Torrance, California Woman Allegedly Claimed Millions in Fraudulent Tax "Refunds" Based on Phony Claims of Large Tax Withholding

WASHINGTON, Nov. 20 /PRNewswire-USNewswire/ -- A federal court in Los Angeles has issued permanent injunctions barring a Torrance, Calif., tax preparer, Susan Guan and her company, SRN Financial Services Inc., from preparing tax returns for others, the Justice Department announced today. The defendants agreed to the injunction orders. The government complaint in the civil case alleged that Guan and SRN promoted a tax-fraud scheme designed to siphon millions of dollars from the U.S. Treasury. Guan allegedly requested a total of $4.5 million in fraudulent refunds.

According to the complaint, the defendants promoted a tax-fraud arrangement known as the "redemption" or "OID redemption" scheme. Guan and her firm allegedly filed a series of false IRS forms, including tax returns, amended returns, and IRS Forms 1099-OID to request fraudulent tax refunds based on phony claims of large income tax withholding. For one of her customers, Susan Guan allegedly requested an $851,786 fraudulent refund on a false amended tax return with 16 bogus Forms 1099-OID to support the refund request. The Internal Revenue Service (IRS) catches the vast majority of bogus redemption-scheme tax returns and blocks the claimed refunds.

Guan's case was one of seven lawsuits filed across the country last month against alleged redemption scheme promoters. Papers filed in those cases said the defendants prepared tax returns requesting a total of $562.4 million in bogus refunds. Altogether, according to the IRS, redemption scheme participants (including customers of the defendants in those seven lawsuits) have requested a total of $3.3 trillion in fraudulent refunds.

John A. DiCicco, Acting Assistant Attorney General for the Justice Department's Tax Division, thanked Grayson A. Hoffman, the Justice Department trial attorney who handled the case, and Shauna Henline, the IRS senior technical advisor who conducted the investigation.

In the past decade, the Justice Department's Tax Division has obtained more than 430 injunctions against tax fraud promoters and tax return preparers. Information about these cases is available on the Justice Department's Web site.

SOURCE U.S. Department of Justice

Back to top

RELATED LINKS
http://www.justice.gov