Santa Ana, California – LAWFUEL- The Legal Newswire – This morning, United States District Judge James V. Selna ordered Samuel Joseph DeAngelo, the operator of DeAngelo Tax Service in Yorba Linda and Western Tax Service in Anaheim, to spend 51 months in federal prison for conspiring to defraud the Internal Revenue Service and aiding and assisting in the filing of false tax returns.
During the 2000 and 2001 filing seasons, DeAngelo owned and operated a tax return preparation business. During the 2000 filing season, DeAngelo operated DeAngelo Tax Service out of his residence in Yorba Linda. During the 2001 season, he operated Western Tax Service out of an office suite in Anaheim.
DeAngelo trained each of the tax preparers who worked at DeAngelo Tax Service and Western Tax Service to make false, misleading, and inaccurate statements on US Individual Income Tax Returns, Forms 1040. These false statements included the falsifying and inflation of Schedule A deductions for charitable contributions, employee business expenses, and depreciation.
The fees charged for the preparation of tax returns by preparers at DeAngelo Tax Service and Western Tax Service were substantially higher than the fees charged by comparable returns preparation services in 2000 and 2001. The return preparers obtained the above-market fees from their clients because the clients were receiving inflated refunds from the IRS. DeAngelo paid the return preparers who worked for him a percentage of the tax return preparation fee they charged the client.
In 2001, the preparers at Western Tax Service prepared approximately 8,122 tax returns in 2001. The IRS has determined that the tax loss attributable to the 2001 tax returns totals nearly $15,458,732.
The indictment of DeAngelo included six other individuals involved in a conspiracy to aid and assist others in the preparation of false tax returns with the IRS. Those individuals included Jeffrey Russell Wright, DeAngelo’s son-in-law, who assisted in the preparation of tax returns for DeAngelo Tax Service and Western Tax Service; Alan Michael Hovey, a return preparer for Western Tax Service; Heather Lee Chaffin, originally a secretary and later a return preparer for DeAngelo Tax Service and, subsequently, Western Tax Service; and Douglas Shields, a data entry clerk and then a tax return preparer for Western Tax Service.
Douglas Shields, Wright, Hovey, and Chaffin each previously pleaded guilty to conspiring to aid and assist others in the preparation of false tax returns.
– Douglas Shields was sentenced on August 6, 2007 to 15 months in federal prison followed by 3 years of supervised release for his role in the conspiracy. Shields was ordered to report for sentencing on October 26, 2007;
– Wright was sentenced on September 17, 2007 to six months in prison followed by 6 months home detention. Judge Selna ordered Wright to begin serving his sentence on December 3, 2007;
– Hovey is set to be sentenced on October 22, 2007; and
– Chaffin’s sentencing is set for November 19, 2007.
Additionally, the indictment included Kelly Agbonmoba David and Anthony Todd Stefani, both of whom were found guilty at trial earlier this year on conspiracy and three charges of aiding and assisting in the filing of false tax returns in this investigation. Both David and Stefani are set to be sentenced on October 15, 2007 before Judge Selna in Santa Ana.
Two other preparers, Joe Gordon Shields and Erin Cordes, each waived indictment and entered guilty pleas to informations filed by the United States Attorney’s Office. Cordes was sentenced on September 24, 2007 to one year of probation which is to include six months of home detention. Joe Gordon Shields is scheduled to be sentenced on October 15, 2007.
The investigation and prosecution of this case was handled by the Los Angeles Field Office of IRS – Criminal Investigation and the United States Attorney’s Office in Santa Ana.
