Not Dad of the Year

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A clock with tax time sticky note and calculator on the desk.

Parenthood is often described as a transcendent experience that makes parents want to set the best example for their children. While this may typically be the case, one Missouri man used his children to carry out a multi-million dollar tax fraud scheme.

Michael Kheop of Kansas City, Missouri spearheaded a $2.5 million tax fraud scheme through an illegal business in 2013 by creating false W-2 forms. He created a fake income and false withholdings to report on the W-2 forms. This allowed Kheop to fraudulently claim refunds in his name and the names of his three children, who were minors. (He despicably dragged his innocent children into his for-profit tax fraud scheme.) 

Kheop filed a dozen refund claims on behalf of his children from 2014 to 2017. He also filed false claims using his name from 2015 to 2017. In total he attempted to defraud the U.S. Government of $2.6 million dollars. The U.S. Treasury had also issued Kheop $24,322 in payments over the course of three years.

It wasn’t until 2018 that the bank Kheop frequented suspected him of fraudulent activity. The bank contacted the IRS when he tried to deposit checks issued by the agency in the amounts of $717,910 and $1.6 million. (The deposit of a million-dollar check isn’t something you see every day.) The IRS then investigated and discovered the additional years of fraud. Kheop was charged and released on bond in 2019.

Kheop filed another false tax return for the year 2018 after he was released on bond with pre-trial supervision. He also fraudulently filed unemployment claims during this time. (This man really didn’t learn from his mistakes.)  Kheop claimed he was laid off from a fictional company called Quddus, resulting in $7,680 in payments from the state of Missouri. These revelations resulted in the court revoking his bond and pre-trial supervision.

“Individuals who commit refund fraud with this degree of dishonesty and deceit, deserve to be punished to the fullest extent of the law. IRS Criminal Investigation along with the United States Attorney’s Office remains vigilant in identifying, investigating, and prosecuting those individuals who seek to willfully defraud the United States Treasury,” said Acting Special Agent in Charge Adam Steiner.

Kheop was found guilty of three counts of making false claims, two counts of mail fraud and one count of aggravated identity theft. He was sentenced to eight-and-a-half years in federal prison without parole. He has also been ordered to pay $24,322 in restitution.

Today’s Fraud of the Day comes from an article, “KC man sentenced in tax-fraud scheme,” posted on KSHB.com on June 21, 2020.

KANSAS CITY, Mo. — A Kansas City, Missouri, man was sentenced on Friday to eight-and-a-half years in federal prison without parole in connection to a $2.5 million tax fraud scheme that included stealing his childrens’ identities.

Michael A. Kheop, 53, was found guilty on Dec. 2, 2019, of three counts of making false claims, two counts of mail fraud and one count of aggravated identity theft.

 

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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.