‘Paper Crimes, Prison Time’: Three Texas Tax Preparers Sentenced for $3.5M False Return Scheme

A Texas tax preparation business owner and two of his employees were sentenced this week to federal prison for orchestrating a multi-year conspiracy that filed thousands of false tax returns—costing U.S. taxpayers millions in fraudulent refunds.

Mathews Chacko, 50, owner of a tax preparation business, received the harshest penalty: 50 months in federal prison. His employees, Anish Pillai and Subhala Suresh, were sentenced to 26 months and 18 months respectively for their roles in the scheme that ran from approximately January 2019 to October 2022.

According to court documents, Chacko, Pillai, and Suresh conspired to defraud the United States by filing tax returns containing false business expenses for clients. These fabricated deductions artificially reduced the taxes clients owed to the IRS, enabling them to receive refunds they were not entitled to. In many cases, the preparers added false expenses without clients’ knowledge, later offering deceptive explanations. In others, they openly informed clients via email that they were submitting false information to the IRS.

Chacko admitted to causing a tax loss exceeding $3.5 million but less than $9.5 million. Pillai acknowledged causing approximately $1.5 million to $3.5 million in losses, while Suresh admitted to losses between $250,000 and $550,000. Two additional tax preparers involved in the scheme have pleaded guilty and are awaiting sentencing.

Assistant Attorney General Colin M. McDonald of the National Fraud Enforcement Division condemned the operation: “No matter the scheme, the agency, or the program involved, those who cheat on their taxes for personal enrichment undermine the very foundation of public trust. The Fraud Division is working across all fronts to detect, investigate, and prosecute criminal tax violations. We will protect the integrity of our tax system and ensure that those who seek to enrich themselves at the expense of honest citizens face the full weight of federal prosecution.”

U.S. Attorney Justin R. Simmons for the Western District of Texas drew a stark comparison: “Though they used a pencil and paper rather than a gun and a mask, these defendants are nothing more than common thieves. The United States is ‘We the People,’ and when you steal from the people, we will hold you to account.”

Chacko pleaded guilty to conspiracy to defraud the IRS, while Pillai and Suresh pleaded guilty to aiding and assisting in the filing of false tax returns.

‘Filing Fraud, Not Taxes’: Michigan Trio Indicted for $3M False Return Scheme at First Class Tax

DETROIT – A federal grand jury has indicted three Michigan tax preparers for allegedly conspiring to defraud the United States by filing thousands of dollars in fraudulent tax returns that saddled clients with bogus deductions and credits they were never entitled to receive, federal prosecutors announced Thursday.

Jamar Harten, of Shelby Township; Tabitha Scott, of Davisburg; and Tyree Monroe Jr., of Detroit, were charged with one count of conspiracy to defraud the United States and multiple counts of assisting in the preparation of false tax returns. If convicted, each faces up to five years in prison for the conspiracy count, plus an additional three years for each false return they helped prepare.

According to the indictment, Harten, Scott, and Monroe provided tax preparation services at Harten’s business, First Class Tax and Consulting, which served clients across Michigan. For the 2022 tax year, the three allegedly prepared or assisted in preparing fraudulent returns containing fabricated deductions and tax credits that reduced clients’ taxable income and generated refunds they were not lawfully entitled to receive.

Prosecutors said the clients never provided any information indicating they qualified for the false deductions or credits. Harten and Scott are also accused of preparing fraudulent returns for clients in both 2021 and 2023, according to the indictment.

An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

‘Losses Were Fiction’: Minnesota Tax Preparer Convicted of Padding Returns with $1M in Bogus Business Claims

MINNEAPOLIS – A federal jury convicted a Minnesota tax preparer Thursday for filing more than $1 million in fraudulent business losses on client returns, generating hundreds of thousands in illegal refunds while pocketing exorbitant fees sometimes without his clients’ knowledge, prosecutors announced.

Cortez Hollis, who owned and operated Hollis Tax Time, was found guilty of 20 counts of aiding or assisting in the preparation of false tax returns. He faces a maximum of three years in prison on each count, with sentencing to be scheduled at a later date.

According to court documents and trial evidence, Hollis told clients he could secure tax credits that other preparers didn’t know about. In reality, he fabricated fictitious businesses and claimed thousands of dollars in losses that clients never actually incurred. He filed these false returns with the IRS, generating large refunds the clients were not entitled to receive.

Hollis often paid himself tax preparation fees of $2,000 or more directly out of the resulting refunds—sometimes without his clients’ knowledge, prosecutors said.

At trial, the government established that Hollis added more than $1 million in fraudulent losses to client tax returns and sought approximately $387,000 in refunds they were not lawfully entitled to receive.

“No matter the scheme, the agency, or the program involved, those who cheat on their taxes for personal enrichment undermine the very foundation of public trust,” said Assistant Attorney General Colin M. McDonald of the Justice Department’s National Fraud Enforcement Division. “The Fraud Division is working across all fronts to detect, investigate, and prosecute criminal tax violations. We will protect the integrity of our tax system and ensure that those who seek to enrich themselves at the expense of honest citizens face the full weight of federal prosecution.”

‘Pandemic Relief Scam’: Arizona Woman Pleads Guilty to $7.7 Million COVID Credit Fraud Scheme

PHOENIX – An Arizona woman pleaded guilty Thursday to attempting to steal more than $7.7 million in government funds by filing false tax returns that fraudulently claimed pandemic-era credits meant to help struggling businesses—despite the fact that the companies had no employees and paid no wages, federal prosecutors announced.

Regina Durkin, of New River, Arizona, entered a guilty plea to one count of conspiracy to file false claims. She now faces up to ten years in prison at her sentencing hearing scheduled for September 11.

According to court documents, Durkin and her co-conspirators submitted fourteen fraudulent claims to the IRS seeking refunds based on the Employee Retention Credit and the Paid Sick and Family Leave Credit—programs Congress passed to aid businesses during the COVID-19 pandemic. In reality, the companies cited in the filings were not operating at the time, had no employees, and paid no wages whatsoever.

“No matter the scheme, the agency, or the program involved, those who cheat on their taxes for personal enrichment undermine the very foundation of public trust,” said Assistant Attorney General Colin M. McDonald of the Justice Department’s National Fraud Enforcement Division. “The Fraud Division is working across all fronts to detect, investigate, and prosecute criminal tax violations. We will protect the integrity of our tax system and ensure that those who seek to enrich themselves at the expense of honest citizens face the full weight of federal prosecution.”

U.S. Attorney Timothy Courchaine for the District of Arizona emphasized the seriousness of exploiting relief programs: “Our work continues as we find and prosecute individuals like Ms. Durkin who took a benefit meant to help the public during a crisis, and used it instead to line their own pockets. We are grateful to our partners at IRS-CI for their tireless efforts to seek accountability on behalf of federal taxpayers.”

IRS Criminal Investigation Phoenix Field Office Acting Special Agent in Charge Scott Brown added: “Regina Durkin chose to steal $7.7 million from the American public through deliberate fraud—and now faces the full weight of a felony conviction. Let this case be a clear warning: IRS-CI will relentlessly pursue anyone who abuses emergency relief programs for personal gain. IRS-CI agents specialize in dismantling complex financial schemes. We will follow the money, expose the fraud, and ensure those who steal from taxpayers are held fully accountable.”