As readers of our tax blog have seen highlighted time and time again, it is typical for sentencing judges to hand down serious penalties in criminal tax cases. That of 54-year-old Minneapolis man Kenneth Mwase, who was recently sentenced to more than 10 years in federal prison, is the perfect example. In a Department of Justice press release, prosecutors announced that Mwase, who previously managed a tax preparation business, “pleaded guilty to one count of conspiracy to defraud the United States, one count of aggravated identity theft, and one count of failure to appear at sentencing” after preparing and filing thousands of fraudulent returns on behalf of the company’s customers. In addition to a decade-long sentence, Mwase was also ordered to serve three additional years of supervised release after leaving prison.
A DOJ press release issued January 28, 2019 announced that defendant Kenneth Mwase, who also used the alias “Chatonda Khofi,” pleaded guilty to aggravated identity theft (18 U.S. Code § 1028A), conspiring against the United States (18 U.S. Code § 371), and failing to appear in court. The identity theft and conspiracy charges arose from Mwase’s role, as manager and director of a Minneapolis-area tax return preparation service known as Primetime Tax Services Inc., in a scheme to file and prepare thousands of fraudulent federal and Minnesota state income tax returns for Primetime customers.
The case traces back to 2014, when prosecutors filed a superseding indictment alleging that Mwase and four co-conspirators used Primetime as a vehicle to commit various crimes, not only against the government, but their own clients – some of whom, according to the press release, were “escorted… to a check cashing location or ATM” by Primetime personnel, who then “demanded additional cash” for their services.
Assisted by 39-year-old Ishmael Kosh of Philadelphia, 47-year-old David Mwangi of Arlington, 36-year-old Amadou Sangaray of New York, and 43-year-old Francis Saygbay of Minneapolis, Mwase helped to prepare and file thousands of fraudulent tax returns, including approximately 2,000 federal returns in addition to roughly 1,700 Minnesota state returns, over the three-year period from 2006 to 2008. The aim of the scheme was to cause the IRS to issue inflated tax refunds, a goal the defendants pursued by reporting “false dependents, fake business income and losses, inflated deductions, inflated credits, and false filing statuses” on Primetime clients’ returns.
Tax schemes of this nature, though illegal, are not uncommon. For instance, our criminal tax attorneys previously wrote about a Philadelphia tax preparer who was sentenced to five years in prison after using stolen information to file returns on which he claimed false dependents. As this and other cases have shown to us over and over, tax preparers face substantial prison time for filing fraudulent returns, in addition to professional sanctions. Mwase, for example, received a sentence of 121 months – to be followed by 36 further months of supervised release. In addition, he will likely be ordered to pay fines and IRS restitution.
Depending on the circumstances, fines and restitution can cost some tax defendants millions of dollars. The fraudulent tax returns that were prepared and filed by Mwase and his co-defendants caused a government tax loss exceeding $2.5 million dollars, suggesting a substantial restitution order.
In last year’s list of the top tax schemes, the IRS warned taxpayers of fraudulent tax preparation services that promise huge refunds – even before reviewing a single document. With tax season upon us yet again, taxpayers (and tax preparers) must proceed with caution. Tax preparer’s including CTEC certified, E.A.’s and Tax Attorneys & CPAs can be charged with conspiracy, tax evasion, assisting a false return, and other serious tax crimes for working with clients or colleagues to violate federal laws.
If you are being investigated by the IRS, especially where your preparer is under criminal investigation, or if you or your business has been chosen for a tax audit, it is urgent that you contact an experienced IRS tax defense attorney for assistance. Serving Northern and Southern California, the Continental United States and the planet as to international tax issues, our dedicated, award-winning San Francisco IRS fraud defense lawyers have extensive experience fighting misdemeanor and felony tax charges. For a reduced-rate consultation, contact the Tax Law Office of David W. Klasing online, or call (800) 681-1295 today.
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