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Canadian Ringleader in Tax Refund Scheme Convicted by U.S. Court

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Canadian Ringleader in Tax Refund Scheme Convicted by U.S. Court

Those that have been following news updates focused on U.S. taxation are fully aware that the Department of Justice and the Internal Revenue Service are waging a war on Americans with secret bank accounts overseas. Foreign Bank Account Reporting and Foreign Account Tax Compliance Act legislation have made disclosure a requirement and willful noncompliance a felony. But while the U.S. was busy squaring-off against Switzerland, a group of Canadian citizens was able to steal over $3.5 million from the IRS. But per usual, the criminals’ bad deeds came back to haunt them as the ringleader was convicted by a federal jury last week and will soon be sentenced to serve a portion of his life in a federal prison.

According to a Department of Justice press release, Kevin Cyster, 52, of Burlington, Ontario was found guilty by a jury in the U.S. District Court for the Western District of New York on charges of making a false claim against the United States, conspiracy, and illegally transferring stolen money in foreign commerce. Per court documents, the U.S. alleged that Cyster was the ringleader of a group of Canadians who attempted to steal nearly millions from the IRS by filing falsified forms claiming a refund. The group used a tax preparer to electronically file the fraudulent documentation.

According to the Department of Justice, the group filed forms with the IRS that falsely claimed that they had more than almost $10 million withheld (for the purposes of paying U.S. taxes) from payments that were made to them by various Canadian financial institutions. Once that information was filed, the group filed tax returns that then sought the refund of a portion of the withholdings. Although the IRS Criminal Investigation Division caught on to the fraudulent activity, by that time, over $3.5 million had already been refunded.

Cyster is scheduled to be sentenced on January 4th of next year and is facing a statutory maximum of 30 years in a federal prison and a fine of up to $7 million. The other members of the conspiracy have either been convicted, are currently being prosecuted, or are deceased.

This story is a prime example of the Department of Justice’s unrelenting defense of U.S. coffers. The vast majority of those who attempt to seriously defraud the government are caught and those that do not have experienced and effective representation are often sentenced to years in a federal prison and face fines in the millions. Although taxpayers should never behave in a way that violates federal or state tax laws, taxpayers have options if they face an investigation or prosecution. Determining whether to make certain statements during an interview could be the difference between walking free and being incarcerated. And although many taxpayers feel as if they are able to “wing it” or talk their way out of an accusation of tax fraud or evasion, only an experienced tax attorney is able to give unbiased and tailored advice for any particular situation

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have a plethora of experience in assisting taxpayers in a variety of different situations. Whether you are facing an examination, an investigation, or full-blown criminal or civil litigation, our tax professionals are here to zealously advocate for your best interests. When the IRS and Department of Justice knock on your door to inform you that you are the subject of an investigation, they will send skilled professionals. Make sure that you don’t answer alone. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.