Family and Friends Fraud

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Imagine discovering that your tax preparer had defrauded the IRS—in your name. Then imagine that this person is a friend or relative (and you’re not in on the scam). According to The Bismarck Tribune, a crooked tax preparer in North Dakota was caught exploiting his clients (mostly family and friends) to defraud the government—and all from the comfort of his home office.

According to the story, 39-year-old accountant altered nine of his clients’ tax returns to include false information that supported inflated tax refund claims. Then he kept a significant portion of the money for himself and provided the client a lesser amount (the ‘family and friends discount’ in reverse). This type of fraud—overstating an earned income to collect a larger amount of related tax credits—typically is punishable by up to five years in prison and a potential quarter-million dollar fine.

From 2009 to 2012, the scamming skimmer stole more than $140,000 in phony refunds, but before long, Internal Revenue Service investigators exposed his scheme. When they did, he accepted a deal from the U.S. Attorney’s Office and pleaded guilty to three of the nine charges he faced. A federal judge sentenced him to time served (meaning, he spent a fair amount of time in jail awaiting trial) and three years of supervised release. He also was ordered to pay back the money he stole and contribute an additional $300 to the Crime Victims’ Fund. (Think he’ll get invited to the family picnic this summer?)

A degree in accounting doesn’t mean you’ll get away with pulling a fast one on the government, nor does it entitle you to take advantage of the people who trust you with important financial transactions. Robbing the government is a fool’s game, made more foolish when dragging innocent family and friends into fraud.

Source: Today’s ”Fraud of the Day” is based on ”Bismarck man sentenced for federal tax fraud,” written by Blair Emerson and published in the The Bismark Tribune on February 17, 2016

A Bismarck man has been sentenced to three counts of tax fraud.

Solomon Lindsay, 39, was sentenced to three years of supervised release in the U.S. District Court for North Dakota.

Newly appointed U. S. Attorney Christopher Myers announced Lindsay was sentenced on Tuesday, according to a press release from the U.S. attorney’s office.

U. S. District Court Judge Daniel Hovland, who presided over the case, also ordered Lindsay to pay $300 to the Crime Victims’ Fund and restitution to the Internal Revenue Service.

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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.