An Alabama man involved in the largest tax fraud case ever prosecuted in Missouri was sentenced to five years of probation.
Mark Murray, along with 13 other defendants, attempted to receive $96 million in fraudulent refunds from the Internal Revenue Service, according to a 72-count federal indictment filed in September 2011.
Murray’s charges arose from his receipt through the mail and retention of “tax refunds” that were generated off false returns prepared and filed by Gerald “Brother Love” Poynter, of Kansas City, Mo., in the amounts of $352,885 from the U.S. Treasury for 2005 and $229,606 for 2006.
Poynter was the leader of this conspiracy, the Department of Justice says, and allegedly recruited “branch managers” throughout the country to submit false tax returns. These branch managers then enlisted 145 clients—including Murray—who were involved in this scam that ran from July 2008 through September 2011.
The defendants allegedly utilized 1099-Original Issue Discount forms as part of their scheme. These forms are legitimately used by tax filers who must pay taxes on income they receive from the interest on their bond investments. Tax on certain bonds must be paid as income accrues.
However, the conspirators used the 1099-OID forms in a nonsensical manner. Clients of the conspirators, working with their branch managers, allegedly assembled financial documents such as mortgage and loan statements, car payments, foreclosure records, bank statements, credit card statements, and other records of debt and spending. Poynter and his staff supposedly used this debt information, rather than nay actual bond income, to promote the false tax returns and improperly calculated 1099-OID forms.
Poynter, his branch managers, and office staff prepared and filed at least 284 tax returns as part of this scam, the indictment said. These tax returns falsely claimed that the filers had received income from bond proceeds and that federal income tax had been withheld. The fraudulent returns claimed the government had over-withheld taxes from the clients’ OID bond income, making the clients appear entitled to more than $96 million in tax refunds.
About 89% of the fraudulent claims filed in this scheme were detected by the IRS and denied. Conspirators allegedly received more than $3.5 million of the total $96 million in attempted fraudulent refunds.
Murray agreed to plead guilty to one count of the indictment which charged him with a violation of filing false claims for tax refunds. Attorneys Stephen Etheredge and Dustin Fowler of the Dothan, Ala.-based firm Buntin, Etheredge & Fowler, helped Murray avoid a possible five-year prison term for this single charge.
“We are very satisfied to be able to convey to the Court sufficient and compelling information as to the true character of Mark Murray to provide a foundation for the Court’s determination as to an appropriate punishment after consideration of all the facts,” Etheredge said in a press release.