Former Chicago Tax Preparer Sentenced to Six Years in Federal Prison for Tax Fraud and Unemployment Insurance Fraud Schemes
|U.S. Attorney’s Office June 17, 2014|
CHICAGO―A suburban Chicago woman was sentenced to six years in federal prison for operating a federal income tax fraud scheme as well as one of the largest fictitious employer unemployment fraud schemes ever prosecuted nationwide. The defendant, JACQUELINE KENNEDY, who owned a south side tax preparation business, engaged in one scheme to falsely claim federal tax refunds and, together with 15 co-defendants, engaged in a related scheme using the identities of other individuals, including some of her tax service clients, to fraudulently obtain millions of dollars from state unemployment insurance agencies in at least six states, including Illinois and Indiana.
Kennedy, formerly of Country Club Hills, received the six-year prison term and was ordered to pay more than $4.8 million in restitution last Thursday by U.S. District Judge Joan Lefkow. Kennedy and her co-defendants were indicted in April 2012, and, after initially being released on bond, Kennedy became a fugitive in September 2012 while she continued to commit unemployment insurance fraud. She was arrested in December 2012 and has remained in federal custody.
Judge Lefkow said Kennedy’s conduct “undermines the public’s confidence in the validity of state unemployment programs.” Noting Kennedy’s defiance, she “made choices knowing full well they were illegal,” the judge added.
Kennedy pleaded guilty in December to one count of making false claims for tax refunds, one count of wire fraud, and three counts of mail fraud. Kennedy owned and managed ATAP Financial Enterprises Inc., ATAP Tax & Business Solutions Inc., and ATAP Tax Services Inc., (collectively ATAP), all tax preparation businesses located at one time at 1757 West 95th St. in Chicago. Between January 2008 and April 2010, Kennedy prepared more than 200 false income tax returns by attaching false W-2 forms from fictitious entities to her clients’ tax returns to inflate their Earned Income Tax Credit.
Between February 2009 and December 2012, Kennedy and her co-defendants registered 97 fictitious companies they created with state unemployment agencies and then filed more than 900 false unemployment insurance claims for fictional employees who were purportedly terminated from the fictitious companies without fault. Proceeds from the claims were deposited on debit cards that Kennedy and her co-defendants used to withdraw the proceeds of their scheme.
After a sentencing hearing on May 30, Judge Lefkow ruled last week that Kennedy alone was responsible for restitution totaling $4,815,740, consisting of a $546,619 loss resulting from the tax fraud scheme, and an actual loss of $4,269,121 from the unemployment insurance benefits fraud scheme. She also found that Kennedy intended a loss of more than $13.8 million from the unemployment fraud scheme.
In total, Kennedy and co-defendants bilked state unemployment insurance agencies in Illinois, Indiana, Kansas, Minnesota, Mississippi, and Oklahoma of approximately $9.1 million, including nearly $6 million from the Illinois Department of Employment Security.
In addition to Kennedy, who was a leader and organizer of the schemes, all 15 co-defendants have been convicted, and 11 of them have been sentenced to terms ranging from probation to three years in prison, while four others are awaiting sentencing.
The sentence was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; James Vanderberg, Special Agent in Charge of the Chicago Regional Office of the U.S. Department of Labor, Office of Inspector General; James C. Lee, Special Agent in Charge of the Internal Revenue Service Criminal Investigation Division; Robert J. Holley, Special Agent in Charge of the Chicago Office of Federal Bureau of Investigation; and Tony Gómez, Inspector in Charge of the U.S. Postal Inspection Service in Chicago. The Social Security Administration Office of Inspector General also assisted in the investigation.
The government was represented by Assistant U.S. Attorney Michelle Petersen.