Part Owner of Tax Preparation Business Admits to Preparing False Tax Returns and Aggravated Identity Theft
Obtained Over $1 Million in Fraudulent Refunds; Kept a Book of Children's Personal Information to Be Inserted in Client Tax Returns
|U.S. Attorney’s Office December 03, 2010|
BALTIMORE, MD—Twanna Dorothea Campbell, aka “Twanna D. Gaines,” “ Twanna Campbell-Moore,” and “Mrs. T,” age 32, of Baltimore, pleaded guilty today to conspiracy to file false tax returns and aggravated identity theft.
The plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Rebecca Sparkman of the Internal Revenue Service - Criminal Investigation; and Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation.
“Identity theft is a contemptible modern-day scourge," stated Rebecca Sparkman, Internal Revenue Service - Criminal Investigation, Special Agent in Charge, Washington, D.C. Field Office. "Filing fraudulent tax returns using names of other individuals may result in significant harm to those individuals whose identities were stolen, as well as a monetary loss to the U.S. government."
According to her plea agreement, Campbell and another individual owned a tax preparation business that operated under various names, including Phoenix Tax World, 101 Taxes, 420 Income Tax Services, and 1 One 1 Taxes (collectively, “Phoenix”). Between 2006 and 2009, Phoenix was located in Baltimore at several locations, including 2216 Harford Road, 3349 Greenmount Avenue and 4829 Belair Road.
From approximately late 2005 or early 2006 through at least April 2009, Campbell and her co-conspirator prepared over 600 fraudulent individual federal income tax returns on behalf of her clients. Campbell required each client to fill out a questionnaire requesting that individual’s personal and financial information. After the client left the Phoenix office, Campbell filled out an electronic tax return in which, without the client’s knowledge, she entered false items to increase the client’s tax refund. For example, Campbell claimed: exemptions and child tax credits for non-existant dependents; losses from businesses the client did not operate; credits paid for bogus child care expenses; and federal income tax withholdings from unearned wages. Campbell required as a cash payment a percentage—generally between 20 percent and 40 percent—of the client’s tax refund. In this way, Campbell’s inflation of her clients’ tax refunds increased Campbell’s own tax preparation fees.
Campbell also enrolled many clients in a Refund Anticipation Loan (RAL) program without their knowledge. A RAL is a short-term loan provided by a lender that is based on, and usually repaid by, an anticipated federal income tax refund. A bank funded the client’s RAL and issued the loan in the form of a check made payable to the client. In doing so, the bank deducted its own fees and also deducted an additional tax preparation fee, which it wired directly into a bank account controlled by Campbell. Thus, Campbell received an additional tax preparation fee that was not disclosed to her clients. In 2007, Campbell opened a bank account using the stolen personal identifying information of a former client to conceal the fact that these additional tax preparation fees were being paid to her. Campbell wrote checks drawn off that bank account in order to pay for personal and business expenses.
Campbell also applied for and obtained acceptance from the IRS to file electronic tax returns in 2007 on behalf of her clients. However, Campbell made this application in the name of a former client without the client’s knowledge, so that Campbell could operate Phoenix under an electronic filing number that was not directly traceable to her. Campbell similarly applied for and obtained acceptance from the IRS to file electronic tax returns in 2009 on behalf of her clients, this time using the stolen personal identifying information of a close friend and client.
In June 2009 law enforcement officers executed a search warrant and seized $96,480 in cash hidden in Campbell’s home. Law enforcement officials also found a book maintained by Campbell containing a list of names, dates of birth and Social Security numbers of children which Campbell used to obtain larger tax refunds for her clients by claiming deductions for dependents who were not actually related to her clients.
As part of her plea agreement, Campbell agrees to the entry of a forfeiture order and a restitution order of at least $1 million, the amount of loss sustained by the IRS as the result of this scheme.
Campbell faces a maximum sentence of five years in prison and a $250,000 fine for conspiracy; and two years’ mandatory imprisonment consecutive to any other term of imprisonment for aggravated identity theft. U.S. District Judge William M. Nickerson scheduled sentencing for March 9, 2011, at 10:00 a.m.
United States Attorney Rod J. Rosenstein commended the IRS - Criminal Investigation and the FBI for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorneys Sujit Raman and Martin Clarke, who are prosecuting the case.