Lony Tap Gatwas Charged in $1.2M Tax Fraud Scheme

DES MOINES, IA — A Des Moines tax preparer is staring down federal prison after being indicted on 18 counts tied to a multi-year scheme to file rigged tax returns for unsuspecting clients. Lony Tap Gatwas, 47, of Ames, Iowa, was formally charged on November 21, 2016, with preparing and presenting false tax returns, wire fraud, and aggravated identity theft, according to U.S. Attorney Kevin E. VanderSchel.

The indictment alleges that from at least February 2011 through March 2013, Gatwas ran a tax preparation business in Des Moines, where he routinely inflated client returns by adding fake dependents. These dependents didn’t meet IRS requirements — many never lived with the taxpayers or received financial support — but Gatwas charged extra for each one, pocketing fees while padding refunds.

Investigators say the scheme relied on deception and digital manipulation. Gatwas filed the falsified returns electronically, triggering wire fraud charges due to the use of interstate communications. By stuffing returns with ineligible dependents, he inflated refunds that he then shared with clients — splitting ill-gotten gains while the IRS picked up the tab.

Gatwas faces a maximum of three years in prison and a $100,000 fine for each count of preparing false tax returns. The wire fraud charges carry a steeper penalty — up to 20 years behind bars and a $250,000 fine. On top of that, the aggravated identity theft charges mandate a minimum two-year sentence, consecutive to any other term, and another $250,000 in potential fines.

A trial is set for January 30, 2017, before U.S. District Judge Rebecca Goodgame Ebinger at the Des Moines Federal Courthouse. Prosecutors say the case, built by the Internal Revenue Service – Criminal Investigation Division, exposes a brazen abuse of trust by a professional entrusted with sensitive financial data.

An indictment is not a conviction. Lony Tap Gatwas is presumed innocent until proven guilty in a court of law. The case is being prosecuted by the United States Attorney’s Office for the Southern District of Iowa.