Articles Posted in White Collar Crimes

In a November 30 Dept. of Justice press release it was announced that former Petoskey attorney Michael Aho Kennedy, 67, had pleaded guilty to one count each of filing false tax returns and mail fraud in connection with an October 2015 indictment. U.S. Attorney Patrick A. Miles, Jr. was joined in the announcement by IRS Criminal Investigation, Special Agent in Charge Jarod J. Koopman.

According to his plea agreement, Kennedy became a trustee for a family friend and long-time client; as her trustee, he eventually defrauded the woman of $1 million by withdrawing money from investment accounts to pay her expenses, but withdrawing more than was needed. The excess money withdrawn from her accounts was transferred to his own law office’s business account, and used to pay Kennedy’s own business and personal expenses.

Eventually, the client’s investment account funds were exhausted, however she was not aware of it due to the fact Kennedy sent fraudulent monthly statements to her that indicated her account was earning interest and stable. At this point, another client who was elderly was defrauded of $114,000 by Kennedy in his efforts to continue paying the initial client’s expenses, and for his own benefit as well.

Michigan white collar crimes attorneys know that even in situations where no violence is involved or harm done to others, crimes involving financial matters can result in serious punishment. Recently, 52-year-old Paul Joseph Waltner of Ypsilanti pleaded guilty to once count of filing a false tax return with the IRS.

On August 14, U.S. Attorney Barbara McQuade and IRS Special Agent in Charge-Criminal Investigation Jarod J. Koopman announced in a press release that Waltner had pleaded guilty before U.S. District Judge Stephen J. Murphy, III.

According to the release, Waltner failed to report his full wages and a bonus he earned for the year 2008 while working in the Kingdom of Bahrain at Unicom Investment Bank. He was employed at the bank from 2007 through March of 2011. While Waltner actually earned more than $246,000 and received a bonus of nearly $216,000 from UIB in 2008, the Form 1040 he filed with the IRS reported combined wages and bonuses of only $150,000. Waltner used the Foreign Earned Income Form 2555. By reporting approximately $310,000 less than he had actually received, the amount Waltner actually owed in taxes was understated by $101,998.

Recently, it was announced by U.S. Attorney Barbara L. McQuade and Special Agent in Charge Jarod J. Koopman of the IRS – Criminal Investigation unit that former Troy, Michigan resident Irvin Flemming had been convicted of structuring financial transactions by a federal jury. Flemming was involved in a drug trafficking organization orchestrated by Carlos Powell, an organization which was investigated over a period of several years.

According to the press release, Flemming’s role in the drug operation was to make financial transactions in a way that would prevent law enforcement from detecting the true source of the funds and Powell’s illegal drug activities.

The investigation, which was conducted by agents and officers from various organizations and county, city, and state law enforcement agencies including the DEA, Homeland Security, Michigan State Police, officers from Detroit, Plymouth, Warren, Redford, Northville, and others, led to the discovery that Flemming was structuring, or causing to be structured, nearly $240,000 in cash that belonged to Powell in September and October of 2010. Flemming was structuring deposits into bank accounts he controlled, depositing amounts of $10,000 or less with each deposit so that the banks/financial institutions would not report the transactions. Financial institutions are required under law to file a report regarding deposits of more than $10,000.

On Monday, February 9 it was announced in a press release issued by U.S. Attorney Barbara L. McQuade that Richard Alan Williams, owner and operator of Imperial Tax Service in Jackson, had been found guilty on 20 counts of filing false tax returns. IRS Criminal Investigations Special Agents investigated the case, including Special Agent in Charge Jarod Coopman, who stated in the press release that, “IRS Criminal Investigation focuses on protecting revenue by identifying, investigating and prosecuting abusive return preparers. This case accentuates the importance for taxpayers to carefully select a tax return preparer.”

According to the release, Williams was convicted of 17 counts of assisting in the preparation and filing of fraudulent tax returns for clients, and three counts of subscribing and filing fraudulent personal income tax returns of his own. The charges were related to filing of fraudulent tax returns for these customers for tax years including 2004, 2006, and 2007. Essentially, false business losses and expenses were claimed on these returns, which resulted in the taxpayers’ refunds being greater than the customers were entitled to. In some cases, phony business income was added to the returns so that customers could claim an increased Earned Income Credit.

While Williams collected substantial fees for the preparation of client tax returns in 2004, 2006, and 2007, he claimed that his own income was $1, $2, and $10 for those years respectively. Some of the customers who had Williams prepare their taxes testified at trial that they were not aware of the fraudulent income, expenses, or other items he had included in their tax returns, although some of the taxpayers have been ordered by the IRS to repay excess refunds after being audited.

On January 14, it was announced by U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, and several others that a Redford physician had been sentenced to 15 months in prison for her role in a $2.1 million Medicare fraud scheme.

According to a news article at, 69-year-old Dr. Paula Williamson has been ordered to pay $1.3 million in restitution in addition to spending time in prison. Essentially, Williamson signed off on unnecessary treatments for patients so that a home health care company based in Farmington Hills could bill the government for those charges. The scheme allegedly took place between 2009 and 2012, according to investigators.

Williamson certified that certain Medicare patients were homebound when they were not; she also falsified medical records. The fraud scheme involved several home health care workers who enlisted Williamson’s assistance in avoiding a requirement of Medicare that reimbursement could not be obtained without the approval of a certified physician.

In December of last year, 46-year-old Stacy Morgan was sentenced to five years in prison along with payment of restitution in the amount of $7,912,950 for his role in a mortgage fraud scheme, according to Special Agent in Charge Jarod J. Koopman of the IRS-Criminal Investigation. Koopman was joined in announcing Morgan’s sentence by U.S. Attorney for the Eastern Judicial District of Michigan Barbara L. McQuade.

Court records indicate that Morgan conspired with other individuals to secure fraudulent mortgage loans on several Bloomfield Hills properties between December of 2003 and February of 2008.

According to the indictment, Morgan supplied information in loan applications and closing documents on specific properties that were falsified or he caused to be falsified. Information that was falsified included that regarding income information, loan applicant’s assets, and false income documents in support of the requests for loans. Morgan also supplied false bank account balances and verification of employment so that applicants could obtain mortgage loans. Ultimately, the lenders involved granted loans in excess of $9 million, according to the press release.

Recently, United States Attorney Barbara L. McQuade and Special Agent in Charge of the IRS, Criminal Investigation Jarod Koopman announced in a press release that a 53-year-old Royal Oak, Michigan woman had pleaded guilty to tax evasion. According to the release, Robin Petty, who is part owner and treasurer of Superior Metal Finishing, a Detroit corporation, pleaded guilty to failure to report substantial income from 2008 through 2011. While Petty did report some of her income, she ultimately evaded payment of almost $340,000 in federal income taxes over the four year time period.

In 2008 alone, Petty under-reported her income by $236,933. She did report a total income of $119,117, however she had also received checks made payable to her from Superior Metal Finishing totaling $356,050. Because she failed to report the balance of the income for 2008, her tax liability for the year was understated by more than $70,000. Other years through 2011 were similar.

While Petty’s sentence had not been set at the time of the press release, income tax evasion carries punishment which includes a fine of up to $250,000 and/or a maximum of five years in prison. She agreed to pay restitution to the IRS in an amount of up to $339,526, and to pay $100,000 toward this restitution prior to her sentencing.

On Wednesday, November 19, the U.S. Justice Department announced that the president and founder of Happy’s Pizza, Happy Asker, had been convicted in a multi-million dollar tax fraud scheme defrauding the IRS of more than $6.2 million dollars. Asker was convicted on 32 counts of tax crimes, according to the release.

Asker’s Farmington Hills, Michigan based pizza franchise has locations in Chicago, Michigan, and Ohio, which Asker has ownership interests in. Other individuals, some employees and some franchise owners, were also involved in the scheme to defraud the U.S. In all, there are 60 Happy’s Pizza franchise restaurants across three states. The release indicates that payroll amounts and gross sales were significantly underreported for nearly all of the franchises. More than $6.1 million was diverted from about 35 of the stores between 2008 and 2010, with the unreported income being distributed among Asker and most of the Happy’s Pizza store franchise owners.

In November and December of 2010, Asker was involved in voluntary interviews in which he is said to have purposely misled IRS – Criminal Investigation special agents. Those who investigated the case include the DEA and special agents with the IRS – CI. Asker is scheduled to be sentenced in March of next year in the Eastern District of Michigan. He faces a maximum of five years in prison for conspiring to defraud the IRS, three years for each count of filing a false income tax return/aiding or assisting in filing a false return, three years for obstruction and impeding the administration of the Internal Revenue Code. He also faces numerous fines including $250,000 for each count of filing a false income tax return, of which he was convicted on 28 counts.

On Monday, September 15, a press release was issued by U.S. Attorney Barbara L. McQuade in reference to two Detroit residents who have pleaded guilty to defrauding the Internal Revenue Service by using the identities of individuals who are deceased.

According to the press release, Adreann Turnage and Brenda Knight, both of Detroit, pleaded guilty to aiding and abetting in the use of false identification, and wire fraud. Special agents of the IRS Criminal Investigation unit conducted the investigation, including Acting Special Agent in Charge Jarod Koopman.

The two women, along with Knight’s husband Willie Watkins and others, devised a scheme using the social security numbers and names of people who had recently died to collect tax refunds. In 2010, those involved in the scheme filed hundreds of fraudulent tax returns which resulted in more than $1 million in refunds. In filling out the tax returns, those involved used the Making America Work Credit, Earned Income Credit, and Education Credits in order to get refunds which were then deposited into bank accounts that were set up solely for receiving the tax refunds. Watkins, Knight’s husband, had control over many of the bank accounts. Some of the tax returns were filed electronically via an account on the Internet set up in Turnage’s name. The group used public Internet access to electronically transmit many of the returns from coffee shops and hotels.

Knight and Turnage may face substantial prison time along with thousands of dollars in fines for their participation in the fraudulent tax scheme. Using false identification for the purpose of committing a violation of federal law will result in prison time of up to 15 years and/or fines of up to $250,000 for those found guilty. A maximum of 20 years in prison, a $250,000 fine, or both may be handed down by the court for wire fraud.

Jarod Koopman warned that the investigation of identity theft is a top priority of the IRS – Criminal Investigation unit. In addition, McQuade urged family members to practice vigilance in protecting the private information (including taxpayer information) of deceased loved ones.

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Recently, United States Attorney Barbara McQuade and IRS Criminal Investigation Acting Special Agent in Charge Jarod Koopman announced in a press release that Lamarjoire Pharr, a former Clinton Township resident, was sentenced to 37 months in prison for filing fraudulent federal income tax returns. According to the press release, Pharr was also ordered to pay $962,952 in restitution to the Internal Revenue Service.

Pharr, a musician and music producer, is alleged to have used the nearly one million dollars he received in refunds to further his career, and on such expenses as casinos, hotels, adult entertainment, bars, and department store purchases. For more than 2 1/2 years beginning in September of 2009, Pharr prepared and electronically filed more than 360 tax returns using the information of individuals who were for the most part deceased. Pharr obtained information on these individuals at a well-known website, The individuals who were still living, as well as survivors and estates of those who were deceased had no knowledge of Pharr stealing their information. Atlanta, Detroit, and Miami Beach were just a few of the locations Pharr filed the fraudulent income tax returns from.

U.S. Attorney McQuade wanted to warn the public about the fact that criminals troll death notices and websites in an effort to locate potential victims, who are often times deceased. People should not only make a concerted effort to keep their own taxpayer information safe, but that of their loved ones as well.

When criminals file fraudulent income tax returns, essentially it is the American taxpayers who pay for it. Jarod Koopman warned that the IRS – Criminal Investigation is and will continue to be vigorous in their pursuit of individuals who may be committing identity theft and tax fraud.

Once released from prison, Pharr will be under supervised release for three years.

Michigan criminal defense attorneys understand the seriousness of crimes involving identity theft and tax fraud. While these “white collar crimes” typically do not involve violence or physical injury to others, they do result in financial injury to others, and are punished harshly.

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