Income tax

Tax preparer sentenced to prison for fraudulent deductions on federal tax returns | USAO-WDWA

Seattle – A 58-year-old Pacific, Washington resident was sentenced today in U.S. District Court in Seattle to one year and a day in prison on 14 counts of aiding and abetting the production false tax returns, US Attorney Nick Brun said. Jean Mpouli worked for 25 years as an aviation inspector for the Federal Aviation Administration (FAA), while running a tax preparation business with hundreds of clients, primarily serving African immigrants. During the 3-day trial in September 2021, prosecutors showed how Mpouli falsely increased deductions for unreimbursed business and education expenses in order to increase his clients’ tax refunds. Mpouli took a percentage of the refund as a fee, so the higher the refund, the higher the fee. Additionally, on his personal tax returns, Mpouli hid more than $200,000 in income generated from his illegal side business.

During today’s sentencing hearing, U.S. District Judge John C. Coughenour ordered Mpouli to pay $31,296 in restitution and imposed one year of supervised release after the prison sentence.

“Motivated solely by greed, Mr. Mpouli took advantage of the trust placed in him by his community – African immigrants and their descendants,” said US Attorney Nick Brown. “His clients were particularly susceptible to being used in this way because they were unfamiliar with US tax law. Mr. Mpouli put his clients at risk, exposing them to audits, fines and penalties, and possible criminal investigation.

According to filings in the case and trial testimony, in late 2016 an IRS analyst noted that an unusually high number of returns prepared by Mpouli claimed deductions for unreimbursed business expenses. In 2017, the IRS’ Criminal Investigations Division sent an undercover agent to the company to take a close look at how Mpouli prepared tax returns. Using W-2 information provided by the undercover agent, Mpouli correctly determined that the agent owed approximately $800 in taxes. However, Mpouli then offered to list approximately $34,000 in fraudulent expenses in order to bring the undercover agent’s reimbursement to over $5,600. Mpouli explained that the undercover agent should view the repayment as a “loan” in case the agent is audited by the IRS. Mpouli then accepted $250 in cash as a fee for preparing the fraudulent statement.

When officers executed court-authorized search warrants at the business in September 2017, they found more than 1,200 personal tax returns on Mpouli’s computers. Hundreds of tax returns show suspiciously high amounts of unreimbursed business and education expenses. In one example, Mpouli claimed that a client had flown over 33,000 business miles in one year. However, the client did not own a vehicle, did not have a driver’s license, and had never driven a vehicle in the United States.

When investigators contacted a random sample of clients who had used Mpouli’s services, they said they were unaware of the extent of the deductions he had claimed on their behalf. Many did not own vehicles, although Mpouli said car expenses were not reimbursed. Others have never attended the educational institution listed on the statements. In some cases, he claimed that children were attending secondary school, even though they were in fact enrolled in day care or primary school. Clients said Mpouli did not discuss the statements with them before filing, and when told they were being audited, he refused to help.

According to financial records, during the time of the fraud, Mpouli was sending over $300,000 to his native Cameroon to pay for the construction of a building.

In total, the government estimated the tax loss at nearly $3.5 million.

“When those we trust to prepare our taxes take advantage of their clients for their own greed, everyone is harmed. We rely on our tax system to provide resources to fund the essential services we all rely on,” a said Bret Kressin, IRS Special Agent for Criminal Investigations (IRS: CI), Seattle Field Office. Mpouli knew on a personal level how essential tax revenue is to public safety, as his previous career as a government employee was funded by taxpayers’ money. However, Mr. Mpouli chose to abuse the system despite this for his own illicit gain. Today’s sentence is a reminder that IRS:CI takes attacks on our tax system seriously, because the safety and well-being of our communities is what is at stake.”

The case was investigated by the Internal Revenue Service: Criminal Investigation. The case was prosecuted by Assistant United States Attorneys Lyndsie Schmalz and Frances Franze-Nakamura.