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Ask The California Employment Tax And Payroll Tax Attorney – Covid-19 Tax Fraud – When You Are Caught

By Robert S. Schriebman

2024

Introduction

CARES Act provided loans, credits, and payments for taxpayers suffering the impact of COVID-19. The CARES Act stands for Coronavirus Aid, Relief and Economic Security Act. The CARES Act was signed into law on March 27, 2020 to provide emergency financial assistance to millions of Americans suffering from the economic effects of the COVID-19 pandemic. Four years after its enactment, the IRS’ Criminal Investigation Division (CID) has investigated 1,644 tax and money laundering cases related to COVID-19 fraud potentially totaling $8.9 billion. These cases include criminal activity in fraudulently obtained loans, credits, and payments meant for America workers, families and small businesses.

As of the end of February 2024, close to 800 people had been indicted and close to 400 individuals have been sentenced to an average of 34 months in federal prison. The IRS’ conviction rate is staggering; almost 99%!

In 2023, the IRS CID opened nearly 700 new COVID-19 fraud investigations that total almost $5 billion in potential fraud.

Let’s look at two examples of successful criminal convictions.

The Case of Rami Saab

Rami Saab was sentenced to 10 years in prison and required to pay close to $10 million in restitution. Saab and a network of conspirators fraudulently applied for more than $32 million in loans from the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Program (EIDL) on behalf of shell corporations they controlled. They received close to $10 million in emergency relief funds intended for distressed small businesses. Saab and others laundered the proceeds before using the funds for their own self-enrichment.

The Case of Terrence L. Pounds

In March 2024 Pounds was sentenced to 94 months in prison and ordered to pay over $4 million to the SBA after being convicted of wire fraud and money laundering. He often claimed the loans were for non-profit, faith-based organizations with over $1 million in revenue and 15 employees. Pounds took millions of dollars in loans and then used the money to purchase several new vehicles, which were later seized by the US Government.

Conclusion

The IRS Criminal Investigation Division is the police force of the IRS. Agents carry guns. CID is responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, identity theft and more. You have to hand it to an agency that has almost a 99% conviction rate.

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Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 50 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments. Mr. Schriebman is in private practice. He is not affiliated in any way with the EDD, and he is not employed by the EDD or any other agency of the State of California.

Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House.

Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.

Web Site Article 796