Two North Carolina Residents Indicted for Conspiracy to File False Tax Returns

Two Mecklenberg County, North Carolina, residents were indicted yesterday in Charlotte, North Carolina, with conspiracy to defraud the United States and filing false, fictitious or fraudulent claims, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and Acting U.S. Attorney Jill W. Rose of the Western District of North Carolina.

Daniel Heggins and Joan Clark were charged with one count of conspiracy to defraud the United States and 16 counts of filing false, fictitious or fraudulent claims for federal income tax refunds.  According to the allegations in the indictment, beginning no later than July 2009 and continuing through May 2011, Heggins and Clark operated Guarantor Manufacturer Inc., which advertised consulting, investing, debt reduction, and foreclosure avoidance services.  Heggins and Clark recruited individuals who owed debts, such as mortgages or car loans, and used their information to file false federal income tax returns with fraudulent claims for tax refunds.

Heggins and Clark prepared false tax returns by attaching false Internal Revenue Service (IRS) Forms 1099-Original Issue Discount (OID) to the returns.  Certain taxpayers file Forms 1099-OID because taxes owed to the IRS on certain bonds must be reported annually and paid as interest accrues.  Heggins and Clark intentionally mischaracterized the debts owed by improperly using Forms 1099-OID to report debts as interest income to the individuals.  As a result, the false tax returns claimed refunds based on fictitious tax withholdings from that purported interest income.  Heggins and Clark filed at least 16 false tax returns that fraudulently claimed more than $4 million in tax refunds.

If convicted, Heggins and Clark each face a statutory maximum sentence of five years in prison and a maximum fine of $250,000 on each count.

Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation and the FBI, who investigated the case, and Assistant U.S. Attorney Michael Savage of the Western District of North Carolina and Trial Attorney Todd P. Kostyshak of the Tax Division, who are prosecuting the case.

An indictment is not a finding of guilt.  An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceeding.

More information about the Tax Division and its enforcement efforts can be found on the division’s website.

Daniel Heggins and Joan Clark Indictment