Some federal employees argue that they are underpaid. No doubt, that is true for some people. But, if that is the case, using a federal position as a stepping stone to defraud the government has some serious pitfalls.
A former IRS employee with a 30-year career who worked his way up to a district director of the Internal Revenue Service is now facing a prison term and a substantial fine. He found a way to add another $300,000 to his income as the director of the "Tax Dream Team" through a company in Topeka, Kansas.
According to prosecutrors, Jesse Ayala Cota used his position as an IRS district director to give legitimacy to a scam. He has admitted to defrauding the U.S. Treasury of more than $1.3 million and to earning more than $300,000 from his participation. Through a company called "Renaissance, The Tax People, Inc." he operated a scheme to defraud the government and individuals by marketing a program that sold illegal tax deductions through false and misleading representations.
Another member of the dream team sent an e-mail message to customers claiming written endorsements from “over 2,000 tax attorneys, enrolled agents and CPAs (certified public accountants) that every strategy contained in the Tax Relief System is absolutely sound, unassailable and proven over the past 40 years.” The e-mail also claimed that “[t]he training offered by Renaissance, the Tax People, through the Tax Relief System . . . was approved for continuing education credit for CPAs in all 50 states.”
The claims were not true and Cota is now facing a potential maximum sentence of five years in prison followed by up to three years of supervised release, a $250,000 fine, and liability for the costs of prosecution. His sentencing has been scheduled for January 2008.
“This is an example of someone implying he has ‘insider information’ to help others enrich themselves by buying into his bogus tax avoidance system. However, what he sold was long-term legal and financial problems for those who bought his advice,” said IRS Criminal Investigation Chief Eileen C. Mayer. Six other people have also pleaded guilty to felony charges in the case involving the one company.
