Jersey tax preparer charged in $124M COVID tax credit fraud

PHOTO: DEPOSIT PHOTOS

Matthew Fazelpoor//August 1, 2023//

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The Justice Department announced July 31 the arrest of a Teaneck man for allegedly seeking more than $124 million from the Internal Revenue Service by filing over 1,000 fraudulent and false tax forms claiming COVID-19-related employment tax credits.

Tax preparer Leon Haynes, 49, is charged with eight counts of aiding and assisting in the filing of false tax returns and one count of mail fraud.

Prosecutors say Haynes took advantage of employee tax credit programs that were authorized by Congress during the throes of the pandemic to help small businesses reduce the employment tax it owed to the IRS.

“From November 2020 to May 2023, Haynes, acting as a tax preparer, repeatedly exploited these programs by preparing and submitting 1,387 false forms to the IRS claiming COVID-related tax credits on behalf of himself and clients. Haynes falsely told his clients that the government was giving out COVID-relief money for businesses and that they were eligible for the money simply because they had a business,” according to court documents and statements released by prosecutors. “Without consulting with his clients, Haynes then submitted forms to the IRS on behalf of their businesses that grossly overstated the number of employees and amount of paid wages.

“Haynes submitted similarly false forms for three of his own companies,” the information continued. “Based on these and other misrepresentations, Haynes fraudulently sought $124.8 million in tax refunds on behalf of his companies and numerous other businesses in his clients’ names.”

Based on these claims, prosecutors allege that Haynes was mailed multiple tax refund checks totaling more than $1 million from the U.S. Treasury, which also disbursed at least $31.6 million in tax refunds to Haynes’ clients based on false tax forms he submitted.

Prosecutors noted that Haynes charged clients an up-to 15% fee based on tax refunds they receive, adding that at his request, many clients paid him those fees in cash.

U.S. Attorney for New Jersey Philip Sellinger — Sellinger

“While our country was fighting the spread of the virus and its profound economic impact, Haynes allegedly scammed the system in a massive scheme to line his own pockets,” said U.S. Attorney for New Jersey Philip Sellinger. “As described in the complaint, Haynes abused his position as a tax preparer to steal millions of dollars by submitting over 1,000 false applications for funds set aside to help legitimately struggling businesses. My office and our partners will continue to find and prosecute fraudsters who exploited the pandemic for personal gain.”

“Today’s arrest demonstrates IRS Criminal Investigation and our law enforcement partners commitment to holding accountable those who exploited the pandemic for personal gain,” said Tammy Tomlins, special agent in charge of the Newark Field Office. “We are committed to rooting out pandemic-related fraud and holding accountable anyone seeking to profit from the public health emergency.”

Haynes was expected to make his initial court appearance Monday in Newark federal court. His attorney was not immediately known.

The mail fraud charge carries a maximum penalty of 20 years in prison and a $250,000 fine. Each count of aiding and assisting in the preparation of false returns carries a maximum penalty of three years behind bars and a $250,000 fine.