Pro athlete tax fraud scheme leads to another guilty plea

On Behalf of | Aug 15, 2022 | Fraud

A man in California entered a guilty plea for the part he played in a tax conspiracy that attempted to defraud the IRS and the Paycheck Protection Program. The losses that resulted from this tax fraud scheme involving fabricated income tax returns, PPP loans, and unsuspecting professional athletes totaled up to $25 million.

A tax expert gone rogue

This individual worked with co-conspirators through the company they were employed at, Mana Tax Services. Together, the group prepared and filed a series of counterfeit income tax returns with the IRS as representatives of these professional athletes. There were nine athletes or more who were caught up in this scheme.

The defendant wore many hats at Mana Tax Services, a Los Angeles tax expert company. He served as their Vice President, Director, and Chief Executive Officer. Now, he’s the second defendant in this high-profile fraud case to plead guilty.

Which types of fraud were involved?

There were two separate schemes that led to the charges – and the millions of dollars in losses. The first case of fraud involved the professional athletes’ income tax returns, in which the conspirators created fraudulent tax refunds for the athletes by making up personal and business losses.

The other scheme in the case was carried out using phony PPP loans. The Paycheck Protection Program was created by the U.S. federal government in 2020. This initiative created a way for loans to be distributed to the business owners who needed the funds to cover expenses and keep their workers paid.

A 30% processing fee was charged by these Mana Tax co-conspirators out of the fraudulent loan. The payments were hidden in a series of shell entities that were controlled by the head conspirator of the scheme.

The conspirators led these athletes to believe that they could secure tax refunds that they weren’t truly eligible for. These rogue accountants suggested that they had tax-related information that the athletes’ previous accountants hadn’t been privy to. They also went back into tax records from past years, claiming they would fix the mistakes and maximize their refund.

FindLaw Network
Gary Jay Kaufman
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