Houston Man Convicted of Filing Fraudulent Tax Returns on Behalf of Foreign Oil & Gas Workers

February 27th, 2020 by Tad Nelson in White Collar Crime

Tax crimes are among the most commonly prosecuted forms of white collar crimes in Texas. Indeed, one of the easiest ways to find yourself in the crosshairs of the IRS or the U.S. Attorney’s office is to file a fraudulent tax return–or even worse, to file multiple such returns on behalf of other people. This is known in criminal law as “conspiracy,” and you can face several decades in federal prison if caught, tried, and convicted.

Indeed, one Houston-area man recently learned this lesson the hard way. In June 2018, a grand jury indicted the man (the defendant) on 15 charges of conspiracy, wire fraud, and tax violations. Following a jury trial, he was convicted of all charges on February 13, 2020.

So what did the defendant do? According to prosecutors, he “participated in a scheme” to file fraudulent tax returns with the IRS. Specifically, the defendant prepared and submitted returns on behalf of non-U.S. citizens who were working on oil and gas vessels in the Gulf of Mexico. These workers had certain taxes withheld from their pay and reported to the IRS by their respective employers.

The defendant, however, falsely claimed these workers were exempt from paying U.S. taxes under certain international treaties. Acting on this false belief, the defendant submitted amended returns and claimed a refund on behalf of the workers. The defendant then had the IRS pay the refunds directly to him, from which the defendant collected certain “fees.” However, the prosecution also demonstrated at trial that the defendant eventually “stopped forwarding any money to the workers.” And when he was pressed for information, he “repeatedly sent misleading and materially false responses to [the workers’] questions.”

Altogether, prosecutors said the defendant “fraudulently obtained $3,097,974.19 in tax refunds from the IRS and kept approximately $1,302,271.75 for himself.”

U.S. District Judge Ewing Werlein Jr. will formally sentence the defendant in May 2020. The defendant faces a maximum sentence of 20 years in prison for mail fraud and conspiracy to commit mail and wire fraud, and up to 3 years in prison for each of the 13 remaining charges, which all relate to tax fraud. The judge can further order the defendant to pay restitution to his victims and another $250,000 in fines to the government.

Speak with a Houston White Collar Criminal Defense Attorney Today

When you sign your tax return each year, you may notice there is a statement saying you do so “under penalty of perjury.” This is not mere boilerplate language. It is a crime to knowingly file a false tax return. Likewise, it is a crime to “aid or assist” someone else in filing a false tax return, as the case above illustrates.

Of course, there are scenarios where someone makes an honest mistake on their return and later finds themselves facing an IRS audit or threats of criminal prosecution. If you find yourself in such a situation, you should speak with a qualified Houston tax crime lawyer as soon as possible. Contact the Law Offices of Tad Nelson & Associates in Houston, Galveston or League City today if you need immediate assistance. Call 281-280-0100

 

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