Enforcement actions focused on tax and COVID-related fraud, money laundering, cybercrimes
Philadelphia (Nov. 19, 2021)--– Over 2,500 criminal investigations, the identification of more than $10 billion from tax fraud and financial crimes, and a nearly 90% conviction rate are just a few highlights from the IRS-Criminal Investigation (IRS-CI) Fiscal Year 2021 Annual Report. The report, released Thursday, details statistics, important partnerships, and significant criminal enforcement actions from IRS-CI, the criminal investigative arm of the IRS, for the past fiscal year, which began Oct. 1, 2020, and ended Sept. 30, 2021.
“Those who make it their job to do nothing but create elaborate schemes to steal from the government and the American people should understand that IRS Criminal Investigation will use all lawful means to identify and hold them accountable,” said Acting IRS-CI Special Agent in Charge Yury I. Kruty. “Would-be criminals are reminded that engaging in such schemes can and will result in jail time and restitution.”
In fiscal year 2021, IRS-CI built upon its existing network of U.S. field offices and international attachés to combat financial crimes across the globe. The agency’s alliance with the Joint Chiefs of Global Tax Enforcement (J5) helped strengthen public-private partnerships with financial institutions and the Fin-Tech industry to deter and identify criminal activity. Additionally, IRS-CI established its first cyber attaché in The Hague, Netherlands, to proactively support cyber investigative needs in coordination with Europol.
“IRS-CI continues to lead tax and financial investigations here in the U.S. and across the globe,” said IRS-CI Chief Jim Lee. “In the fiscal year 2021, as we faced the second year of a global pandemic, our team of agents continued to overcome personal and professional challenges to target criminals who exploited the U.S. tax and financial systems for personal gain.”
While IRS-CI agents spent most of their investigative man-hours, about 72%, investigating tax-related crimes like tax evasion and tax fraud during the fiscal year 2021, they also made significant contributions to money laundering, narcotics trafficking, public corruption, terrorism, and COVID-19 fraud investigations.
Case examples include:
Patrick S. LaMarsh, a resident of Blair County, Pennsylvania, was sentenced to 33 months in prison followed by three years of supervised release on charges of tax evasion and wire fraud. Between 2011 and 2013, LaMarsh defrauded TracFone and Walmart by selling fraudulently obtained Straight Talk airtime cards on Amazon.com. LaMarsh fraudulently re-encoded Straight Talk prepaid wireless cards and sold them for a discount, netting approximately $1.2 million in proceeds. LaMarsh used the proceeds to buy precious metals and a recreational vehicle. In addition, LaMarsh deposited proceeds into nominee bank accounts to conceal income.
Imad Dawara, of Swarthmore, Pennsylvania, and Bahaa Diawara, of Woodlyn, Pennsylvania, were both sentenced to 9 years in prison. Both were also ordered to pay more than $22 million in restitution for conspiracy to commit arson and conspiracy to defraud the United States. The brothers previously pleaded guilty and admitted to planning and causing the arson of their business, RCL Management LLC, in Philadelphia on February 18, 2018, and for evading the assessment of their income tax liabilities from 2015 through 2017. Imad Dawara also admitted to fraud in connection with his receipt of health care and other government benefits. The brothers owned and operated various restaurants and entertainment establishments in Philadelphia, including a restaurant and hookah lounge. The brothers were struggling in their business on Chestnut Street and had a years-long history of fighting with their landlord. After purchasing a $750,000 insurance policy providing accidental fire coverage, a fire was intentionally started with gasoline in the basement. The fire destroyed the entire building, displaced approximately 160 people, closed the 200 block of Chestnut Street for months, and closed numerous businesses.
Wesley Cox, also known as “Michael Deshawn Carter,” formerly of New Castle, Pennsylvania, was sentenced to more than 15½ years in prison for violating federal narcotics and money laundering laws. Cox participated in a conspiracy to distribute 5 kilograms or more of cocaine and 280 grams or more of a cocaine base, commonly known as crack. Cox also participated in the conspiracy to commit money laundering.
Justin David May, of Wilmington, Delaware, was sentenced to seven years and eight months in prison, five years of supervised release, ordered to pay more than $4 Million in restitution and over $300,000. He was sentenced after pleading guilty in two separate cases to tax evasion, mail fraud, money laundering, and interstate transportation of goods obtained by fraud. May perpetrated separate schemes in order to defraud Cisco Systems Inc. (“Cisco”), Microsoft Corporation (“Microsoft”), Lenovo Group Ltd. (“Lenovo”), and APC by Schneider Electric (“APC”) out of computer hardware, by submitting to these manufacturers hundreds of false warranty claims to seek the advance replacement of more than $5 million worth of computer hardware. While not every false claim was successful, most of the claims did deceive the manufacturers, and May successfully defrauded them into shipping more than $3.5 million worth of computer hardware to him and several co-schemers.
Marien Torres-Acevedo, of Allentown, Pennsylvania, was sentenced to 75 months in prison for conspiring to defraud the government and for committing aggravated identity theft. Torres-Acevedo was also ordered to pay $857,729.65 in restitution. Torres-Acevedo is a citizen of the Dominican Republic and faces deportation at the conclusion of her prison sentence.
Torres-Acevedo and her conspirators obtained fraudulent U.S. Treasury checks by stealing victims’ identities and using those stolen identities to file false tax returns that generated significant refunds. Torres-Acevedo and her conspirators then secured the fraudulent U.S. Treasury checks and cashed them at various check-cashing businesses. Torres-Acevedo admitted that between $550, 000 and $1.5 million in losses occurred as a result of the criminal activity. Torres-Acevedo also was held accountable for fabricating social media communications that threatened her and her family and providing them to investigators, who were able to trace the communications back to Torres-Acevedo.
Kim Forney, of Windsor Pennsylvania, was sentenced to 12 months’ imprisonment, while her husband, Matthew Forney, of Camp Hill, Pennsylvania, was sentenced to 12 months and one day in prison. In September 2018, police were called to the residence of Matthew and Kim Forney for reports of a shooting. Upon arrival, police discovered that their daughter’s boyfriend had shot both Matthew and Kim Forney. While securing the residence, officers observed bloody footprints leading through the house to an outside pool house. Inside the pool house, the police located a garbage bag, which contained a large amount of bundled United States currency. Pursuant to a search warrant, police found a large gun safe located in the residence, they also found additional amounts of bundled cash attached to daily receipts. The officers seized the cash and receipts.
An investigation conducted by IRS-CI determined that this currency was income that Matthew and Kim Forney earned through their business, but omitted on their federal income tax returns for the years 2014 through 2017. The Forneys deposited checks from their business sales into the business bank account, which was reported as taxable income on their tax returns, along with credit card sales. However, the Forneys retained any cash from their business sales at their residence. The Forneys did not report this cash as taxable income on their tax returns or pay taxes on these monies. The unreported income for these years totaled $817,713, which resulted in $292,066 in unpaid taxes.
The report includes additional case examples for each U.S. field office, an overview of IRS-CI’s international footprint, details about the specialized services provided by IRS-CI and investigative statistics, broken down by discipline, for fiscal year 2021.