Two Mississippi tax preparers used multiple schemes to defraud $65 million from programs that had been designed to help businesses stay afloat during the coronavirus pandemic, federal prosecutors said this week.
The preparers, Renata Walton, 44, and Nicole Jones, 36, both of Olive Branch, Miss., were indicted on more than 50 counts of wire fraud, money laundering, preparing false tax returns and obstruction of justice, the U.S. Attorney’s Office for the Western District of Tennessee said on Wednesday.
They both pleaded not guilty and were each released on $100,000 bond, court documents show.
Ms. Walton owned R&B Tax Express in Moscow, Tenn., where she and Ms. Jones prepared tax returns.
Federal prosecutors said that the two women contacted small-business clients and asked if they were interested in pandemic-related grant money, according to court records. The women would then file for pandemic-related tax credits on behalf of the clients even though they were ineligible for those funds, officials said.
The money came mostly from the Employee Retention Credit and the Sick and Family Leave Credit programs, court documents show.
The Employee Retention Credit program offered companies thousands of dollars per employee if they could show that the pandemic was hurting their businesses, but that they were continuing to pay workers. Sick and Family Leave Credit offered tax breaks to employers who voluntarily gave their workers paid sick and family leave if they needed to take time off because of the pandemic.
The Internal Revenue Service processed the fraudulent tax returns, and the clients received six-figure tax refunds, according to the indictment. It did not name the clients, detail how much they received in fraudulent grants or whether they would face a penalty or be forced to repay the funds.
The clients paid the women large fees for their tax preparation work, including more than $10,000 in some cases, court records show. The fraudulent claims, which lasted from 2020 to 2024, added up to more than $65 million, according to court records.
It was not immediately clear how much in total the clients paid Ms. Walton and Ms. Jones for their work.
The federal government had notified both women that it was investigating, yet they persisted in filing false tax returns, prosecutors said. Ms. Walton told her clients not to speak with I.R.S. agents, according to the indictment.
Court records did not list any lawyers for the preparers, and an outgoing message at their tax preparation business said that it was closed for the season.
Government investigators have struggled to keep up with pandemic-related fraud, focusing their efforts and limited resources on large, multimillion-dollar cases. Federal prosecutors have used novel methods and even relied on private citizens to hunt for potential cases of fraud.
Washington distributed billions of dollars with few strings and little oversight as part of its response to the pandemic.
The Small Business Administration’s inspector general has estimated that more than $200 billion — or at least 17 percent of the pandemic loans that the agency distributed — was awarded to “potentially fraudulent actors.”
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