Related Federal Cases
Multi-Million Dollar Tax Fraud Scheme Uncovered
LOS ANGELES – In a stunning blow to tax cheats, a federal court has permanently barred three Huntington Beach men from preparing federal tax returns, bringing an end to a multi-million dollar tax fraud scheme operating in Southern California.
U.S. District Judge A. Howard Matz entered the civil injunction order against Alexander H. Adams, who does business as Adams Beach Income Tax, and his sons, Brandon A. Adams and Garrett R. Adams. The court found that the Adamses prepare federal income tax returns claiming massive fraudulent tax refunds based on fabricated income tax withholdings.
The court order specifically bars the Adamses from promoting tax fraud schemes, including the 1099-OID program or ‘commercial redemption’ program. The court held that the Adamses ‘promote a tax fraud scheme designed to siphon massive fraudulent tax refunds from the U.S. Treasury.’
According to the court order, the Adamses prepared tax returns claiming huge false tax refunds, often exceeding $500,000. Two of the returns, including one for Garrett Adams, included fraudulent claims of $2.5 million. Other courts have enjoined return preparers for promoting the same type scheme.
The court order also requires the Adamses to provide a list of their customers to the United States and to notify their customers of the injunction. This move is seen as a crucial step in preventing further tax cheating.
Return preparer fraud and bogus refund claims based on false 1099-OID forms are identified by the IRS as two of the 2010 ‘Dirty Dozen’ tax scams. In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions against tax fraud promoters and dishonest tax return preparers.
The Adamses’ scheme is just the latest example of tax cheats trying to game the system. As one expert noted, ‘tax cheats will stop at nothing to get their hands on your hard-earned cash.’
Key Facts
- State: Federal
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release ↗
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