Preparer Allegedly Claimed Millions in Fraudulent Tax 'Refunds' Based on Phony Claims of Large Tax Withholding

WASHINGTON, Nov. 24 /PRNewswire-USNewswire/ -- A federal court in Los Angeles has permanently barred a local tax preparer, Jacqueline Cornejo from preparing tax returns for others, the Justice Department announced today. Cornejo, who operated J.C. Income Tax Services in Los Angeles, agreed to the injunction order without admitting the allegations in the suit.

The government complaint in the civil injunction case alleged that Cornejo promoted a tax fraud scheme designed to siphon millions of dollars from the U.S. Treasury. Cornejo allegedly requested a total of $12.1 million in fraudulent refunds.

According to the complaint, Cornejo promoted a tax fraud arrangement known as the "redemption" or "OID redemption" scheme. Cornejo 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, Cornejo allegedly requested a $4.4 million dollar refund on a false tax return. The Internal Revenue Service (IRS) catches the vast majority of bogus redemption scheme tax returns and blocks the claimed refunds.

Cornejo'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 435 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