked at least two of them to lie about their relationship with the bogus dependents. (You can guess what happened after the audits.)

A jury found the tax preparer guilty on four counts of wire fraud and seven counts of preparing and presenting false tax returns. The 48-year old is facing a maximum prison term of two years and a possible fine of up to $250,000 for aggravated identity theft.

It’s safe to assume that this man is not up for the “Father of the Year” award. In fact, his children may want to pawn him off to the Justice System in hopes he’ll come home a redeemed man.

Today’s “Fraud of the Day” is based on an article entitled, Des Moines Tax Preparer Convicted of Tax Fraudposted on KWWL.com on July 27, 2017.

DES MOINES (KWWL) – A jury found Des Moines area tax preparer Lony Tap Gatwas, 48, of Ames, Iowa, guilty of four counts of wire fraud, seven counts of aggravated identity theft, and seven counts of preparing and presenting false tax returns.

Gatwas was charged with engaging in a scheme to defraud the Internal Revenue Service by preparing and filing personal income tax returns listing false dependents. During trial, the government presented evidence Gatwas placed his own children, as well as other children, on his clients’ personal income tax returns as dependents, when these children had no relationship to the taxpayers, did not live with the taxpayers, and the taxpayers provided no financial support for the children.

 

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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.