A Rigby woman is among six people nationwide who were sentenced to federal prison last week by U.S. District Judge William Dimitrouleas in Miami, Florida.
Penny Jones was sentenced to 144 months in prison. Jones pleaded guilty to conspiracy to defraud the United States and 41 counts of filing false claims for tax returns. Five other persons, from Florida, Tennessee, and California were sentenced on the same day.
The evidence at trial showed that Jones and others operated a scheme to defraud the IRS out of tax refunds. The false return scheme operated under the name PMDD Services LLC, and, later, Forever Grace LLC. The false return scheme was nationwide, causing the filing of tax returns for at least 180 clients from 30 different states, requesting more than $160 million in fraudulent tax refunds.
The defendants and clients of the scheme collectively filed more than 380 tax returns, mostly from tax year 2008 but also for other tax years. The tax returns falsely reported the amount of their personal debt obligations as both income and as federal tax withholding. The fictitious income and withholding was reported to the IRS on Forms 1099-OID.
According to the evidence at trial, the tax returns prepared as part of the scheme fraudulently claimed refunds in amounts specifically intended to allow the clients to pay off their mortgages, credit cards, student loans, and other personal debts. Clients paid $750 to have the defendants prepare a tax return reporting this fictitious “OID” income, and clients agreed to share 10 percent of their tax refund with defendants.
The evidence at trial further established that most clients of the scheme did not receive the enormous refunds requested, but instead received substantial civil penalties. Those who did receive refunds were typically subject to collection efforts by the IRS.
U.S. Attorney Wifredo A. Ferrer called the tax refund scam the latest crime du jour. “For a $750 fee, complicit clients across the United States expected the defendants to submit false returns to the IRS on their behalf, claiming exorbitant fraudulent refunds, to be shared with the defendants. Instead of receiving enormous refunds, however, the defendants were sentenced to substantial jail time and the clients received substantial civil penalties and were subject to aggressive collection efforts by the IRS. As this case demonstrates, we will continue to crack down on fraudsters and will not let them line their pockets with our tax dollars.”