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Regulation and Compliance > Federal Regulation > IRS

3 Florida Men Plead Guilty in Tax Fraud Scheme

By Melanie Waddell

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Three Florida men have pleaded guilty to running a tax fraud scheme called the “Note Program.”

Christopher Johnson of Orlando and Jasen Harvey of Tampa pleaded guilty to conspiring to defraud the United States through the scheme, in which the two “prepared tax returns for clients that claimed large nonexistent income tax withholdings had been paid to the IRS, and sought large refunds based on those purported withholdings,” according to the Department of Justice. 

Arthur Grimes of Ocoee and Orlando pleaded guilty April 2 to obstructing the Internal Revenue Service in connection with the scheme.

The conspirators charged clients fees and required them to pay over a portion of the fraudulently obtained refunds, according to the DOJ.

Overall, the defendants claimed over $3 million in fraudulent refunds on their clients’ returns, of which the IRS paid about $1.5 million, DOJ said.

Grimes participated in the scheme by causing four false income tax returns prepared by Harvey to be filed.

“When the IRS attempted to recover a refund issued to Grimes based on one of those returns, Grimes made false statements and submitted false documents to an IRS revenue officer and transferred funds to a nominee bank account,” according to DOJ.

Johnson “was paid more than $200,000 in 2016 and more than $100,000 in 2017 as his share of the proceeds from the scheme. Johnson filed false tax returns for those years that did not report that income, resulting in a tax loss of $78,259,” according to DOJ.

A sentencing hearing will be set at a later date for Johnson and Harvey, who each face a maximum penalty of five years in prison on the conspiracy charge, DOJ said.

Grimes, scheduled to be sentenced Nov. 12, faces a maximum penalty of three years in prison on the tax obstruction charge.

All three defendants also face a period of supervised release, restitution and monetary penalties, according to the Justice Department.

Credit: Shutterstock

Melanie Waddell

@Think_MelanieW

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