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Tax Crime Roundup: IRS Employees Charged With COVID Fraud

Posted on Oct. 25, 2022

Five current and former IRS employees allegedly defrauded pandemic relief programs and used their ill-gotten gains to procure cars, manicures, Gucci products, and trips to Las Vegas, according to the government.

Brian Saulsberry, Courtney Quinshe Westmoreland, Fatina Hewitt, Roderick Demarco White II, and Tina Humes have all been charged with wire fraud under 18 U.S.C. section 1343 and money laundering under 18 U.S.C. section 1957. Saulsberry, White, and Humes are residents of Memphis, Tennessee. Westmoreland is from Cordova, Tennessee, and Hewitt hails from Olive Branch, Mississippi.

According to the government, all five individuals sent fraudulent applications for the Paycheck Protection Program, the economic injury disaster loan program, and the federal stimulus programs, which were part of the Coronavirus Aid, Relief, and Economic Security Act. Collectively, they obtained $402,078 from the programs.

Hewitt, White, and Humes have all pleaded guilty to one count of wire fraud.

Along with defrauding pandemic programs, Westmoreland was found to have submitted false applications to the state of Tennessee for unemployment benefits despite being employed by the IRS.

Each person faces up to 20 years in prison for each count of wire fraud and 10 years in prison for each count of money laundering.

Poorly Constructed Lies

Zeki Donuk of Landing, New Jersey, was indicted October 20 on 12 different counts, including tax evasion under section 7201, employment tax crimes under section 7202, aiding in filing false tax returns under section 7206, and making false statements in bankruptcy under 18 U.S.C. section 157.

Donuk operated a construction business under the name of Titan Builders LLC. It was later changed to Titan Construction LLC.

According to the government, Donuk has allegedly been cashing checks payable to Titan into his personal accounts rather than his business accounts since 2016. He attempted to conceal his actions and didn’t report them on gross receipts for Titan or his personal tax returns.

From the third quarter of 2016 through the third quarter of 2017, Donuk didn’t collect and pay over IRS employment taxes for his employees, nor did he file his quarterly employment tax returns.

Donuk allegedly made false statements in his bankruptcy case, in which he attempted to conceal that he had  vacation property in Pennsylvania, maintained signatory authority over some accounts, owed tax debts, and operated his construction business.

Donuk faces five years in prison for each count of tax evasion, employment tax violations, and bankruptcy fraud. He also faces a potential three years in prison for each count of filing a false tax return.

California Schemin’

Quin Ngoc Rudin of Chino, California, was sentenced to 10 years in prison October 5 after engaging in a $62 million scheme that defrauded both the IRS and the PPP.

According to the government, Rudin served as the secretary, director, and CFO of Mana Tax Services despite being a convicted felon. He engaged in two fraud schemes using Mana while he was out on supervised release.

Rudin and two co-conspirators schemed to have at least nine professional athletes report fabricated deductions by claiming that their firm’s tax professionals had “specialized knowledge.”

Rudin’s cut was 30 percent of whatever fraudulent refunds the IRS issued. He charged the same fee for persuading small businesses to let him and his co-conspirators file 80 fraudulent PPP loan applications claiming inflated employee numbers and payroll costs. Some of the applications were for fully ineligible businesses, and others were for entities he and his co-conspirators controlled.

He pleaded guilty May 13 to one count of conspiracy under 18 U.S.C. section 371 and another count of wire fraud under 18 U.S.C. section 1343.

The government has recovered over $15 million of the fraud proceeds. Rudin’s restitution amount will be set at a later date.

Ivy League to Iron Bars

On October 13 Jamie Petrone of Lithia Springs, Georgia, was sentenced to nine years in prison after stealing and selling $40 million in electronic hardware and claiming the costs as business expenses on her tax returns.

According to the government, Petrone had been employed by the Yale University School of Medicine since 2008. As the director of finance and administration for the Department of Emergency Medicine, Petrone had the authority to make and authorize purchases for departmental needs as long as the purchase amount was under $10,000.

Beginning as early as 2013, Petrone would order or direct others to order electronic hardware from Yale vendors using the school’s funds and would arrange for the hardware to be shipped out of state in exchange for money.

Petrone would then falsify internal forms and communications that the hardware was for Yale Med and break up the fraudulent purchases into orders below $10,000 to prevent the need for additional approval.

From 2013 through 2016, Petrone would then file false tax returns in which she claimed the costs of the equipment as business expenses. From 2017 through 2020, she didn’t file any tax returns. Her scheme cost the government $6.4 million.

Petrone was arrested in September 2021. In March she pleaded guilty to one count of wire fraud under 18 U.S.C. section 1343 and filing a false tax return under section 7206.

Fool Me Once, Fool Me Twice

Jonas Purisch of Baltimore pleaded guilty October 12 to willful failure to pay employment taxes under section 7202.

According to the government, Purisch operated two employee staffing companies that provided workers for third-party manufacturing businesses. He was responsible for the operation of those businesses, including withholding and paying employment taxes. Between 2018 and 2021, Purisch withheld but didn’t pay over more than $2 million in payroll taxes.

Purisch was previously convicted of filing a false individual income tax return under section 7206 and willful failure to file a tax return under 7203 in April 2013. He served three months in prison.

His sentencing is scheduled for December. He potentially faces five years in prison for willful failure to file and pay over employment taxes. He has agreed to pay more than $3.4 million in restitution to the IRS.

Not-So-Real Estate

Thomas Nicholas Salzano of Secaucus, New Jersey, and Rey E. Grabato II of Hoboken, New Jersey, were indicted October 13 on various charges related to an alleged real estate Ponzi scheme, including two counts of tax evasion under section 7201 and four counts of subscribing to false tax returns under section 7206.

According to the government, Grabato was the president of National Realty Investment Advisors LLC (NRIA), and Salzano served as the firm’s shadow CEO. Salzano’s true role was concealed while Grabato was the outward CEO to avoid scrutiny by investors over Salzano’s criminal history of defrauding small businesses in Louisiana.

From 2018 to 2022, the two defrauded investors and potential investors in a real estate fund operated by NRIA of $650 million through “lies, deception, misleading statements and material omissions,” the government said. They allegedly schemed to mislead investors into believing that NRIA was a solvent business even though it had generated little to no profits.

“These defendants schemed to create a high-pressure, fraudulent marketing campaign to hoodwink investors into believing that their bogus real estate venture generated substantial profits. In reality, their criminal tactics were straight out of the Ponzi scheme playbook so that they could cheat their investors and line their own pockets,” U.S. Attorney Philip R. Sellinger said.

In addition to their Ponzi scheme, Grabato and Salzano plotted to defraud the IRS in its attempts to collect $26 million in back taxes owed by Salzano. They allegedly lied to IRS employees, used false and fraudulent company documents, used nominees, and opened bank accounts for phony entities.

End to Decadelong Chase

Scott Allan Chappelle, an attorney and former CPA from East Lansing, Michigan, was sentenced to more than three years in prison after spending a decade trying to avoid paying more than $1.6 million in taxes.

According to the government, Chappelle operated three real estate development and property management companies: Strathmore Development Company Michigan LLC, Terra Holdings LLC, and Terra Management Company. Despite being obligated to do so, Chappelle didn’t pay the IRS any of the employment taxes that he withheld from employees of the three companies.

When the IRS attempted to collect the unpaid taxes, Chappelle avoided those efforts by making false statements and hiding assets from the agency, including his vacation home on Lake Michigan and other real property purchases made in the names of his businesses.

Scott Chappelle spent nearly ten years evading taxes he owed to the IRS. At the same time he was falsely claiming financial hardship, Chappelle was spending money on multiple homes, payments toward a luxury yacht, and elective plastic surgery,” acting Deputy Assistant Attorney General Stuart M. Goldberg said in a release.

Along with false statements made to the IRS, Chappelle made false statements on a loan application when he refinanced the mortgage on the vacation home on Lake Michigan and submitted fabricated bank statements to make it appear as if one of his companies had more money in its account.

Chappelle pleaded guilty to one count of tax evasion under section 7201 in April. He agreed to pay $1.2 million in restitution to the United States.

Not Your Average Nigerian Letter Scam

On September 26 Abidermi Rufai of Lekki, Nigeria, was sentenced to five years in prison for stealing disaster aid and taxpayer refunds and using stolen identities of U.S. taxpayers.

According to the government, Rufai, the special assistant to the governor of Nigeria’s Ogun State, used stolen identities to file fraudulent U.S. tax returns and defraud disaster programs, including programs providing aid money in the aftermath of hurricanes Harvey and Irma.

Since 2017 Rufai has stolen the personal identifying information of more than 20,000 Americans in order to submit claims for more than $2 million in federally funded disaster relief benefits and fraudulent tax returns. He attempted to obtain more than $1.7 million in IRS tax refunds and received $90,877. In total, he obtained more than $600,000 from various agencies.

Rufai also submitted fraudulent pandemic unemployment claims in at least 17 states and defrauded the Small Business Administration in order to obtain economic injury disaster loans by submitting 19 fraudulent applications.

Rufai was arrested at New York’s JFK Airport in May 2021. He pleaded guilty to one count of wire fraud under 18 U.S.C. section 1343 and one count of aggravated identity theft under 18 U.S.C. section 1028A.

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