FACTS
Approximately 200 to 300 specially trained IRS examiners will conduct the audits. It is expected to be a comprehensive audit meaning time consuming. They will look at employment tax records and tax returns. The returns to be focused on are for calendar years 2007 and 2008.
Importantly enough the IRS will focus on worker classification. Did you pay the person as an independent contractor when in realty under the 20-point test of the IRS, the person is really an employee? If so, expect to pay the taxes that were not deducted unless you have proof the person paid them. The signing of an independent contractor agreement does not make the person an independent contractor. The IRS looks to the 20-element test to determine W-2 vs. 1099 status. (msktaxalert33010)
MORAL
If the IRS is coming in for an audit do not do it yourself. Use competent tax counsel or your CPA.
PHOENIX WOMAN SENTENCED TO TWO YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD
FACTS
On May 10, 2010, April J. Lucero of Phoenix was sentenced to two years in prison for her conviction in a mortgage fraud scheme in her hometown. Lucero pleaded guilty to one count of conspiracy to commit mail, wire and bank fraud, a felony, related to her participation in a two-year conspiracy involving the purchase of 37 properties using fraudulent loan documents. Seven other co-conspirators were also charged and have pleaded guilty for their involvement in the conspiracy.
The case against Lucero was based on an investigation by the FBI, which indicated that from 2005 through March 2007 she conspired to commit mortgage fraud in Phoenix. Lucero fraudulently submitted mortgage loan applications, on behalf of straw buyers, under false pretenses, obtaining and disbursing the proceeds of fraudulently obtained loans, including directing portions of the proceeds in the amount of $735,000 to a bank account in Lucero's control. Lucero used her skill as a loan officer to prepare the mortgage loan applications for a borrower misrepresenting salary, assets and liabilities. Lucero used the proceeds from the fraud for personal expenses. Lucero received a lesser sentence due to her early guilty plea and cooperation. The entire conspiracy resulted in a loss to lending institutions of approximately $9.5 million. (usattyaz51110)
MORAL
She cooperated and still wound up in prison for two years. Like I have said before the federal prison system does not have any parole.
FIVE CALIFORNIA DEFENDANTS CHANGED THEIR NAMES TO CONCEAL SCHEME THEY MADE FALSE STATEMENTS TO FINANCIAL INSTITUTIONS
FACTS
On May 7, 2010 a federal grand jury returned an indictment charging Jake Weather, Glenn Watkins, Kevin Watkins, Frederick Davis and Paul Yearby Jr, with 11 counts of mail fraud relating to their alleged operation of a mortgage fraud scheme that involved the defendants changing their names to Muslim names in order to obtain new credit and to conceal poor credit histories and other liabilities in their birth names.
The indictment alleges that Glenn Watkins legally changed his name to "Rasheed Khaleb" to fraudulently purchase two homes. Once those homes fell into foreclosure, he legally changed his name to "Jason Johnson." Likewise, the indictment alleges that Kevin Watkins changed his name to "Jamal Ali" then to "Calvin Carter." Their uncle, Frederick Davis, allegedly changed his name to "Ammar Rashad," to purchase a home, and then to "Corey Green" once that home fell into foreclosure. Paul Yearby Jr. legally changed his name to "Malcom Ali" in order to execute the fraud scheme.
According to the indictment, Jake Weathers, an unlicensed mortgage broker operating as "Weathers & Associates," devised the scheme to defraud in order to obtain loan brokerage commissions and other cash payments from sellers made outside of escrow (i.e., they were not disclosed to the title company or to lenders). Weathers also is charged with knowingly providing to lenders false documents such as W-2 tax forms, wage earning statements, bank statements, and other documents, to support loan applications that stated borrowers earned significant income through employment with a company owned by Weathers, "C Auto Brokers." Losses are estimated at over $1 million.
In a separate case, the grand jury returned a four-count indictment charging Nathaniel Blanton with making false statements to financial institutions in connection with four mortgage loan applications on two residential properties in Roseville and Lincoln. The indictment alleges that Blanton submitted loan applications that falsely inflated his income and cash assets by tens of thousands of dollars.
These cases are the product of extensive investigations by the Federal Bureau of Investigation and the IRS-Criminal Investigation. The investigations are ongoing.
In the Weathers case, the maximum statutory penalty for each count of conspiracy to commit mail fraud and mail fraud is 20 years in prison, a $250,000 fine, and three years of supervised release. In the Blanton case, the maximum penalty for each false statement count is 30 years in prison, a $1 million fine, and three years of supervised release. (usattyedca5710)
MORAL
I keep repeating myself. See your attorney now before the FBI sees you later. If you were involved in creative mortgage loans they will find the loans. Notice the highlight on "after an extensive investigation" and "the investigation is still ongoing."
SAN DIEGO MAN CONVICTED OF 160 COUNTS OF MORTGAGE FRAUD
FACTS
On March 25, 2010, William Hutchings of San Diego was convicted by a jury of 160 felony counts of conspiracy, rent-skimming, grand theft and failing to follow state mortgage laws. Hutchings faces about 49 years in prison.
