Two Michigan residents have been convicted by a jury of their peers for filing as much as $3.4 million worth of false claims for payment to the government. The conviction marks a resolution to the ongoing investigation into their fraudulent trust and income tax business, according to the Department of Justice.
“Cheating the government by filing false claims for payment is actually just another way of robbing taxpayers,” commented Christopher Paulos, an attorney with the Levin, Papantonio law firm who practices in the areas of qui tam or whistleblower and False Claims Act litigation.
The young men convicted, Jason McGuire and Delvin Davis reportedly developed their tax-cheating scheme when they were in high school in 2008. According to court documents, when the scheme included filing false trust and income tax returns. They recruited the assistance of at least nine other individuals to assist them with filing the bogus documents.
This scheme resulted in $3.4 million in requested false refunds of which $1.5 million were paid.
“Individuals who prepare and file falsified tax returns cheat the system, such schemes have become more common, and luckily the Department of Justice and Internal Revenue Service have been given new tools to combat this fraud,” Mr. Paulos added. “Recently enacted whistleblower laws, which provide for rewards for reporting tax fraud, have significantly increased the government’s ability to catch and prevent financial wrongdoing.”
The two men will be sentenced this summer and each face sentences that may goes as high 10 years in prison, a $250,000 fine for their conspiracy, and five years and a $250,000 fine for each instance of a false claim filed by them.