Recently in Conspiracy Category

Nashville Tax Return Preparers Face Mo' Problems

December 7, 2012, by The McKellar Law Firm, PLLC

As I have written about previously, tax return preparers can face both civil and criminal penalties for preparing false or fraudulent tax returns. One such tax return preparer company, Mo' Money Taxes, is now dealing with a civil injunction lawsuit, which was filed earlier this week against them in Nashville by the U.S. Attorney's Office in Middle Tennessee, according to published reports.

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The Justice Department's lawsuit claims that defendants Toney Fields and Trumekia Shaw did "intentionally prepare and file fraudulent federal income tax returns to obtain improper tax refunds for customers." Claimed tax losses by the Government could exceed $5 million in tax year 2011. Some of the alleged errors committed by employees of Mo' Money Taxes include: using taxpayers' end-of-the-year pay stubs (instead of W-2 forms) to assist in preparing tax returns; manufacturing fake W-2 forms; and claiming false tax credits for child tax credits, incorrect number of dependents, and false charitable donations.

This civil injunction in Nashville is the latest legal battle against Mo' Money Taxes, and follows the arrest of franchise owner Jimi Clark and four Mo' Money employees in October, 2012, for conspiracy to commit tax fraud by falsely claiming educational tax credits on 47 returns filed in 2009. Additionally, the Memphis-based company has hundreds of people claiming that they never received their tax refund checks.

Sixth Circuit Court of Appeals Remands Oxycodone Case due to Improper Jury Charge

August 27, 2012, by The McKellar Law Firm, PLLC

Earlier this month, the Sixth Circuit Court of Appeals, in U.S. v. LaPointe, 2012 FED App. 11-5194 (6th Cir.), remanded the decision of the trial court where the defendant was originally charged with "conspiring to distribute or conspiring to possess with the intent to distribute oxycodone in violation of 21 U.S.C. §§ 846 and 841(a)(1) and (2) attempting to possess oxycodone with the intent to distribute in violation of 21 U.S.C. § 846." He was convicted on both counts and sentenced to sixty-three (63) months for each count to run concurrently.

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LaPointe appealed both counts and won his appeal on Count I based on the denial of the lower court to allow jury instruction of the lesser included offense of conspiracy to possess. The lower court argued that the charge of conspiracy to distribute did not always include conspiracy to possess. However, the appellate court found that the Indictment of LaPointe described Count I as conspiracy to possess with intent to distribute which has always been held to include the lesser offense of conspiracy to possess. The appellate court reasoned that conspirators can have different objectives during the commission of a crime, and a defendant has the right for the jury to hear the lesser-included offenses so long as said offense meets the Colon standard which is the following:

• A proper request is made
• The elements of the lesser offense are identical to part of the elements of the greater offense
• The evidence would support a conviction on the lesser offense
• The proof on the element or elements differentiating the two crimes is sufficiently disputed so that a jury could consistently acquit on the greater offense and convict on the lesser offense. See United States v. Colon, 268 F.3d 367, 373 (6th Cir.2001).

LaPointe's Count I conviction was reversed and remanded back to the lower courts to issue an opinion consistent with the appellate court's ruling.

Nashville Man Sentenced to Federal Prison for Involvement in Ponzi Scheme

Nashville, Tennessee area resident, Barron A. Mathis, 30, who was the former Vice-President of J.C. Reed & Co., Inc., was sentenced on May 20, 2011, by United States District Court Judge Aleta Trauger to 72 months in prison, and ordered to pay $2,823,091.06 in restitution, according to a press release from Jerry E. Martin, United States Attorney for the Middle District of Tennessee. U.S. Attorney Martin said, "Mathis stole the hard-earned money of individuals without any consideration for the destruction caused to the lives of his victims. Mathis repeatedly encouraged people to invest by falsely promising security, growth and returns on their money, but instead the investors lost their savings as part of an elaborate Ponzi scheme."

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The press release alleges that Mathis served at various times as a director, vice president, president, and portfolio manager of J.C. Reed, a financial services company located in Franklin, Tennessee. The company, J.C. Reed, operated a residential mortgage originating business and brokered a variety of marketable securities, including certificates of deposit, private placements, partnerships, and mutual funds. John C. Reed, who is now-deceased, was the founder of J.C. Reed. Prior to his death in 2008, Reed and Mathis conspired to devise a scheme to defraud investors who deposited funds with J .C. Reed by soliciting and obtaining money from clients, friends, and acquaintances and falsely promising to invest and manage the money in growth-oriented, traditional instruments, such as investments with fixed annual returns, or in established marketable securities.

The press release further states that customers were solicited by Mathis to purchase J.C. Reed stock. Mathis represented that the stock was a safe investment; however, Mathis was aware that the purchase of J.C. Reed stock was a high-risk investment and that J.C. Reed clients, who were mostly elderly and unsophisticated growth-oriented investors, would not have invested in the stock but for his false assurances. Mathis falsely assured customers that J.C. Reed was profitable and "making money." However, as Mathis well knew, J.C. Reed was not profitable, and virtually all of its operating capital was received from shareholder investments. Mathis also falsely represented to investors that a market existed for J.C. Reed stock and that their investment in J.C. Reed stock would increase in value and be readily redeemable. However, Mathis knew that no market existed for J .C. Reed stock and that no realistic possibility existed for the redemption of J.C. Reed stock other than redemption by family or friends of Reed.

Mathis was paid a commission for identifying and soliciting new clients for investment. Whenever he successfully solicited a new investor, Mathis would deposit the investor's funds into a "discretionary account" with J .C. Reed, thus enabling him to control purchases and sales within the account with few limitations. Mathis frequently used his discretionary authority to liquidate traditional investments from various client portfolios and used the funds to purchase shares of J.C. Reed stock, all without the knowledge or authorization of J.C. Reed clients. At various times, he also withdrew or liquidated assets from individual client accounts and used the funds to make investment purchases for the accounts of other clients or to open new client accounts. In order to disguise his unauthorized purchases and sales of client securities, Mathis created fraudulent invoices, forged client signatures on trading documents, and prepared fictitious account statements that falsely reported client investment holdings.

Bank Fraud Scheme Results in 30 Arrests in Knoxville Federal Court

November 24, 2010, by The McKellar Law Firm, PLLC

United States Prosecutors unleashed an Indictment last week against 30 defendants from Tennessee and Georgia for an alleged conspiracy to commit bank fraud, in violation of 18 U.S.C. Section 1344. The indictment alleges that the ringleaders of this alleged conspiracy recruited homeless people to cash fake payroll checks in area banks. According to an article by the Knoxville News Sentinel's Jamie Satterfield, Judge Bruce Guyton ordered the alleged ringleader of the conspiracy to be held without bond pending his trial.

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Federal law on Bank Fraud is codified at 18 U.S.C. Section 1344 as follows:

Whoever knowingly executes, or attempts to execute, a scheme or artifice-- (1) to defraud a financial institution; or (2) to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises; shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.

This case is another example of the Government continuing its efforts to prosecute white collar and economic crimes. If you are unfortunate enough to be accused of committing economic crimes, your best move is usually to contact an experienced criminal defense attorney immediately. Oftentimes, the Government has been investigating the alleged crimes long before a suspected defendant is even aware of the Government's involvement. Accordingly, time is of the essence to ensure that your rights are protected.

Additional Resources:
"Alleged Leader of Fraud Scheme Jailed," Knoxnews.com, November 24, 2010
112410ring.pdfUnited States v. Larry Seymore, et al., Indictment
18 U.S.C. Section 1344 - Bank Fraud