Federal prosecutors have unsealed an indictment in Central Islip, New York, charging seven individuals with orchestrating a multi-state conspiracy to defraud the United States of over $600 million by filing more than 8,000 fraudulent tax returns. The scheme exploited COVID-19-related employment tax credit programs designed to assist businesses impacted by the pandemic.
From November 2021 to June 2023, the defendants—Keith Williams, Jamari Lewis, Morais Dicks, Janine Davis, Tiffany Williams, James Hames Jr., and Ewendra Mathurin—allegedly filed thousands of false employment tax returns claiming credits under the Employee Retention Credit (ERC) and the Paid Sick and Family Leave Credit (SFLC) programs. These tax credits were established by Congress to incentivize businesses to retain employees and reimburse wages for employees on COVID-19-related sick or family leave.
The scheme was allegedly headquartered at Credit Reset, a credit repair business owned and operated by Keith Williams. Acting as tax preparers, the defendants are accused of submitting fraudulent tax returns that claimed:
- SFLC amounts exceeding the wages reported on the returns.
- Wages simultaneously as sick leave and family leave wages, which is prohibited by law.
- Both SFLC and ERC for the same wages, which is also unlawful.
The defendants allegedly profited by receiving U.S. Treasury refund checks and charging clients fees or a percentage of the refunds. Additionally, they reportedly recruited others into the scheme, compensating them with portions of fraudulently obtained tax refunds.
In total, the defendants sought over $600 million, with the IRS paying approximately $45 million in fraudulent refunds before uncovering the scheme.
According to the indictment, the defendants took steps to avoid detection by:
- Failing to list themselves as the paid preparers on the tax returns.
- Using Virtual Private Networks (VPNs) to obscure their IP addresses while filing the fraudulent returns.
- Selling shell companies to clients who lacked legitimate businesses, enabling false filings.
When discrepancies were identified, the defendants allegedly submitted false information to the IRS and Social Security Administration (SSA) to support their claims.
Some defendants also allegedly submitted false applications for Paycheck Protection Program (PPP) loans. These applications resulted in additional wire fraud charges against Keith Williams, Lewis, Mathurin, Davis, Tiffany Williams, and Dicks.
The defendants face 45 charges, including:
- Conspiracy to defraud the United States (maximum penalty: 5 years in prison).
- Wire fraud related to the ERC scheme (maximum penalty: 20 years per charge).
- Wire fraud related to the PPP scheme (maximum penalty: 30 years per charge).
- Aiding and assisting in the preparation of false tax returns (maximum penalty: 3 years per charge).
A federal district court judge will determine sentences based on the U.S. Sentencing Guidelines and other statutory factors.
The case is being investigated by IRS Criminal Investigation (IRS-CI) and the U.S. Postal Inspection Service (USPIS). Acting Deputy Assistant Attorney General Karen E. Kelly of the Justice Department’s Tax Division, U.S. Attorney John J. Durham for the Eastern District of New York, Acting Inspector in Charge Brendan Donahue of USPIS, and Special Agent in Charge Harry T. Chavis Jr. of IRS-CI announced the charges.
The case is being prosecuted by Trial Attorney Richard Kelley of the Tax Division and Assistant U.S. Attorneys Adam Toporovsky and James Simmons for the Eastern District of New York. Former Trial Attorney Samuel Bean assisted with the investigation.
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