Cowardly Behavior

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12567971 - tax forms 1040,1120,1065 u s income tax return

Anyone who has seen the classic movie, “The Wizard of Oz,” is familiar with the lion’s false bravado that hid his true, cowardly disposition. While the famous fictional character is quite loveable, despite his foibles, today’s cowardly fraudster is not. An Overland Park, Kansas businessman, who owned and operated a tax preparation business in Kansas City, concealed his true nature as a coward and stole nearly $650,000 by committing tax fraud.

 Some common characteristics of a coward include dishonesty, pretending to be someone or something they are not, fleeing at the slightest hint of danger, taking the easy way out and blaming others, instead of taking responsibility. (Today’s fraudster checks off all those boxes.)

The Kansas businessman, who made a living by preparing federal tax returns for individuals, was dishonest by pretending to run a legitimate tax prep business. He knew that he was delving into a dangerous area by submitting false tax returns, so he concealed the fact that he was the preparer on the fake returns by claiming the returns were self-prepared. (That covers the “taking the easy way out” and “blaming others” part. He hung his clients out to dry, pointing the blame at them.)

 Over about two years, the Kansas tax preparer carried out his tax fraud scheme by claiming false business income and losses, deductions for medical and dental expenses, job-related expenses, charitable donations and other fraudulent items. The Internal Revenue Service (IRS) incurred a loss of $648,442 as a result of the cowardly fraudster’s illegal acts.

The 58-year-old Kansas businessman was indicted on 36 counts of fraud, but reached a plea agreement. He pleaded guilty to four counts of filing fraudulent tax returns and was sentenced to eight years in federal prison. (Instead of receiving a badge of courage like the cowardly lion, the cowardly fraudster received a prisoner serial number and an orange jump suit.) He also has to pay more than $648,000 in restitution to the IRS.

Just as the man behind the curtain was revealed to be just an ordinary man, the Kansas tax preparer’s true nature has also been revealed as just another ordinary fraudster. (He’s just like every other criminal who wanted to avoid responsibility for stealing money he did not deserve.) It’s a given that this man now realizes he’s not in the Land of Oz anymore, though still in Kansas. Unfortunately for him, the yellow brick road did not lead him to the Emerald City, just prison.

Today’s “Fraud of the Day” is based on a Department of Justice press release entitled, “Kansas Business Owner Pleads Guilty to Filing Fraudulent Tax Returns,” released on October 30, 2017.

A former resident of Overland Park, Kansas, pleaded guilty today to aiding and assisting in the preparation and presentation of false income tax returns, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Thomas E. Beall for the District of Kansas.

According to documents filed with the court, Alfred Reece, 58, owned and operated a tax preparation business in Kansas City.  From approximately 2013 through 2015, Reece prepared federal tax returns for individuals, claiming false business income and losses, medical and dental expense deductions, job-related expenses, charitable donations and other fraudulent items.  Reece also concealed himself as the preparer on these fraudulent returns by falsely claiming that they were self-prepared.  Reece admitted to causing a tax loss of between $550,000 and $1.5 million.

 

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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.