Entrepreneurial Fraud

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42189930 - closeup of smiling woman realtor giving key of new apartment to client. female house agent sitting at the desk with house miniature and plan.

Small businesses are usually good for the community because they create job opportunities, while generating tax revenue that ultimately benefits local residents. A story published on NOLA.com tells about a mother and daughter team of entrepreneurs, who operated a Louisiana tax preparation business with the intent to bilk the Internal Revenue Service (IRS). (This is not exactly beneficial to the local community or their victims.)

The story states that over about a six-month period of time, the 46-year-old mother and her 29-year-old daughter used recruiters to refer clients to their office under the guise of securing the $7,500 federal first-time homebuyer credit. (Who wouldn’t like to receive a $7,500 tax break?)

The mother-daughter team interviewed the clients to capture their personal information, which was then used to file more than 300 false tax returns claiming earned income tax credits and first-time homebuyer tax credits. (Did I mention that they also listed false dependents?) The article claims that the bogus tax returns yielded from between $5,200 to more than $10,000 each. In total, more than $1.8 million in fraudulent refunds were paid out.

Court documents state that the woman relied on her brother to open accounts at two local banks. He was also directed to withdraw hundreds of thousands of dollars in cash, which was used by his sister to make personal purchases and support a gambling habit.

Both the mother and the daughter pleaded guilty to a conspiracy to defraud the U.S. government. They are each facing a 10-year prison sentence, restitution and a $250,000 fine. (This is the maximum punishment allowed by federal law.)

According to the article, the small business owner had previous experience with fraud. She had intentionally hidden her identification from the IRS during the investigation because her electronic filing identification number already had been suspended for running another fraudulent tax scheme through a different business she had created. (Perhaps she told herself that if at first you don’t succeed try again with another fraudulent business.)

It looks like this fraudster is not very successful at running legitimate companies and her career as a tax preparer is most likely over for good. (Finally, a benefit to be realized by the local community.)

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Destrehan Mother, Daughter Plead Guilty to $1.8 Million Fraud Involving Tax Returns,” written by Littice Bacon-Blood and published by NOLA.com on June 18, 2014.

A Destrehan mother and daughter, accused of filing more than $1.8 million worth of fraudulent tax returns at their tax preparation company during a six-month period in 2009, have pleaded guilty to conspiracy to defraud the U.S. government. Each faces a maximum of 10 years in prison, restitution and a $250,000 fine, although maximum punishments are rare in federal court.

The U.S. attorney’s office said Cathy Vinnett, 46, pleaded guilty on Monday, the day her trial was scheduled to start, before U.S. District Court Judge Ivan Lemelle. Her daughter, 29-year-old Lashanda Vinnett, pleaded guilty to the same charge on Friday.

 

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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.