Mo. mastermind of tax fraud scheme pleads guilty
Thursday, November 7, 2013
KANSAS CITY, Mo. (AP) — A Kansas City man who prosecutors say masterminded a tax fraud scheme in an attempt to receive nearly $96 million in refunds pleaded guilty Thursday to conspiracy and filing false tax refunds and will spend 13 years in federal prison under a plea bargain.
Gerald A. Poynter, 48, also known as Brother Jerry Love, had faced 66 charges in a 72-count indictment that also named 13 co-defendants. Eight from the indictment, along with two people in separate but related cases, also have pleaded guilty to the conspiracy.
Poynter and two others in the indictment who have pleaded guilty — Kristi Jones, 40, of Riverside; Shirley Oyer, 72, of Overland Park, Kan. — are from the Kansas City area. The rest are from Georgia, Alabama, California, Louisiana, Illinois and Oregon.
Poynter’s scheme involved the use of 1099-Original Issue Discount forms, which typically are used by tax filers who must pay taxes on income they receive from bond investments. Prosecutors said Poynter, his branch managers and office staff prepared and filed at least 284 tax returns, then got a portion of whatever money was refunded.
Poynter outlined his “OID process,” at a December 2008 training seminar at a hotel in Atlanta, prosecutors said. In addition to claiming that the Internal Revenue Service would issue refunds even if the name listed on the forms was “Spongebob Squarepants” or “Spiderman,” Poynter joked that going to prison was a possibility for him.
He also conducted and participated in several other seminars and conference calls promoting his OID process, prosecutors said, and maintained a website called “luckytown” to promote his illegal endeavor.
Of the nearly $96 million claimed in the fraudulent returns, the IRS paid out $3.5 million.
“This scheme was based on a nonsensical formula that any honest person would instantly recognize was patently absurd and fraudulent,” U.S. Attorney Tammy Dickinson said in a statement. “Fortunately, the vast majority of these refund claims were detected by the IRS and denied.”
According to the indictment, participants had clients provide financial documents, such as mortgage and loan statements, car payments, bank statements, credit card statements and other records of debt and spending. They then listed those debts on tax returns as investment earnings on which they had paid taxes.
The tax preparers in Poynter’s and the related cases are accused of inflating the amount of taxes on individual returns they claimed the government withheld, then filing for refunds — some in excess of $1 million — when none of the clients had earned, or paid taxes on, any bond income.
To mask his involvement, Poynter asked co-conspirators to refer to his fees as “love donations” and frequently directed them to write checks to “Jerry Love Ministries,” prosecutors said. He submitted at least $25 million in fraudulent claims on 81 returns filed for his clients, causing a tax loss to the U.S. of $951,930.
In addition to his sentence, Poynter must also reimburse that amount to the government.
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