Messages from the Chief and Deputy (2020)

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ANNUAL REPORT 2020

Messages from the Chief and Deputy

Field Office Map

2020 Snapshot

Atlanta

Organizational Chart

Boston

Tax Crimes

Charlotte

Digital Fornesics

Chicago

Non-Tax Crimes

Cincinnati

International Operations

Dallas

Narcotics, Counterterrorism, &

Denver

Transnational Organized Crime

Detroit

Specialized Units

Houston

Asset Forfeiture

Las Vegas

Nationally Coordinated

Los Angeles

Investigations Unit

Miami

Commissioner's Protection Detail

Newark

Undercover Operations

100

New York

National Forensic Laboratory

104

Oakland

National CI Training Academy

108

Philadelphia

Professional Staff

112

Phoenix

Equity, Diversity & Inclusion

116

Seattle

Communications & Education

120

St. Louis

Outreach/Community Engagement

124

Tampa

128

Washington D.C.

132

Appendix

TABLE OF CONTENTS

Table of Contents

IRS:CI Annual Report 2020

Message from the

Departing Chief

Message from the

Incoming Chief

and find those cases that have the biggest impact on tax

administration. We are leading the world in our ability to

trace virtual currency in financial investigations while still

working our foundational tax enforcement mission areas.

Our conviction rate is among the highest in federal law

enforcement. Although many things have changed, some

things have remained constant. That is how we preserve

our legacy. Most crimes are still committed for financial

gain and we are still the only federal agency authorized

to investigate and recommend prosecution on federal

income tax cases.

It has been the honor of my life to lead the men and

women of IRS-CI these past three years. It’s been

an amazing run. In my 29 years with CI, I never

imagined I would rise from a grade 5 Special Agent

to being the Chief of this great agency. It’s truly been

an honor.

We have had some tremendous successes over

the years, and I attribute those to the great

personnel I have worked with in CI, and with our

partners around the world. I’ve followed one simple

philosophy: Work hard, surround yourself with

greatness and the rest will take care of itself. During

my tenure as Chief, we launched some important

initiatives and the quality of our cases has never

been higher, but it is the people I will miss the most.

It is the people who selflessly devote their lives

to this mission on behalf of the American people

because they believe in the badge and all that it

represents.

Throughout my time with CI, I have never forgotten

our mission and the important role we play on tax

administration. The deterrent effect from our work

forms the backbone of our voluntary compliance

tax system—a system that funds our government,

our military and our infrastructure. While criminals

and their methods may change from year to year,

following the money still forms the basis for

everything we do just as it did 100 years ago. I’m

proud of our accomplishments from this year and I

look forward to following future successes!

–Don Fort, Departing Chief

The people in CI change throughout the years, but our

underlying principles and our mission remain the same.

They are what unite us and give us the structure to move

forward seamlessly. Honor the Badge, Preserve the

Legacy, Master Your Craft, and Inspire the Future are the

guiding principles that IRS Criminal Investigation lives by

and by which 2020 was defined.

HONOR THE BADGE. As the new Chief, I am excited to

share the FY 2020 IRS Criminal Investigation Annual

Report. We honor the badge by remembering that the

IRS relies on Criminal Investigation’s ability to investigate

and recommend prosecution of criminal tax violations

to the Department of Justice. Criminal Tax cases which

are prosecuted and publicized provide a strong deterrent

message to would-be tax evaders, helping to ensure the

integrity and fairness in the tax system. Our workforce

honors the badge by working with a sense of urgency,

integrity, and professionalism every day. As we look

ahead to develop and deploy the tools that will make

us successful in the 21st Century, we must use those

lessons learned from the past to inform our investigations

and investigative techniques of the future. This is how we

continue to honor the badge and our great history.

PRESERVE THE LEGACY. Our cases continue to be some

of the most complex and impactful cases in the world and

regularly appear on the front page of the nation’s largest

newspapers and websites. We are working smarter using

data analytics to augment good old-fashioned police work

MASTER YOUR CRAFT. The evolution of financial crime

mirrors the evolution of money movement in general.

The speed at which money moves today is almost

instantaneous and the convenience that comes with

that opens the door for criminals to exploit the latest

technological advancements. Money disappears in the

blink of an eye. All that is needed is a smartphone to

move money from one location to another, anywhere in

the world. The internet and the dark web have facilitated

this change and law enforcement has adjusted to keep

up. CI made significant investments in training our

employees in the latest tactics and techniques to be

successful in a digital financial world. These investments

will continue.

INSPIRE THE FUTURE. While the tools of the trade

may have changed, criminals are still doing the same

things they were always doing. Skimming money from a

business to avoid employment taxes or pretending to be

someone else to file taxes—these are things criminals

have done since our inception. And while it is true that

the threat and evolution of cybercrimes is real and has

impacted all financial crimes, I’m proud of what we have

done as an agency to position ourselves to solve these

sophisticated crimes. Today’s cyber criminals think we

cannot catch them, but as evidenced by some of the great

casework in this report, it is clear we can. I’m proud of all

we have accomplished in fiscal year 2020. I’m proud to

lead this agency and I look forward to helping to write the

next chapter of investigative excellence for CI.

–Jim Lee, Chief

Message from the

Incoming Deputy Chief

In fiscal year 2020,

we continued to

focus on case

selection to make

sure we worked

the most egregious

tax crimes in

the country. We

continued to

pursue the cases

that have the

biggest impact on

tax administration,

finding ourselves

in the headlines

of some of the

most talked-about

cases of the year.

We validated pilot

programs and solidified units designed to better use data

to aide in finding and solving the best financial crime

cases. We took another step into the center of the world

stage in solving some of the most complex cybercrimes.

And we nourished international partnerships, broke down

barriers of information sharing, and showed the world’s

criminal population that there is nowhere to hide.

CI Special Agents are in demand when it comes to

solving complex financial crimes. As the Chief said, we

are the only ones who can investigate tax crimes, but

U.S. Attorneys want CI special agents involved in all

their financial crime cases. In the international arena,

we continue to work with our partners to break down

barriers and work together in areas where we share

common goals. Perhaps there is no better example of

these types of partnerships than our work with the Joint

Chiefs of Global Tax Enforcement, or J5. The J5 includes

CI and our counterparts in the United Kingdom, Australia,

Canada, and the Netherlands and focuses on enablers of

international tax evasion and on the use of cryptocurrency

to evade international tax obligations.

This annual report is a proud reflection of the tremendous

cases the Criminal Investigation Division has worked

during fiscal year 2020. The case summaries in this

report touch every field office, every state and nearly

every region of the world. Though we spend most of our

time talking about cases, it should be noted that these

successes are a result of having the most sophisticated

financial crime law enforcement personnel the world has

ever seen. I look proudly at our successes in fiscal year

2020, but also forward to accomplishing great things in

fiscal year 2021.

– Jim Robnett, Deputy Chief

IRS:CI Annual Report 2020

2020 Snapshot

U.S. ATTORNEY'S OFFICE

$2.3B $8.4B 90.4%

1226 1.27

TAX FRAUD IDENTIFIED

OTHER FINANCIAL CRIMES

WARRANTS EXECUTED

INTERNATIONAL

26%

14%

BSA DATA

13%

CONVICTION RATE

INVESTIGATION

SOURCES

PETABYTES

IRS:CIVIL

DIGITAL DATA SEIZED

STATE/LOCAL GOVERNMENT

CORPORATE

FRAUD

EMPLOYMENT

TAX

OTHER FEDERAL AGENCIES

PUBLIC

CORRUPTION

ABUSIVE

TAX SCHEMES

PUBLIC

29%

CYBER CRIMES

GENERAL

TAX FRAUD

GENERAL

FRAUD

IDENTITY

THEFT

TAX

REFUND

FRAUD

IRS:CRIMINAL INVESTIGATION

73.1

13.8

NON-TAX

NARCOTICS

11.3

MONEY

LAUNDERING

IRS:CI STAFFING

OCDETF

Organized Crime

Drug Enforcement

Task Force

SPECIAL AGENTS

2020 2030

PROFESSIONAL

STAFF

2020

DIRECT INVESTIGATIVE TIME SPENT*

2019

2009

828

13.7%

2019

728

PERCENTAGES

*1.8% UNCATEGORIZED

IRS:CI Annual Report 2020

Office

of the Chief

Chief of Staff

Communications

& Education

Chief

Deputy Chief

Review & Program

Evaluation

Technology

Operations &

Investigative

Services

Equity, Diversity

& Inclusion

International

Operations

Operations,

Policy,

& Support

Field

Operations

East

National

Forensic

Laboratory

Finance

Program Analysis

& Operational

Support

Business

Systems

Development

Chicago

Boston

Atlanta

Denver

Field

Operations

West

Financial

Crimes

Human

Resources

Cyber Crimes

Cybersecurity

Dallas

Cincinnati

Charlotte

Las Vegas

Narcotics,

Counterterrorism,

& Transnational

Organized Crime

Special

Investigative

Techniques

National CI

Training

Academy

Operations,

Scheme

Development,

& Support

Digital

Forensics

Detroit

Newark

Miami

Los Angeles

Warrants &

Forfeiture

Applied

Analytics

Technical

Operations

Center

Houston

New York

Tampa

Oakland

Treasury

Liaison

User

Support

St. Louis

Philadelphia

Washington, DC

Phoenix

FinCEN

Liaison

Program

Management,

Acquisition,

& Contracts

Strategy

Refund &

Cyber Crimes

Midstates Area

Field Offices

NCIU

Northern Area

Field Offices

Southern Area

Field Offices

Western Area

Field Offices

ORGANIZATIONAL CHART

Organizational Chart

Seattle

TEOAF

Liaison

IRS:CI Annual Report 2020

TAX CRIMES

Tax Crimes

1598 945 593

INVESTIGATIONS INITIATED

PROSECUTIONS RECOMMENDED

ABUSIVE TAX SCHEMES

CI focuses on the investigation of promoters and clients

who willfully participate in domestic and offshore tax

schemes in violation of the tax laws. Participants in

these abusive schemes create structures such as trusts,

foreign corporations, and partnerships to make it appear

a trustee, nominee, non-resident alien, or other foreign

entity is the owner of the assets and income, when in

fact the true ownership and control remains with a U.S.

taxpayer.

CRIMINAL INVESTIGATION’S (CI) primary resource

commitment is to develop and investigate tax crimes,

both legal and illegal source. Prosecution of these cases

supports the overall IRS compliance goals and enhances

voluntary compliance with the tax laws. CI works some

of these investigations with our federal, state and local

law enforcement partners and also coordinates with

foreign tax and law enforcement agencies. The Illegal

Source Financial Crimes Program encompasses tax and

tax-related, money laundering and currency violations.

These investigations focus on individuals deriving income

from illegal sources, such as money obtained through

embezzlement, bribery, and fraud. The individuals can

be legitimate business owners but obtain their income

through illegal means. These investigations focus on

methods through which individuals seek to launder

their ill-gotten income by making it appear the income

is from a legitimate source. Frequent money laundering

techniques include the manipulation of currency reporting

requirements, layering of transactions and international

movement of funds.

IRS:CI Annual Report 2020

REFUND FRAUD PROGRAM

GENERAL TAX FRAUD

General tax fraud investigations are at the core of CI’s

law enforcement efforts and directly influence the

American public’s confidence and compliance with the

tax laws. The integrity of our tax system depends heavily

on taxpayers’ willingness to self-assess taxes owed and

voluntarily file tax returns. CI investigations help assure

law-abiding taxpayers that individuals who deliberately

underreport or omit income from their tax returns are

held accountable for their actions. Common practices

involved in general tax fraud investigations include

keeping two sets of books, making false entries in books

and records, claiming personal expenses as business

expenses, claiming false deductions or credits against

taxes owed, and hiding or transferring assets. CI special

agents use their financial investigative expertise to

uncover and quantify the seriousness of these schemes.

They also work closely with Department of Justice (DOJ)

prosecutors to gather the necessary evidence to bring

these cases to a successful conclusion.

The Refund Fraud Program consists of three parts–

identity theft investigations, the Questionable Refund

Program (QRP), and the Abusive Return Preparer Program

(RPP) for both Individual Master File (IMF) and Business

Master File (BMF). These programs cover criminals who

file fraudulent tax returns to steal government funds.

This type of theft erodes voluntary compliance and

taxpayer confidence in the integrity of the tax system. It

also results in the loss of vital funds needed to support

government programs, many of which impact the most

vulnerable Americans.

The Questionable Refund Program identifies fraudulent

claims for tax refunds. Generally, these schemes involve

individuals filing multiple fraudulent tax returns using

the personally identifiable information of individuals

who knowingly or unknowingly are used to facilitate the

scheme. A significant number of these investigations

include cases also considered identity theft investigations

(stolen identity refund fraud-SIRF). In contrast, Abusive

Return Preparer Program investigations involve the

orchestrated preparation and filing of false income tax

returns by corrupt return preparers. These preparers

often claim inflated personal or business expenses, false

SENTENCED

deductions, excessive exemptions, and unallowable tax

credits. The preparers’ clients may or may not know their

returns were falsified.

EMPLOYMENT TAX FRAUD

Employment tax fraud takes many forms. Some of the

most common forms include employee leasing, paying

employees in cash, filing false payroll tax returns,

and failing to file payroll tax returns (“pyramiding”).

Pyramiding occurs when a business withholds taxes

from its employees, but intentionally fails to forward

them to the IRS. After a liability accrues, the individual

starts a new business and begins to accrue a new

liability. Some employers withhold taxes from their

employees’ paychecks and use the funds for their

personal expenses. Employment taxes include federal

income tax withholding, Social Security taxes, and federal

unemployment taxes.

IDENTITY THEFT

Identity theft refund fraud occurs when someone uses

the personally identifiable information (PII) of another

individual–for example name, Social Security number

(SSN), address–without permission, to commit fraud

or other crimes. These cases are commonly referred

to as stolen identify refund fraud (SIRF) investigations.

The scam usually occurs when an identity thief uses

a legitimate taxpayer’s identity to file a fraudulent tax

return and claim a refund. Generally, the identity thief

will use a stolen SSN and other personally identifiable

information to file a fraudulent tax return and attempt

to get a refund early in the filing season before the

legitimate taxpayer files their tax return. u

IRS:CI Annual Report 2020

Cyber Crimes

SIGNIFICANT CASES

North Korea Crypto Hackers

Charged

SINCE 2015, CI continues to build a cybercrimes

program to address the exponential growth of

cybercrime impacting the tax, financial, and economic

systems of the United States. A Cyber Crime Unit (CCU)

with locations in our Los Angeles and Washington,

D.C. Field Offices was part of the initial launch of the

program and a headquarters Cyber Crimes office and

cybercrimes coordinators in each of our 21 Field Offices

followed. CCU investigations involve the internet and

internet based technologies that enable criminals to

engage in illegal activity with anonymity and without

a defined physical presence. The CCU focuses its

efforts on multijurisdictional investigations posing the

most significant threats to the U.S. tax and financial

systems. These crimes typically involve the use of crypto

currencies to facilitate the criminal activity.

Field office special agents and professional staff working

cybercrime investigations are focused primarily on cyber

enabled investigations that involve theft and fraud and

are increased in scale by the use of computers, computer

networks, or other forms of technology. Over the past

several years, CI has seen an increasing growth in the

number of criminals using the cyber environment to

facilitate Stolen Identity Refund Fraud (SIRF) and other

refund fraud schemes. During this same period, data loss

incidents reported to the IRS has drastically increased.

These data loss incidents include data intrusions,

IRS:CI Annual Report 2020

business email compromises, phishing schemes, and

bank account takeovers victimizing private sector entities

involved in the tax eco-system and the IRS. These thefts

target detailed financial data, prior year tax returns, and

payroll records that criminals use to generate SIRF claims

that mirror a victim’s actual tax return. During these types

of cybercrime investigations, special agents use their

close working partnerships with other law enforcement

agencies and their capabilities as law enforcement

officers to gather valuable information about SIRF, refund

fraud crimes, and information that affects the integrity of

IRS online systems. They share criminal intelligence in

real-time with their IRS civil counterparts to aid taxpayer

and revenue protection efforts. The IRS also uses this

information to develop internal defenses that help identify

and prevent further losses associated with fraudulent

claims.

CI’s cybercrime investigative efforts focus on subjects

using the internet as an essential means to commit the

crime, remain anonymous, elude law enforcement, and

conceal financial transactions, ownership of assets, or

other evidence. As with all types of crimes within CI’s

area of responsibility, special agents working cybercrimes

investigations use the same “follow the money” strategy

that made CI’s involvement in complex investigations a

mainstay since the creation of the agency in 1919.

On March 2, 2020, two Chinese

nationals were charged with

laundering over $100 million worth

of cryptocurrency from a hack

of a cryptocurrency exchange.

In total, nearly $250 million in

cryptocurrency was stolen by North

Korean co-conspirators in 2018.

The funds were laundered through

hundreds of automated crypto

currency transactions and multiple

virtual currency exchanges’ Know

Your Customer (KYC) controls were

circumvented through the use of

doctored photographs and falsified

identification documentation. A

Treasury Secretary Steven Mnuchin presented the Secretary’s Honor Award to

portion of the laundered funds was

Special Agent Christopher Janczewski of the Washington Field Office. Christopher

used to pay for infrastructure used

was recognized for playing a key role in an international investigation that brought

in North Korean hacking campaigns

down three terrorist financing schemes, leading to the largest crypto seizures in

against the financial industry. The

the history of the U.S. relating to terrorism.

U.S Treasury’s Office of Foreign

Asset Control (OFAC) also imposed

sanctions on defendants and numerous cryptocurrency

Largest Ever Seizure of Terrorist Organizations

addresses related to their involvement in activities facili

Cryptocurrency Accounts Causes Global Terror

tating North Korean sanctions evasion.

Disruption

Darknet Based Bitcoin Mixing Service Owner Charged

with Laundering More Than 300 Million Dollars

On February 13, 2020, Larry Harmon was charged with

money laundering conspiracy, operating an unlicensed

money transmitting business and conducting money

transmission without a D.C. license. Harmon ran both

Grams and Helix, respectively a darknet search engine

and money laundering service that was integrated into

major darknet markets such as AlphaBay, Silk Road II,

Abraxxas, and many others. Helix worked by tumbling

bitcoins from users and vendors on darknet markets with

new, “clean” bitcoin so as to obfuscate the illicit source

of the bitcoin. Approximately 356,000 bitcoins moved

through the site between July 2014 and December

2017 – valued at over $300 million at the time of the

transactions. Data obtained from these servers will assist

investigations all around the world – since criminals use

tumblers to obfuscate the crypto trail. Evidence obtained

from this investigation will serve as the missing link or

puzzle piece in many investigations.

On August 13, 2020, three forfeiture complaints and

a criminal complaint were unsealed in the District of

Columbia detailing a coordinated effort to dismantle

three terrorist financing cyber-enabled campaigns. These

campaigns involved the (1) al-Qassam Brigades, Hamas’s

military wing, (2) al-Qaeda, and (3) Islamic State of

Iraq and the Levant (ISIS). These actions represent the

government’s largest-ever seizure of cryptocurrency in

the terrorism context.

These three terror finance campaigns all relied on

sophisticated cyber-tools, including the solicitation of

cryptocurrency donations from around the world. The

action demonstrates how different terrorist groups

have similarly adapted their terror finance activities to

the cyber age. Each group used cryptocurrency and

social media to garner attention and raise funds for

their terror campaigns. Pursuant to judicially-authorized

warrants, U.S. authorities seized millions of dollars, over

300 cryptocurrency accounts, four websites, and four

Facebook pages all related to the criminal enterprise.

IRS:CI Annual Report 2020

Cyber Crimes

AL-QASSAM BRIGADES CAMPAIGN: The first forfeiture

complaint involves the al-Qassam Brigades (aQB),

Hamas military wing, and its online cryptocurrency

fundraising efforts. In early 2019, aQB posted a call on

its social media page for bitcoin donations. The aQB then

moved the request to its official websites and boasted

the donations were untraceable and would be used for

violent causes. The websites offered video instructions

to make bitcoin donations. With judicial authorization,

IRS:CI seized the infrastructure of the aQB websites and

subsequently covertly operated one of the websites and a

bitcoin wallet. Funds were received from persons seeking

to provide material support to aQB and communications

from persons seeking to join aQB. Financial accounts

were seized and also included hundreds of bitcoin

addresses from both donors and aQB in a forfeiture

complaint.

AL-QAEDA CAMPAIGN: The second action involves

al Qaeda and affiliated terrorist groups, largely based

out of Syria. These organizations operated a bitcoin

money laundering network using Telegram channels and

other social media platforms to solicit cryptocurrency

donations. In some instances, they purported to act as

charities when, in fact, they were openly and explicitly

soliciting funds for violent terrorist attacks. IRS:CI

identified and included 155 bitcoin addresses in the

forfeiture complaint.

ISIS CAMPAIGN: The final forfeiture complaint involves

a scheme by ISIS facilitator, Murat Cakar to sell fake

personal protective equipment via website FaceMaskCenter.com. The website claimed to sell FDA approved

N95 respirator masks, when in fact the items were not

FDA approved. Site administrators claimed to have near

unlimited supplies of the masks, in spite of such items

being officially-designated as scarce. The forfeiture

complaint seized Cakar’s website as well as four related

Facebook pages used to facilitate the scheme.

IRS:CI Annual Report 2020

Cyber Crimes

Two Turkish Inidividuals charged as money

launderers

Mehmet Akti and Husamettin Karatas were charged

in a criminal complaint with acting as related money

launderers while operating an unlicensed money

transmitting business. Akti operated a prolific virtual

currency Money Service Business (MSB) from his account

with a virtual currency exchange receiving approximately

2,328 Bitcoin, 2,296 Ethereum, and U.S. dollar wires

totaling $82.8 million. During the same time period

withdrawals out of the account were made to more than

250 unique cryptocurrency wallet addresses totaling

over $90 million. Karatas opened an account at a virtual

currency exchange which he used to operate a cryptocurrency exchange of his own. In addition to a $500,000

wire from a company linked to Akti, Karatas received

cryptocurrency and fiat currency valued at approximately

$2.1 million into his virtual currency account between

April and July 2019. During the same time period Karats

withdrew cryptocurrency valued at approximately $2.3

million from this account to 17 unique wallet addresses.

HEROCOIN Owner Admits to Operating Unlicensed

Crypto ATM Network that Laundered Millions of

Dollars of Bitcoin and Cash for Criminals

Kais Mohammad, a.k.a. “Superman29”, ran a variety

of Bitcoin ATM-type kiosks under the brand name

“Herocoin”. He was charged in a three-count criminal

information filed on July 22, 2020, and plead guilty

the same day. Mohammad plead guilty to one count of

operating an unlicensed money transmitting business,

one count of money laundering, and one count of failure

to maintain an effective anti-money laundering program.

From December 2014 to November 2019, Mohammad

owned and operated Herocoin, an illegal virtual-currency

money services business. Mohammad purchased and

advertised on the internet a network of Bitcoin ATM-type

kiosks, which were located in malls, gas stations and

convenience stores in Los Angeles, Orange, Riverside

and San Bernadino counties. These 17 kiosks allowed

customers to use cash to buy Bitcoin, an internet-based

cryptocurrency, or sell Bitcoin in exchange for cash that

is dispensed onsite. The machines were seized by the

government. In total, Mohammad admitted he exchanged

between $15 million and $25 million from in-person

exchanges and transactions occurring at his Bitcoin

kiosks.

SCAM ALERT! The BitClub Network investment

scheme revealed

On December 10, 2019, Matthew Goettsche, Jobadiah

Weeks, Russ Medlin, Joseph Abel, and Silviu Balaci were

charged for their roles in connection with defrauding

BitClub Nework investors of at least $722 million. To

date, Balaci and Abel have plead guilty to various charges

associated with their roles in the scheme.

From April 2014 through December 2019, the defendants

operated BitClub Network, a fraudulent scheme that

solicited money from investors in exchange for shares

of purported cryptocurrency mining pools and rewarded

investors for recruiting new investors. Goettsche, Weeks,

and others conspired to solicit investments in BitClub

Network by providing false and misleading figures

that BitClub investors were told were “bitcoin mining

earnings,” purportedly generated by BitClub Network’s

bitcoin mining pool. Goettsche discussed with his

conspirators that their target audience would be “dumb”

investors, referred to them as “sheep,” and said he

was “building this whole model on the backs of idiots.”

Goettsche directed others to manipulate the figures

displayed as “mining earnings” during the course of the

conspiracy.

For example, in February 2015, Goettsche directed

another conspirator to “bump up the daily mining

earnings starting today by 60%,” to which his conspirator

warned “that is not sustainable, that is ponzi teritori

[sic] and fast cash-out ponzi... but sure.” In September

2017, Goettsche sent an email to another conspirator in

which he suggested that Bitclub Network “[d]rop mining

earnings significantly starting now” so that he could

“retire RAF!!! (rich as f**k).” Weeks sent an email in June

2017 to Goettsche and another conspirator in which he

remarked that BitClub selling shares in BitClub and then

not using the money to purchase mining equipment was

“not right.” Goettsche, Weeks, and others obtained the

equivalent of at least $722 million from BitClub Network

investors.

Goettsche, Weeks, Abel, and others also conspired to

sell BitClub Network shares – which were securities –

notwithstanding that BitClub Network did not register

the shares with the U.S. Securities and Exchange

Commission. Weeks and Abel created videos and traveled

around the United States and the world to promote

BitClub Network. In one video, a conspirator espoused

that BitClub Network was “the most transparent company

in the history of the world that I’ve ever seen.” In another

video, Abel assured investors that BitClub Network was

“too big to fail.” u

IRS:CI Annual Report 2020

DIGITAL FORENSICS

IRS:CI’S ELECTRONIC CRIMES section is now Digital

Forensics. In fiscal year 2020, Electronic Crimes was

restructured to better provide world class digital forensic

services to Special Agents and other law enforcement

stakeholders. This specialized and highly technical

section has been more appropriately named Digital

Forensics.

Virtually every criminal investigation now includes

some form of digital evidence and a need for digital

forensics. Digital forensics can range in complexity from

running a simple keyword search on existing data to

imaging complex server farms and analyzing terabytes

of data in a virtual environment. The Digital Forensics

section specializes in extracting evidence from a variety

of sources: standalone computers, mobile devices,

business computer networks and systems, servers, cloud

storage, and even the dark web. As digital technologies

IRS:CI Annual Report 2020

Digital Forensics

The Digital Forensics section forensically acquires and

analyzes digital data and provides testimony in legal

proceedings about digital evidence and processes

in ongoing criminal investigations. Digital Forensics

currently has 68 field CISs in 47 laboratories throughout

the United States; these labs will be consolidated to 18

Regional Digital Forensics Laboratories in the coming

years. Digital Forensics also has a specialized Digital

Forensics Laboratory in Virginia staffed with six CIFAs

and two Special Agent Senior Analysts responsible for

policy, training, hardware and software testing, as well as

serving as a resource in solving complex data extractions,

data recovery, and other challenges encountered by CISs

in the field.

SIGNIFICANT CASES

In FY 2020, Digital Forensics personnel participated in

more than 959 search warrants or other digital forensics

operations at more than 718 locations and seized over

than 1.278 petabytes of data from more than 3,304

computers, laptops, and external devices and 724 mobile

devices. The Digital Forensics section is the primary

source for digital analysis in IRS:CI, and IRS:CI’s Digital

Forensics remains one of the premier digital forensic

programs in all of U.S. law enforcement.

Initially, Kvashuk started stealing smaller amounts

totaling about $12,000 in value using his own account

access. As the thefts escalated into millions of dollars of

value, Kvashuk used test email accounts associated with

other employees. Kvashuk, a knowledgeable software

developer, attempted to mask digital evidence that would

trace the fraud and the internet sales back to him. He

used a bitcoin “mixing” service in an attempt to hide

the source of the funds ultimately passing into his bank

account. In all, over the seven months of Kvashuk’s

illegal activity, approximately $2.8 million in bitcoin was

transferred to his bank accounts. Kvashuk then filed fake

tax return forms, claiming the bitcoin had been a gift from

a relative.

Northern Pacific Area

On February 25, 2020, Volodomyr Kvashuk, a 25-year-old

former Microsoft software engineer was convicted of

a scheme to steal over $10 million in digital currency

from Microsoft. Kvashuck was involved in the testing of

Microsoft’s online retail sales platform and used that

testing access to steal “currency stored value” (CSV) gift

cards. Kvashuck resold the value on the internet and used

the proceeds to purchase a $160,000 Tesla vehicle and a

$1.6 million-dollar lakefront home.

and modes of concealing evidence evolve, CI’s Digital

Forensic examiners’ evolve as well through training and

education. Computer Investigative Specialists (CISs)

and Computer Investigative Forensic Analysts (CIFAs)

continually train and work to advance their technical

acumen and skillsets. Training is primarily accomplished

through a joint-agency training project known as the

Treasury Computer Forensic Training Program (TCFTP),

a collaboration with Homeland Security Investigations

and the U.S. Secret Service. Through TCFTP training and

additional advanced trainings and certifications, IRS:CI’s

Digital Forensics examiners have quickly become leaders

in the identification and extraction of data from common

computer and mobile systems to unique devices, such

as vehicle infotainment systems, drones, wearables, and

various other electronic media known as the Internet of

Things.

IRS:CI Annual Report 2020

Digital Forensics

IRS:CI Digital Forensics took the lead as to the

acquisition, processing, and analysis of the data from

various devices, constituting approximately seven

terabytes of data seized as evidence. A Digital Forensics

SA-CIS and a special agent from the Western Cyber

Crimes Unit worked together on a daily basis to triage

and assess digital evidence in the context of the investi

gation. Information about the tools and means of the

fraud that were initially developed via other aspects of

the investigation were confirmed and validated through

the Digital Forensics’ analysis of internet and program

artifacts found on the seized devices. For example, use of

VPN services; meticulous analysis by the user of possible

IP and geolocation information; Microsoft test account

access information; stolen CSV codes; screenshots of

fraudulent purchases made in the scheme; and a rich

variety of data in the forms of significant internet browser

history, saved user login/password information, and

add-ins designed to thwart identification of the user.

The CIS prepared video recordings of Kvashuk’s

virtualized computer documenting user attribution

and the operation of a custom-built software program

used to automate the process of stealing Microsoft

CSV codes. The CIS subsequently testified at trial using

extracts of the video to show how the information would

have appeared to the user behind the keyboard. When

sentenced, Kvashuk faces up to twenty years in prison.

Mid-Atlantic Area

Monique Ellis was sentenced to six years in prison for wire

fraud and aggravated identity theft. Ellis was convicted

following a jury trial in October 2017. Ellis’s appeal was

denied in September 2019. According to documents

filed with the court and evidence presented at trial, Ellis

used stolen IDs, including those of prisoners within the

Alabama Department of Corrections, to file tax returns

with the Internal Revenue Service seeking fraudulent

IRS:CI Annual Report 2020

Digital Forensics

refunds. Ellis directed the fraudulently obtained refunds

to bank accounts that she controlled, causing a tax loss of

$700,933.

A Digital Forensics SA-CIS was tasked with forensically

reviewing laptops seized during the execution of a search

warrant at Ellis’s apartment, including two laptops seized

from her bedroom. A forensic review of the laptops

revealed that they were used to file over 300 electronic

tax returns from 2008 through 2012. The forensic review

included identifying TurboTax UIDs from the laptop’s

internet browser history to identify the filed returns. The

forensic review also identified that the laptops accessed

the internet provider (IP) address associated with Ellis’s

apartment over 300 times. The tax returns linked to the

laptops shared certain characteristics, such as being

filed from one of several IP addresses, including the IP

address for Ellis’s apartment. The CIS testified at trial, as

well as at a pretrial hearing regarding the tools/processes

used. In addition to the prison term, Ellis has been

ordered to serve three years of supervised release and to

pay $352,183 in restitution.

Mid-Atlantic Area

George David George was indicted in the Middle District

of Tennessee by a federal grand jury in May 2015 with

securities fraud, mail fraud, wire fraud, and money

laundering and subsequently charged with additional

counts of wire fraud in February 2017. George plead guilty

and was sentenced in March 2019. His appeal was denied

in March 2020. George operated a fraudulent investment

scheme where he raised money for a social networking

platform focused on health and wellness known as Well

City. George bilked dozens of investors out of $3 million.

Rather than invest the funds in the business, he diverted

a substantial portion to personal uses like gambling and

retiring personal debts. In May 2017, George was indicted

for failing to appear in U.S. District Court after he failed

to appear for a bond revocation hearing and prior to the

start of his trial scheduled for May 16, 2017. George, who

was out on bail, cut off his ankle monitor and absconded

from justice. He spent nineteen months as a fugitive and

continued to deceive. He went to Texas, Alabama, and

was caught in Jacksonville, FL. He assumed at least two

identities while on the run to evade capture. One identity

was that of a Harvard-trained psychiatrist where he

unlawfully dispensed a prescription drug, Clonazepam, to

a sixteen-year-old, landing the boy in the hospital. George

had previously taken this medication from a woman he

met on Match.com and whom he was having a romantic

relationship with while deceiving her as well. George was

apprehended and arrested by the US Marshals in January

2019.

IRS:CI’s Digital Forensics (DF) was tasked with imaging

and analyzing devices seized during the arrest under a

short deadline. SA-CISs in the Nashville Digital Forensics

lab were quickly able to do the necessary analysis. The

work of the CISs was crucial as George’s computer was

a major topic addressed during sentencing. Analysis

showed George’s internet searches consisted of topics

such as how to successfully run from authorities and how

to erase search history.

George plead guilty to seven counts of wire fraud, and

one count of mail fraud, securities fraud and money

laundering in March 2019. George was sentenced to 20

years in federal prison for the fraud scheme and ordered

to pay almost $3 million in restitution. During sentencing,

Judge Wilson remarked that George had “larceny in his

heart”.

Eastern Area

Ryan P. Sheridan operated two drug and alcohol

detoxification centers in Ohio under the name Braking

Point Recovery Center. Sheridan, with the assistance

of multiple co-conspirators, used these detoxification

centers to commit health care fraud by submitting false

billings to the Ohio Department of Medicaid. On October

4, 2019, Sheridan plead guilty to a 60-count indictment

that included various health care fraud charges and 28

money laundering counts. On January 22, 2020, Sheridan

was sentenced to serve 90 months incarceration and pay

restitution of over $24 million.

During the course of the investigation, A Digital Forensics

SA-CIS captured significant data on various cell phones

and computers and elicited essential information during

interviews of key witnesses who had text message

communications with Sheridan. These text messages

provided insight into the relationships Sheridan had with

his co-conspirators. The SA-CIS assisted the prosecution

team in determining the most efficient way to examine

mass amounts of data seized from the electronic devices

which proved instrumental to the investigation and

subsequent prosecution.

Walters among other things, adjusted prescription

formulas to ensure the highest reimbursement without

regard to efficacy; solicited recruiters to procure

prescriptions for high-margin compounded medications

and paid those recruiters commissions based on the

percentage of the reimbursements paid by pharmacy

benefit managers and health care benefit programs,

including commissions on claims reimbursed by TriCare;

solicited (and at times paying kickbacks to) practitioners

to authorize prescriptions for high-margin compounded

medications; routinely and systematically waived and/

or reduced copayments to be paid by beneficiaries and

members, including utilizing a purported copayment

assistance program to falsely make it appear as if the

pharmacies were collecting copayments. Walters and

his numerous co-conspirators effectuated a scheme

to defraud health care benefit programs, including the

TRICARE program, in the amount of $287,659,569, with

losses to a government health care program exceeding

$20,000,000. Walters obtained over $40,000,000 in

proceeds derived directly or indirectly from the fraud.

Walters is only one of fourteen guilty pleas or trials in

which Digital Forensics played a significant part in the

investigation. In February 2017, Digital Forensics CISs

took the lead in analyzing the 210 terabytes of digital

evidence originally seized by the FBI. In conducting the

digital review and analysis, CISs used complex forensic

software, as well as CI’s own internal digital evidence file

sharing system known as Electronic Crimes Environment.

The three-year review consisted of a team of CISs

assisted by technical agents from several other agencies

to complete and present the evidence necessary to prove

the case.

The IRS:CI Digital Forensics section continues to

provide technical assistance to the investigation and US

Attorney’s as they continue to look into the numerous

aspects of this case. u

Southeast Area

On July 10, 2020 Wade Ashley Walters, a co-owner of

numerous compounding pharmacies and pharmaceutical

distributors, pleaded guilty to one count of conspiracy

to commit health care fraud and conspiracy to commit

money laundering. As part of his guilty plea, Walters

admitted that, between 2012 and 2016, he orchestrated

a scheme to defraud TriCare and other health care benefit

programs by distributing compounded medications that

were not medically necessary. As part of the scheme,

IRS:CI Annual Report 2020

NON-TAX CRIMES

Non-Tax Crimes

998 914 633

INVESTIGATIONS INITIATED

CRIMINAL INVESTIGATION’S (CI) Illegal Source

Financial Crimes Program investigates tax and tax related

crimes, money laundering, and currency violations.

The special agent’s investigations focus on individuals

who receive income from illegal sources, such as

embezzlement, bribery, and fraud. They also focus on

money-laundering schemes where individuals launder

their ill-gotten gains by making the money appear as if it

came from legitimate sources. Sometimes an individual

will employ a third party or a professional money

launderer.

IRS:CI Annual Report 2020

Frequent money laundering techniques include:

• Manipulating currency reporting requirements

• Layering transactions

• Use of Cryptocurrency

• Using Black Market Peso

• Moving funds internationally

The domestic and international law enforcement

community recognize CI’s special agents as the premier

experts in money laundering investigations.

PROSECUTIONS RECOMMENDED

SENTENCED

MONEY LAUNDERING

BANK SECRECY ACT PROGRAM

Money laundering, as defined in the National Money

Laundering Strategy, is criminal finance. Money

laundering creates an underground, untaxed economy

that harms our country’s overall economic strength.

When criminals or criminal organizations seek to disguise

the illicit nature of their money by introducing it into the

stream of legitimate commerce and finance, they launder

money. The traditional image of money laundering

portrays someone manually washing drug money from

city streets, and turning it into legitimate financial

transactions, such as those for bank deposits and other

assets.

The Bank Secrecy Act (BSA) mandates the disclosure of

foreign bank accounts, the reporting of certain currency

transactions conducted with a financial institution, and

the reporting of the transportation of currency across

United States borders. Through the analysis of BSA data,

CI has identified significant, complex money laundering

schemes and other financial crimes. CI is one of the

largest law enforcement consumers of BSA data.

In contrast, criminals today can press a computer button

to move large amounts of criminally derived funds

into or through the United States and foreign financial

institutions. They launder money through a wide variety

of enterprises, such as banks and money transmitters to

stock brokerage houses, casinos, and virtual currency

exchanges. The flow of illegal funds around the world is

estimated to be hundreds of billions of dollars. Whenever

money, whether it be legal or illicit, moves through a

financial system, it leaves behind a trail of transactions.

Uncovered trails identify who willingly enables and

finances crime. These people often view crime with

deliberate blindness, negligence, or disregard. The trail

can also reveal the crooks who made money through

crime.

CI special agents are experts at uncovering money trails.

They take part in a wide variety of investigations, financial

task forces, and narcotics task forces including Organized

Crime Drug Enforcement Task Force (OCDETF) and the

High Intensity Drug Trafficking Area (HIDTA).

The CI BSA program has grown substantially since its

start in early 2000. The primary objective of the program

is to analyze BSA information to identify significant

financial criminal activity. Although Financial Crimes

Enforcement Network (FinCEN) is the agency tasked with

administering the BSA, they have no criminal enforcement

authority. All criminal enforcement of BSA is delegated

by the U.S Treasury Secretary to IRS:CI. Other federal

agencies can investigate criminal violations of the BSA,

but CI is the only federal agency that actively reviews

all BSA data for leads and possible criminal violations.

CI uses various data analytics tools to actively analyze

BSA data and identify leads for possible investigation. CI

leads SAR Review Teams (SAR RTs) and Financial Crimes

Task Forces (FCTFs) in all 93 judicial districts across the

country.

The FCTFs and SAR-RTs focus on specific geographic

areas and involve collaboration between CI and federal,

state, and local law enforcement agencies for identifying

and investigating financial crimes, including BSA

violations, money laundering, narcotics trafficking, and

terrorist financing.

IRS:CI Annual Report 2020

Non-Tax Crimes

Each of the SAR RTs and FCTFs operate in slightly

different fashion, based on direction and oversight from

their respective U.S Attorney’s offices (USAO), but once

CI special agents identify leads in their respective areas,

they meet with participating law enforcement agencies

to discuss and disseminate the leads for action. It should

be noted that all of the major federal agencies use BSA

data to supplement their investigations, but only CI

regularly triages BSA data for leads and possible criminal

violations. CI’s financial investigative focus allows them

to leverage BSA data better than any other U.S law

enforcement agency. As a result, 13% of all CI investi

gations initiated in fiscal year 2020 were the direct result

of BSA data. CI currently has upwards of 200 special

agents and investigative analysts working on SAR RTs and

FCTFs around the country.

CI strengthens the BSA program area by maintaining

excellent working relationships with anti-money

laundering officials within the financial industry. During

the past year, CI participated in numerous local, regional,

national, and international anti-money laundering

forums and conferences presenting on various topics

including CI’s role in investigating financial crimes, case

studies, and typologies. CI also continues to partner with

FinCEN and other federal law enforcement agencies to

provide feedback and outreach to the financial industry.

Additionally, CI is collaborating with the financial industry

and federal regulators to examine the US Anti-Money

Laundering regime to make it more effective and efficient

through the BSA Advisory Group.

IRS:CI Annual Report 2020

Non-Tax Crimes

PUBLIC CORRUPTION

CORPORATE FRAUD

SIGNIFICANT CASE

CI investigates elected and appointed individuals who

violate the public’s trust.

The Corporate Fraud Program concentrates on violations

committed by publicly-traded or private corporations

and their senior executives. Some specific criminal acts

involving corporate fraud include falsifying, fabricating,

or destroying company records. Fraudsters use the false

information to complete tax returns, financial statements,

and reports for regulatory agencies or investors.

Corporate Fraud can also include executives who entitle

themselves to unauthorized compensation, or who

receive unapproved payments and bonuses, corporate

funds, or bogus loans to pay for personal expenses.

Former Milton City Mayor and Ex-Head of United Way

of Santa Rosa County Sentenced to 51 Months Federal

Prison for Fraud and Tax Evasion

These individuals are from all levels of government

including local, county, state, federal, and foreign

officials. Public corruption investigations include criminal

offenses, such as bribery, extortion, embezzlement,

kickbacks, tax fraud, and money laundering.

Corruption by public officials results in the loss of

taxpayer dollars. Public officials who violate the public

trust are often prosecuted to the full extent of the law,

with large fines and increased jail time for offenders. In

addition, the United States is often a desirable destination

for the monies of corrupt foreign officials. This type

of corruption undermines democratic institutions and

threatens national security.

GENERAL FRAUD

CI special agents also investigate healthcare and financial

institution fraud. When CI brings income tax and money

laundering charges to a criminal case, it enhances

prosecutors’ effectiveness to combat these and other

types of fraud. CI special agents work with federal, state,

and local law enforcement partners, as well as with

foreign tax and law enforcement agencies, to follow and

uncover a trail of illicit money in these investigations.

Guyland W. Thompson, a former mayor of Milton, Florida,

and ex-executive director of the United Way of Santa Rose

County Florida, was sentenced to 51 months in federal

prison after pleading guilty to wire fraud and tax evasion

in relation to a complex embezzlement scheme. Between

at least 2011 and 2018, Thompson embezzled over

$650,000 from the United Way. He used his position and

access to the charity’s records and bank accounts to steal

money from the charity for years by conducting a series

of complicated financial transactions to cover his tracks.

He also made false representations to board members,

employees, bank tellers, and United Way Worldwide to

keep his fraud undetected for so long. Thompson then

failed to report to the Internal Revenue Service the extra

income from his embezzlement scheme.

Prior to sentencing, Thompson pled guilty to 20 counts of

wire fraud and three counts of tax evasion stemming from

his embezzlement of funds from United Way of Santa

Rosa County while he ran the organization. Thompson

was ordered to forfeit $221,868 seized from his bank

accounts and pay an additional money judgment of

$430,132. u

IRS:CI Annual Report 2020

INTERNATIONAL OPERATIONS

THE HAGUE

LONDON

FRANKFURT

OTTAWA

WASHINGTON, D.C.

DUBAI

HONG KONG

MEXICO CITY

BARBADOS

PANAMA CITY

BOGOTA

THE GLOBAL FIGHT against tax and

economic crimes transcends borders and

requires innovative approaches. IRS:CI’s

Office of International Operations (IO)

works collaboratively in support of

agency goals, objectives, and activities.

IO enhances IRS’s international strategy

by combating offshore tax, money

laundering, transnational organized

crime, terrorism financing and other

financial crimes. It unites our domestic,

foreign tax, and law enforcement

agency partners. IO also works with

other organizations to leverage bi- and

multilateral agreements and resources.

CANBERRA

Headquarters

BRANCH A:

IRS:CI Annual Report 2020

OTTAWA

LONDON

THE HAGUE

DUBAI

CANBERRA & SYDNEY

Attaché

BRANCH B:

SYDNEY

Attaché (J5)

MEXICO CITY

PANAMA CITY

BOGOTA

BARBADOS

FRANKFURT

HONG KONG

IRS:CI Annual Report 2020

International Operations

Internationally, IO has Special Agent Attachés strate

gically stationed in 11 foreign countries:

• Mexico

• Canada

• Colombia

• Panama

• Barbados

• China

• Germany

• The Netherlands–

Europol

• England

• Australia

• Dubai

Attachés continuously build and maintain strong alliances

with foreign governments, and law enforcement and

industry partners. These alliances give CI the ability to

develop leads for domestic and international investi

gations that have an international nexus. The vigilance

of IRS:CI Special Agent Attaches serves to uncover

emerging schemes perpetrated by promoters, profes

sional enablers, and financial institutions. These entities

facilitate tax evasion of federal tax obligations by U.S.

taxpayers.

IO also educates foreign governments and agencies on

crime detection, investigative techniques, case studies,

emerging trends, and best practices. Special Agents train

foreign governments through collaborative efforts with

the International Law Enforcement Academies (ILEA) in

Budapest, Hungary; Bangkok, Thailand; San Salvador,

El Salvador; and Gaborone, Botswana. In addition, IO

conducts training at the International Academy for Tax

Crime Investigation at Guardia di Finanza Economic and

Financial Police School in Ostia, Italy. The Organization

for Economic Cooperation and Development (OECD) and

the U.S. Department of State sponsors the training.

In FY 2020, IO had several significant

accomplishments:

The Assistant Secretary of the U.S. Treasury and the

Ambassador of U.S. Embassy Mongolia were concerned

with counter-threat finance, counter narcotics, and border

security of Mongolia. They pledged to provide support

to Mongolia. Hong Kong Post coordinated a week-long

Financial Investigation Technique

training in Mongolia. The training was

attended by judges, prosecutors and

law enforcement from Mongolia’s

National Police Agency, Dept of Taxation,

Financial Regulatory Commission,

Financial Intelligence Unit, Independent

Authority Against Corruption, General

Prosecutors Office, General Intelligence

Agency, Judicial General Council and

Internal Affairs University of Mongolia.

An important partnership initiative, of

CI’s International Strategy, involves

IRS:CI Annual Report 2020

NARCOTICS, COUNTERTERRORISM &

Section

Title

TRANSNATIONAL

ORGANIZED CRIME

strengthening agency participation in The Joint Chiefs of

Global Tax Enforcement (J5), is an alliance between the

criminal tax authorities of the U.S., Australia, Canada,

the Netherlands, and the United Kingdom. J5’s focus is

combatting international tax and financial crimes through

proactive collaboration using each country’s collective

resources. Areas of emphasis for the J5 presently

include:

• Professional Enablers

• Virtual Currency Crimes

• Tax Evasion

• Technology Sharing

• Innovation

The first major operational activity for the J5 occurred

on January 23, 2020, when a globally coordinated

enforcement activity was carried out in the United

Kingdom, Canada, Australia, the Netherlands and the U.S.

The action occurred as part of a series of investigations

into an international financial institution located in Central

America whose products and services are believed

to be facilitating money laundering and tax evasion

for customers across the globe, using the institution’s

sophisticated system. The coordinated day of action

involved collection of intelligence, and evidence through

interviews, search warrants and subpoenas.

On November 22, 2019, Mexico City Post, U.S.

Ambassador to Mexico, Christopher Landau, along with

the Phoenix Field Office, hosted a meeting with Mexico’s

Financial Intelligence Unit, Banking Commission, Banking

Unit, and AML Compliance Officers of Mexican financial

institutions. The Mexico City Post increased communi

cation and collaboration with local bankers, and provided

a history of CI, and how they collaborated with AML

officials to facilitate the detection and referral of BSA

investigative leads to IRS:CI. u

IRS:CI NARCOTICS AND COUNTERTERRORISM (NCT)

program supports these programs:

• President’s Strategy for

Transnational Organized Crime

• The U.S. National Drug Control Strategy

• The National Money Laundering Strategy

• The U.S. Government’s National

Counterterrorism Strategy

IRS:CI contributions include reducing or eliminating

the profits and financial gains of individuals, entities,

and transnational criminal organizations whose crimes

involve financing terrorism, narcotics trafficking, and

money laundering. Our special agents investigate criminal

violations of the Internal Revenue Code, Bank Secrecy

Act and Federal Money Laundering statutes. In addition,

we use our unique financial investigation skills to trace

profits from illegal activities to individuals or criminal

organizations to dismantle or disrupt schemes and

prosecute criminals.

NCT assigns CI personnel to the White House Office

of National Drug Control Policy to support its related

strategy and the National Money Laundering Strategy.

Other personnel have assignment to multi-agency task

forces. Here are some examples:

• Organized Crime Drug Enforcement Task Force

(OCDETF)

• OCDETF Fusion Center (OFC)

• High Intensity Drug Trafficking Area (HIDTA)

• High Intensity Financial Crimes Area (HIFCA)

• Drug Enforcement Administration Special Operations

Division (SOD)

• El Paso Intelligence Center

IRS:CI focuses its narcotics investigations on high-priority

OCDETF investigations because its contributions can have

the greatest effect on dismantling large criminal organizations. In 2019, NCT partnered with the Organization

for Economic Cooperation and Development (OECD) Task

Force on Tax Crimes and Other Crimes to update their

Money Laundering and Terrorist Financing Awareness

Handbook for tax examiners and tax auditors. The

purpose of this handbook is to raise awareness on money

laundering and terrorist financing techniques.

One of the largest drug rings ever prosecuted in Buffalo,

NY tried to hide their drug proceeds as income from sea

cucumbers. While on the witness stand, IRS Special

Agent David Turri painted the picture of an organization

so big, it shipped its cocaine and heroin – anywhere

from 30 to 70 kilograms at a time – on pallets in tractor

trailers. Another witness said that in 2013, the organization shipped 100 kilograms of cocaine to a house on

Niagara Falls Boulevard in the Town of Tonawanda, New

York. During his testimony, Turri took the jury through a

series of false bank deposit records and purchase orders

to demonstrate how the organization took in $19 million

during a 2-year period ending in 2015. He added that

the drug ring laundered its money by setting up front

companies in California, such as seafood wholesalers

with names like Triton Foods. They relied on sales

records to falsely show the distribution of large amounts

of sea cucumbers in Buffalo. Indicted with multiple other

defendants, the courts accused Herman Aguirre of being

a leader of the organization and, with co-defendant Jose

Ruben Gil, a link to the Sinaloa cartel. Gil, who claims he

met with “El Chapo,” pleaded guilty in February 2019 and

testified against Aguirre. u

IRS:CI Annual Report 2020

SPECIALIZED UNITS

WARRANTS & FORFEITURES

ALCOHOL AND

TOBACCO

TAX AND TRADE

BUREAU (TTB)

GLOBAL ILLICIT

FINANCIAL TEAM (GIFT)

GIFT is an IRS:CI-led task force to investigate organi

zations that illicitly move money used to support

international crime organizations. These investigations

are conducted with various partner agencies, including

Homeland Security Investigations (HSI) and the

Defense Criminal Investigative Service (DCIS). An IRS:CI

supervisory special agent (SSA) oversees the task force,

which includes special agents and professional staff from

CI and partner agencies. The SSA reports to the special

agent-in-charge in the Washington, D.C., field office. The

GIFT is a major conduit of IRS:CI’s money laundering

strategy and a focal point for the newly formed CI money

laundering cadre. The cadre consists of special agents

from all 21 field offices who coordinate activities and

allocate resources to effectively execute CI’s money

laundering strategy. GIFT investigations include:

• Illegal money transfer businesses

• International real estate fraud

• Financial institutions concealing and

disguising illegal transactions

• Identity theft

• Public corruption and extortion

• Government contract fraud

• Sale of contraband goods

IRS:CI Annual Report 2020

Reminiscent of Eliot Ness and Elmer

Irey’s “T-Men,” IRS:CI continues

its partnership with the Alcohol

and Tobacco Tax and Trade Bureau

(TTB) to combat illicit tobacco and

alcohol trade. The TTB was created

in January 2003, when the Bureau

of Alcohol, Tobacco, Firearms and

Explosives or ATF, was extensively

reorganized under the provisions of

the Homeland Security Act of 2002

and realigned to the Department of

Justice. The act called for the tax

collection functions to remain with

the Department of the Treasury, thereby creating TTB.

TTB regulates and collects taxes on trade and imports

of alcohol, tobacco, firearms, and ammunition within the

United States. In 2009, TTB entered into an inter-agency

agreement with CI to provide special agents to enforce

TTB’s criminal provisions. These special agents are

strategically dispersed across the country and overseen

by an SSA. This group’s sole focus is combating the illicit

tobacco and alcohol trade. The TTB reports to the special

agent-in-charge in the Washington, D.C., field office. Since

the agreement began, the group has initiated over 180

investigations with great success.

INTERNATIONAL

TAX GROUP (ITG)

As the Swiss Bank Program winded down in 2017, CI

ramped up an International Tax Group (ITG) to continue

their focus on this type of work. An SSA leads this group

of special agents, investigative analysts, and professional

staff, which report to a special agent-in-charge in the

Washington, D.C., field office. The ITG’s focus is on

investigations concerning international financial entities,

ultra-high net worth individuals, and tax fraud promotors.

Additionally, ITG remains involved in CI’s J5 tax

enforcement efforts with the governments of the United

Kingdom, Canada, Australia, and the Netherlands. u

IRS:CI ASSET FORFEITURE program uses seizure and

forfeiture authority as an investigative tool to disrupt and

dismantle criminal enterprises.

The program seeks to deprive criminals of property

used in, or acquired through, illegal activities. CI takes

a leading role in these investigations because of their

financial expertise and resources. IRS:CI is one of the

largest contributors to the Treasury Forfeiture Fund (TFF),

which the Treasury Executive Office for Asset Forfeiture

manages. These funds are used to reimburse victims of

criminal activity and to pay for law enforcement related

expenses, such as training, equipment, and the cost

of conducting significant investigations. In addition, CI

shares a portion of forfeited funds with federal, state and

local law enforcement agencies. As of September 30,

2020, IRS:CI seized 775 assets worth an estimated value

of $821 million and forfeited approximately $162 million

in ill-gotten proceeds.

FY2020 Significant Forfeiture - $71,850,000

HSBC Private Bank (Suisse) SA (HSBC Switzerland), a

private bank headquartered in Geneva, entered into

a deferred prosecution agreement (DPA) with the

Department of Justice in the U.S. District Court for the

Southern District of Florida. HSBC Switzerland admitted

to conspiring with U.S. taxpayers to evade taxes and,

as part of the agreement, HSBC Switzerland will pay

$192.35 million in penalties, to include a civil forfeiture

of $71.8 million, for proceeds illegally derived from their

conduct. HSBC Switzerland admitted that between 2000

and 2010 it conspired with its employees, third-party

and wholly owned fiduciaries, and U.S. clients to: 1)

defraud the United States with respect to taxes; 2)

commit tax evasion; and 3) file false federal tax returns.

In 2002, the bank had approximately 720 undeclared

U.S. client relationships, with an aggregate value of

more than $800 million. When the bank’s undeclared

assets under management reached their peak in 2007,

HSBC Switzerland held approximately $1.26 billion in

undeclared assets for U.S. clients.

FY2020 Significant Forfeiture - $18,920,865

Thomas Edward Spell Jr., Glenn Doyle Beach Jr., and

other co-conspirators pled guilty to their role in a $200

million compounding pharmacy scheme to defraud health

care benefit programs, including TRICARE, which is the

program that covers U.S. military service members and

their families in the Southern District of Mississippi. The

charges consisted of conspiracy to commit health care

fraud, conspiracy to commit money laundering and tax

evasion. Both Spell and Beach owned and operated

separate pharmacies that marketed compounded

medications at their respective pharmacies. Rather

than formulating compounded medications based on

the individualized needs of patients, formulas were

selected to maximize profit based upon reimbursements

from TRICARE and other health care benefit programs.

Numerous assets were seized and forfeited from

Spell, Beach and other co-conspirators to include bank

accounts, U.S. currency, real estate, and vehicles. u

IRS:CI Annual Report 2020

NATIONALLY COORDINATED

INVESTIGATIONS UNIT

SINCE ITS LAUNCH IN FISCAL YEAR 2017, the

Nationally Coordinated Investigations Unit (NCIU)

has continued to provide critical support to Criminal

Investigation’s (CI) efforts in using a data driven process

in identifying, selecting, and developing cases. As in

previous years, the NCIU’s resources are focused on case

development efforts that are national and international

initiatives.

The NCIU continues to modernize IRS criminal investi

gative tools to make them more reliant on data analytics

with a centrally led, team-based approach. The NCIU

is proactively addressing key issues in non-compliance

and emerging threats by building strategic partnerships

with internal and external stakeholders. In addition to

innovative, national case development, the NCIU offers

continuous support to CI field offices by offering initia

tive-specific training and investigative research. The NCIU

also works closely with multiple IRS business operating

divisions to facilitate a collaborative, service-wide

approach to enforcement, and to promote data analytics

throughout the entire IRS.

The NCIU has focused its current case development

efforts on several national initiatives that CI’s Executive

Steering Committee identified as priorities. The unit’s

current priorities are: COVID-19 related fraud, virtual

currency, international tax, significant money laundering,

employment tax, the Department of Homeland Security’s

National Targeting Center, and the Whistleblower

Program. The NCIU successfully developed data models

for multiple initiatives that lead to significant, impactful

investigations in the field. More importantly, the unit

demonstrated the power of data analytics and its benefit

for law enforcement through the significant number of

referrals it made, and through quantitative and qualitative

controls.

IRS:CI Annual Report 2020

COMMISSIONER’S

PROTECTION DETAIL

During FY 2020, the NCIU continued to support the CI

field offices through existing national initiatives:

• International – Foreign Account Tax Compliance Act

(FATCA)

• International – U.S. Citizens Living Abroad (USCLA)

• Virtual Currency

• Employment Tax

In addition, during FY 2020, the NCIU expanded their

data driven methods of case development by adding a

new national initiative involving Form 1099K data.

In FY 2020, due to the global COVID-19 pandemic, the

NCIU also brought data driven methodologies to identify

and develop cases specific to the growing fraud in this

area. Several referrals were made to the field offices to

include hording/price gouging of critical supplies, false

applications for Small Business loans, and false claims of

tax credits made via the new Form 7200. Creativity and

the ability to quickly adjust resources allowed the NCIU to

successfully address this emerging threat.

In FY 2020, the NCIU had several notable

accomplishments, including the referral of 117 cases to

field offices across the country. In addition, the efforts

of NCIU team members involved in the employment tax

initiative were recognized with a Commissioner’s Award

in October of 2019 for their innovation and use of data

analytics to identify non-compliance.

THE COMMISSIONER’S PROTECTION DETAIL (CPD)

is a specially trained cadre of IRS:CI Special Agents,

who provide personal security and protection of the IRS

Commissioner. Since 1999, this dedicated team has been

charged with protecting the Commissioner during official

business operations. CPD agents provide protection of

the Commissioner within the National Capital Region and

while in travel status, foreign and domestically.

CPD agents are trained in protective service operations

with an emphasis on operational planning, motorcade

operations, protective intelligence, and preventing and

responding to attacks. Protective operations are a team

effort and require detailed advanced preparations aimed

at identifying and mitigating potential risks, threats, and

vulnerabilities. u

As the leader of the IRS, the Commissioner frequently

attends meetings, conferences, publicized hearings and

speaking engagements in locations such as the White

House, U.S. Capitol, U.S. Treasury, and other venues in

Washington, D.C., as well as around the globe. In a typical

year, the CPD protects the Commissioner on approximately 500 protective movements, 20 domestic trips,

and 2-3 international visits.

The NCIU leadership also provided a briefing to United

States Treasury Secretary Mnuchin on the Employment

Tax Initiative and the data driven process used by the

team to identify, select and develop employment tax

investigations. u

IRS:CI Annual Report 2020

UNDERCOVER OPERATIONS

Undercover Operations

During the investigation, IRS undercover agents posed as

businesspeople interested in purchasing Trendsetter. In

a recorded meeting between Mr. Khatib and the agents

at Trendsetter, Mr. Khatib bragged about millions of

dollars in income he had concealed from the IRS, and

encouraged the agents to run Trendsetter in the same

fraudulent way if they purchased it from him: “How are

you going to pay taxes on the $3.5 mill[ion] that I got

hidden? I can’t pay taxes on that. If you guys want to run

it different than what I’m running it, you will be paying

over 200 grand.” Later the same day, the undercover

agents met with Lisa Khatib at the defendants’ residence,

and she explained to them how she maintained two

sets of records to conceal the tax evasion, and doubled

down on the concealment by making sure the balances

provided to the defendants’ accountants reflected what

was contained in the false, clean books.

This evidence lead to the Khatibs entering into a plea

agreement admitting to violating Title 26, United States

Code, Section 7206(1), the submission of a false return.

CRIMINAL INVESTIGATION (CI) has a long history

of using undercover techniques to investigate crime.

These techniques are well-documented, and they play

a significant role to bring criminals to justice. Special

Investigative Techniques (SIT) oversees CI’s undercover

activities and reviews, approves, funds, and trains

personnel who carry out undercover operations. Special

agents and leadership teams initiate and manage

day-to-day operations in their respective field offices.

CI has a cadre of active undercover agents that use

sophisticated means to initiate contact with individuals

perpetrating tax crimes and gain evidence needed to

prosecute their crimes. In FY 2020, agents conducted

approximately 293 undercover operations.

IRS:CI Annual Report 2020

SIGNIFICANT CASES

IN FEBRUARY 2020, the United States District Court out

of the Northern District of Illinois sentenced Mohammad

Khatib, owner of Trendsetter, a business located in

Harvey, Illinois, to 24 months in prison for one count

of submitting a false income tax return. Lisa Khatib,

Mohammad’s wife, also plead guilty to a count of the

same and was ordered to serve two years of probation,

including 6 months of home confinement and 120 hours

of community service. In addition, the two were ordered

to pay restitution in the amount of $822,265.

According to their plea agreements, Mohammad Khatib

owned Trendsetter, which sold tobacco products,

marijuana paraphernalia, and additives used to cut

certain controlled substances, including heroin and

cocaine. Lisa Khatib was in charge of bookkeeping,

payroll and making bank deposits for the business.

Two sets of books were kept for Trendsetter, one which

listed the total amount of cash generated from the sale

of merchandise and the other which underreported

cash sales. The false set of books was provided to their

accountant to prepare their U.S. Income Tax Returns for

the years 2010 through 2015, resulting in a federal tax

loss of $822,266.

IN MARCH 2020, the United States District Court of New

Hampshire sentenced Michael A. Albert, owner of Mike’s

Affordable Auto, LLC, a business located in Chichester,

New Hampshire, to six months imprisonment and ordered

him to forfeit $434,201 for structuring cash deposits for

the purpose of evading bank reporting requirements,

money laundering, and evading reporting requirements

with respect to cash transactions in excess of $10,000.

According to the plea agreement, Albert knew that if he

deposited cash in amounts more than $10,000, the bank

was required to file reports of those transactions with the

IRS. To evade the reporting requirements, he structured

cash deposits from his business. Additionally, Albert

failed to file required Forms 8300 with the IRS identifying

cash receipts in his business in excess of $10,000.

During the investigation, IRS undercover agents

purchased two vehicles from Albert, representing that

the cash was proceeds of illegal drug trafficking. In one

transaction of $17,800, Albert instructed the undercover

agent to make two payments in amounts less than

$10,000 and said “so I’m not doing over ten grand. I don’t

have to do nothing.” In the other transaction of $19,500,

Albert altered the bill of sale to reflect a paid price of less

than $10,000. Albert failed to file IRS Forms 8300 related

to either of the vehicle sales.

CI’S UNDERCOVER PROGRAM HISTORY

In 1929, Michael Malone successfully infiltrated

Al Capone’s Chicago gang for nearly two years.

Because of his work, the government successfully

prosecuted Capone and his top enforcer, Frank Nitti,

for tax crimes. In 1963, the Undercover Operation

(UCO) was centralized into the National Office. UCO

focused on illegal gambling and organized crime,

and most operations lasted longer than one year.

In the late 1960s, CI initiated the Courier Project to

corroborate persistent allegations concerning the

movement of casino receipts by couriers to offshore

tax havens. UCO infiltrated organized crime organizations that used fall guys to operate casinos.

In the late 1970s, the UCO was decentralized. The

National Office retained review, approval, funding

and training authority, and districts were responsible

for the initiation and daily management of the

operation. This organization continues today. In the

1980s, UCO focused on offshore banking schemes

and illegal tax shelters. The estimated revenue

loss from these shelters was about $120 billion by

1985. With the advent of money laundering laws,

undercover agents became proficient at conducting

investigations into the laundered illegal proceeds of

narcotics traffickers.

Today, CI uses undercover operations in investigations on unscrupulous tax return preparers,

offshore tax schemes, money launderers, dark

web marketplace operators, and those who seek to

conceal the movement of money for illegal purposes,

including tax evasion.

This evidence ultimately lead to Albert entering into a

plea agreement admitting to violating Title 31, United

States Code, Section 5324, Structuring cash deposits

to evade bank reporting requirements, Title 18, United

States Code, Section 1956, Money laundering and

Title 31, United States Code, Sections 5331 and 5322,

Failing to file IRS Forms 8300 for cash transactions by a

nonfinancial business in excess of $10,000. u

IRS:CI Annual Report 2020

NATIONAL FORENSIC LABORATORY

National Forensic Lab Requests

120

SCIENTIFIC SERVICES

SINCE THE EARLY 1970’S, scientists and technical

experts at the National Forensic Laboratory (NFL) have

reported the results of forensic testing and technical

services to investigators for use in both exploring

potential criminal violations and for adjudication of the

Internal Revenue Code and related financial crimes.

Results of the NFL’s work are used by CI Special Agents,

or other customers of the laboratory to analyze elements

IRS:CI Annual Report 2020

to provide pivotal direction in their investigations. Often,

support provided by the NFL doesn’t end with delivery

of a scientific report or product. Whether it be a visual

information specialist providing and adjusting graphics

before or at trial, or a forensic scientist testifying to their

findings, an important function of the NFL is to support

judicial proceedings where and when required.

147

TRIAL GRAPHICS & DESIGN

The laboratory’s work is critical in ensuring the efficient

processing of crucial evidence in CI investigations. The

NFL consists of three sections, each offering specific

scientific or technical services. For instance, the

Scientific Services section offers forensic disciplines that

include electronics (audio, video, and image intelligi

bility), latent prints (finger and palm print development

and comparison), polygraph, questioned documents,

chemistry, and DNA collection. The Trial Graphics

and Design section is responsible for breaking down

complicated cases into succinct effective visuals that

help show, rather than tell, all the elements of extremely

complex investigations. Although these services are

primarily for CI Special Agents preparing for trial, Trial

Graphics and Design also assists in the creation of

high-level presentations and other special projects such

as CI branding and marketing outreach. Furthermore,

the Data Processing Center (DPC) located in Florence,

Kentucky is responsible for taking information, either hard

copy or electronic, and compiling it into a database that

is delivered to the customer and can be used to more

efficiently manage and analyze case-related data. By

doing so, the DPC saves investigators countless hours of

tedious labor, while enabling them to focus their energy

on other key areas of the investigation.

DATA PROCESSING CENTER

When the experts at the NFL are not working on evidence,

they are providing tours to agents and various IRS:CI

stakeholders at their building located in downtown

Chicago. One of the most effective ways to educate

others about the NFL’s capabilities is by demonstrating

their state-of-the-art equipment and sharing stories.

Thanks to the talented men and women of the NFL and

their dedication to science and their technical services,

as well as the mission of IRS:CI, the customers of

the laboratory have come to know and expect their

high-quality work. The successes of the cases they assist

in speak for themselves and nothing is more gratifying

to the NFL than seeing them get fully adjudicated. But

equally important is helping investigators know when

to consider closing a case. Bottomline, the NFL adds

evidentiary and incriminating value in nearly every case

or can aid with the investigator’s decision to move onto

the next one. u

IRS:CI Annual Report 2020

NATIONAL CI TRAINING ACADEMY

TRAINING AND NCITA

In addition to SAIT, the NCITA provides

advance training to special agents in

the use of force, firearms instruction,

building entry and defense tactics.

The NCITA also provides leadership

development programs for all levels,

from pre-management through

senior management, to ensure the

identification and development of

future leaders. Each year, the NCITA

develops continuing professional

education courses for special agents

and professional staff with an emphasis

on emerging trends such as cybercrime

and crypto currencies.

The NCITA also provides foreign governments and

agencies training in crime detection, investigative

techniques, case studies, developing trends, and best

practices. CI trains foreign governments in partnership

with the International Law Enforcement Academies

located in Budapest, Hungary; Bangkok, Thailand; San

Salvador, El Salvador; and Gaborone, Botswana. CI also

partners with the Guardia di Finanza Economic and

Financial Police School’s International Academy for

Tax Crime Investigation in Ostia, Italy. The Organization

for Economic Cooperation and Development (OECD)

sponsors this training.

IRS:CI special agents receive refresher training regularly.

They attend quarterly firearms, defensive tactics and

semi-annual building entry training. Through frequent use

of force training, they maintain their skills and abilities,

so they always use good judgement and the appropriate

degree of force necessary to safely carry out enforcement

activities. These activities include issuing search

warrants, arrests, surveillance, armed escorts, dignitary

protection, undercover activities and seizures.

IRS:CI SPECIAL AGENTS are the best trained and finest

financial investigators in the world. They begin their

training at the National Criminal Investigation Training

Academy (NCITA). The NCITA is located at the Federal

Law Enforcement Training Center (FLETC) in Brunswick,

Georgia and is dedicated to fostering the highest levels

of professionalism and ethical behavior throughout the

CI workforce. The NCITA’s primary focus is training

new special agents in the fundamentals of financial

investigations. Agents learn to recognize the elements of

tax offenses, and methods of proof unique to federal tax

investigations. They acquire all the knowledge, skills, and

abilities required to be federal law enforcement’s finest

financial investigators.

IRS:CI Annual Report 2020

FLETC cancelled all trainings throughout the United

States on March 20, 2020, due to the Covid-19 virus. On

June 16, 2020, students were allowed back after new

pandemic policies were set in place by FLETC. Despite

this setback, the NCITA still trained new employees and

trained future IRS:CI leaders. u

FY 2020 HIGHLIGHTS

• 5 Special Agent Basic Training (SABT) classes held

for approximately 103 new students.

• 2 Frontline Leadership Readiness Program (FLRP)

classes held for future IRS:CI leaders.

• 15 slot classes held at NCITA

• 1 Basic Instructor Facilitator Training (BIFT) class.

• 1 Smith and Wesson Armor Training class.

• 2 Use of Force Instructor Trainings (UOFIT) classes.

New special agents complete six months of training

including the 11-week Criminal Investigator Training

Program (CITP) run by FLETC. The CITP covers basic

criminal investigation skills, federal criminal law,

courtroom procedures, enforcement operations,

interviewing skills, and firearms training common to all

federal law enforcement agents.

Following the CITP, new special agent trainees take the

NCITA Special Agent Investigative Techniques (SAIT)

course. The SAIT program trains recruits in tax law,

evidence gathering, interviewing, report writing, methods

of proving unreported income, and money laundering

violations. It also provides physical fitness conditioning

and use of force training.

IRS:CI Annual Report 2020

PROFESSIONAL STAFF

IRS:CI EMPLOYS 828 professional staff serving in

many administrative and investigative capacities. Our

Budget Analysts, Management and Program Analysts,

Administrative Officers, Secretaries and computer

support professionals all work tirelessly behind the

scenes to support the mission of IRS CI at Headquarters

and in the field offices across the United States and

abroad. Professional staff team members actively

participate in programs like the Chief’s Advisory Council

illustrating their hard work and dedication and providing

crucial insight to CI leadership.

training continues into FY2021 ensuring our professional

staff have the resources and skills needed to maximize

their impact and allowing professional staff to keep

abreast of emerging tax fraud trends like crypto-currency

and COVID related financial fraud. In addition to core

mission tax, Investigative Analysts also support criminal

investigations relating to the opioid crisis, terrorist

financing, and ID theft through work with the High

Intensity Drug Trafficking Areas (HIDTA), Joint Terrorism

Task Forces (JTTF) and other federal law enforcement

taskforces.

Our investigative professional staff are critical to

advancing the law enforcement efforts of CI and

include: Tax Fraud Investigative Assistants (TFIA) and

Investigative Analysts (IA). They process and maintain

investigative files, conduct extensive research, interview

witnesses, schedule and analyze bank records, prepare

written summaries of their findings and recommen

dations, and other actions to support criminal investi

gations and prosecutions.

During FY 2020, CI capitalized on the Veteran Volunteer

Program, an umbrella program that enabled CI to recruit

two disabled veteran interns as volunteers from the

Department of Defense (DoD) and Veteran’s Affairs (VA).

Interns were provided challenging assignments to include

extracting and analyzing critical information from investi

gative databases. Through this program, CI provided

training and work experience to those who served our

country and have now returned to the civilian workforce.

Also, during FY 2020, CI focused on the permanent hiring

of veterans and hired 54 new veterans through various

programs, 44 of these veterans are disabled veterans.

These veterans were placed throughout CI. This veteran

hiring accounted for 34% of CI’s overall hiring, which

greatly exceeded the Treasury FY 2020 veteran hiring

goal of 14%. CI also hired several disabled non-veterans

through Schedule-A hiring authority.

Assigned to the field offices, the Nationally Coordinated

Investigations Unit (NCIU), Refund Crimes, and Interna

tional Operations, CI’s Investigative Analysts use sophis

ticated analytical software to develop leads and support

complex cases for the special agents in the field. In FY

2020, Analysts attended training at the e-Crimes Lab in

Woodbridge, VA, learning about specialized tax and law

enforcement research skills and advanced investigative

data analysis.

During FY 2020, professional staff in multiple CI job

series received comprehensive training in a virtual

environment due to COVID travel restrictions. Virtual

IRS:CI Annual Report 2020

There are also many specialty professional staff positions

related to technology, cyber security, data analytics and

other areas. All of our administrative, investigative, and

technical professional staff employees are critical to CI

accomplishing our law enforcement mission. u

EQUITY, DIVERSITY

& INCLUSION OFFICE

THE MISSION OF the Criminal Investigation (CI) Equity,

Diversity, and Inclusion Office (EDI) is to identify,

examine, and address the organization’s employment

practices, policies, guidelines, and procedures to ensure

that all employees and applicants for employment

achieve equal opportunity in every facet of the CI’s

programs, activities, and services. We work to ensure that

employment practices and decisions are made with the

highest level of integrity and fairness for every employee.

CI EDI endeavors to provide excellent customer service,

advice, and education to management, employees, and

stakeholders to ensure compliance with appropriate

federal Equal Employment Opportunity (EEO) laws

and regulations that prohibit discrimination on the

basis of age, color, disability, equal pay, national origin,

pregnancy, race, religion, retaliation, sex (gender), and

sexual harassment.

potential.

The EDI Director reports directly to the Chief and Deputy

Chief and provides strategic advice and assistance

on Management Directive 715 (MD-715), diversity

strategies, policies, directives, and guidance to the Senior

Staff and Senior Leadership Team. EDI staff members

also advise managers on how to effectively capitalize

on the strengths of all employees while embracing

their differences and unique perspectives to create an

environment that engages and supports all employees.

Additionally, the EDI staff prepares CI’s Federal Agency

Annual EEO Program Status report, also known as

the Management Directive 715 (MD-715) report. This

Directive requires agencies to take appropriate steps

to ensure that all employment decisions are free from

discrimination. It also sets forth the standards by which

EEOC will review the sufficiency of agency Title VII and

Rehabilitation Act programs, which include periodic

agency self-assessments and the removal of barriers

to free and open workplace competition. They also

monitor and evaluate the organization’s compliance

with the directive and other policies established by the

Equal Employment Opportunity Commission (EEOC).

The directive helps identify program limitations and

uncover potential discrimination of equal opportunities

for all employees. It also provides EEO plans to remove

barriers and respond to problems. The EDI staff develops

action plans to eliminate barriers and correct program

deficiencies to ensure compliance with the following six

essential elements of a model EEO program as defined by

MD-715:

CI EDI is dedicated to providing diversity and inclusion

training and education, recognizing that education

is essential for bringing diversity awareness to the

workforce. Our efforts for educating the CI workforce is

an ongoing process of creating the awareness needed

to manage an inclusive and diverse workforce. Presentations, products/reports, guidance, and seminars are

customized and provided to the workforce to ensure that

employees have the awareness, skills, and knowledge

to carry the message of diversity into their personal

work environments. The goal of our diversity training

program is to convey the importance of a respectful

work environment, thereby maximizing every individual’s

When field offices need to obtain EEO information, we

can provide an in-depth demographic report of the field

office as well as an overview of the data so the requestor

understands the information they have received. We

can also give advice, guidance, and recommendations

on any EDI Diversity questions concerns you may have

while providing you all reference points and sources

for any information we provide to you. Part of our job

is to educate the employees of where the written and

electronic sources can be obtained and what impact it

has on their job/role in CI.

EEO PROGRAM STATUS REPORT

IRS:CI Annual Report 2020

Equity, Diversity and Inclusion Office

Demonstrated commitment from agency leadership

The EDI and HR Director facilitated having the IRS EAP

representative present several training segments to CI’s

senior leadership team on topics that help to mitigate the

tangible and intangible impact COVID-19 is having not

only on employees in their workplace, but also at home.

Cultural competence comprises four components: (a)

awareness of one’s own cultural worldview; (b) attitude

towards cultural differences; (c) knowledge of different

cultural practices and worldviews; and (d) cross-cultural

skills.

As multiple inquiries were being received from employees

and managers related to their concerns related to the

advent of social reform protests and the upcoming

election cycle, the CI EDI staff realized that training

needed to be provided to employees to help manage their

concerns on these pressing issues. In response, the staff

created a training presentation on Cultural Competency

which was delivered to all 21 Field Offices and HQ

organizations. Cultural Competency refers to the ability

to interact effectively with people of different cultures.

During the monthly meetings with the Special Agents

in Charge and in conjunction with requested training

presentations, EDI staff members conveyed to all partic

ipants that all of the EEO laws, including the ADA and

Rehabilitation Act, continue to apply during the time of

the COVID-19 pandemic. These laws do not interfere with

or prevent employers from following the guidelines and

suggestions made by the CDC or state/local public health

authorities about steps employers should take regarding

COVID-19. u

This Directive requires agency heads and other senior

management officials to demonstrate a firm commitment

to equality of opportunity for all employees and

applicants for employment. Even the best workplace

policies and procedures will fail if they are not trusted,

respected and vigorously enforced. Agencies must

translate equal opportunity into everyday practice and

make those principles a fundamental part of agency

culture. This commitment to equal opportunity must

be embraced by agency leadership and communicated

through the ranks from the top down. It is the respon

sibility of each agency head to take such measures as

may be necessary to incorporate the principles of equal

employment opportunity into the agency’s organizational

structure.

Integration of EEO into the agency’s strategic mission

Equality of opportunity is essential to attracting,

developing and retaining the most qualified workforce

to support the agency’s achievement of its strategic

mission.

Management and program accountability

A model Title VII and Rehabilitation Act program will

hold managers, supervisors, EEO officials and personnel

officers accountable for the effective implementation and

management of the agency’s program.

Proactive prevention of unlawful discrimination

Agencies have an ongoing obligation to prevent discrimi

nation on the basis of race, color, national origin, religion,

sex, age, reprisal and disability, and eliminate barriers

that impede free and open competition in the workplace.

As part of this on-going obligation, agencies must

conduct a self-assessment on at least an annual basis

to monitor progress, identify areas where barriers may

operate to exclude certain groups and develop strategic

plans to eliminate identified barriers.

Efficiency

Agencies must have an efficient and fair dispute

resolution process and effective systems for evaluating

the impact and effectiveness of their EEO programs; and

Responsiveness and legal compliance

Federal agencies must ensure that they are in full

compliance with the law, including EEOC regulations,

orders and other written instructions.

IRS:CI Annual Report 2020

Other responsibilities include monitoring the organiza

tion’s effort to enhance diversity initiatives and analyzing

trends in the following areas:

• EEO complaints

• Disciplinary actions

• Performance Appraisals

• Promotions

• Awards

• Separations

• Employee development and training

• Recruitment and hiring initiatives and practices

• Retention

EDI SUPPORT DURING

THE COVID-19 PANDEMIC

While the CI organization has spread throughout the

globe, different segments of our employee population

have been impacted by the COVID-19 crisis in drastically

different ways. Some employees are dealing with

inconveniences while others are seeing their families

and communities fight to stay alive. We recognize these

situations are impactful on the organization when

employees feel isolated during a humanitarian crisis

along with feeling marginalized, in forms such as racism,

ageism and parental status pertaining to having young

children, closed school systems, and ad hoc distance

learning.

CI EDI staff works diligently at supporting and coaching

managers to incorporate inclusion in a remote and

high-stress work environment. It has been a priority to

ensure managers know what inclusive behaviors look like

in a remote environment, are modeling them properly,

are prepared for how they will be tested in a stressed

environment and know how they can help all employees

to be inclusive. As a result of these overlapping concerns,

CI EDI implemented the following steps to assist in

addressing these concerns:

CI EDI collaborates with our embedded Human

Resources office on expanding opportunities to partner

more closely and support critical engagement and

employee experience projects, especially in developing

emotional well-being resources and remote work

best-practices.

Leveraged CI’s Communication and Education office to

communicate and connect a wider network of employees

throughout the organization on EDI concerns/issues

and create social connections that might be missing in a

remote work environment.

GOALS ALIGNED WITH GUIDING PRINCIPLES

Equity, Diversity and Inclusion Office

Goal 1: Cultivate a well-equipped, collaborative,

and inclusive work environment that leverages

diversity and empowers all contributors to

Honor the Badge.

CI endeavors to cultivate a culture that encourages

collaboration, flexibility, and fairness to enable

individuals to contribute to their full potential and

further retention. In order to reap the benefits

of workforce diversity, work environments must

cultivate the facilitating conditions that enable

diverse perspectives to be heard and empower all

participants to contribute. This requires deliberate

efforts by our leadership to provide flexibility with

respect to where, when, and how work gets done;

promote robust collaboration through teamwork,

participatory work processes, and cross-functional

work experiences; and engage all employees through

cultural competency, leadership development,

reasonable accommodation, and constructive conflict

management.

Goal 2: Build a diverse, high performing

workforce that reflects all segments of society

and preserves the CI Legacy.

Federal agencies are required to take appropriate

actions to ensure there is equal opportunity in the

workplace by identifying and removing barriers to

EEO. Actions include comparing the demographic

composition of the workforce to the demographic

composition of the relevant labor market, removing

internal barriers, conducting strategic outreach to

communities and utilizing special hiring authorities for

members of groups with less than expected participation rates.

Goal 3: Create an environment that maximizes

employee engagement in a psychologically

safe setting that encourages individual

growth toward continuous learning, pursuit of

excellence, and engagement with internal and

external stakeholders and enables employees to

Master Your Craft.

CI will endeavor to develop structures and strategies

to equip leaders with the ability to manage diversity

and accountability, measure results, refine

approaches based on such data, and engender a

culture of inclusion. This will facilitate the creation of

a workplace approach resulting in the right conditions

for employee engagement where employees can

give their best each day, committed to the organization’s mission, goals and guiding principles. This will

motivate employees to contribute to our continued

organizational success with an enhanced sense of

their own well-being.

Goal 4: Recognize the importance of sustaining

the current workforce while cultivating the

next generation of managers and leaders that

Inspires the Future.

Research has shown that a diverse workforce and

inclusive workplace are associated with greater

organizational performance. The goal of having a

diverse workforce and an inclusive work environment

is to deliver better services to our customers (internal

and external) and meet the needs of our stakeholders,

which come from all segments of society. Effective

leadership and accountability are critical to sustaining

this organization-wide commitment.

IRS:CI Annual Report 2020

COMMUNICATIONS

AND EDUCATION

CRIMINAL INVESTIGATION (CI) serves the American

public by investigating potential criminal violations of

the Internal Revenue Code and related financial crimes.

It does so in a way that encourages compliance with

the law and confidence in the tax system. One of the

most effective ways to encourage compliance is by

publicizing CI activities that enforce the laws within its

jurisdiction. Making taxpayers aware of the enforcement

efforts undertaken by CI is crucial to deterrence. It builds

confidence with the public that our tax system is fair

and just and that potential violators will be caught and

brought to justice.

The Communications and Education Office (C&E) is the

function within CI that makes taxpayers aware of these

enforcement activities. It directly supports CI’s mission

by raising the level of awareness of all stakeholders—

internally and externally—about the important work that CI

does to protect the financial interests of the United States.

C&E’s communication efforts in FY 2020 expanded in two

important areas – in the international arena, and on social

media. CI’s work has an increasingly global reach, and we

partner with the Joint Chiefs of Global Tax Enforcement

(J5), which is a transnational committee comprised of

tax organizations from five countries. The J5 combats

tax crime through collaboration, by sharing intelligence,

conducting operations and building the capacity of tax

IRS:CI Annual Report 2020

crime enforcement officials. In FY 2020 alone, more

information has been shared regarding cryptocurrency,

tax crimes, and related enforcement, than in the previous

ten years combined.

In May 2020, C&E launched a dedicated IRS:CI Twitter

account, @IRS_CI, with the purpose of supplementing

IRS compliance and enforcement messaging. This

account provides real-time information on criminal cases

to the media and public and creates awareness about

CI. Since its launch, CI’s Twitter account has earned

thousands of impressions and generated hundreds of

tweets and continues to grow exponentially.

OUTREACH AND

Section

Title ENGAGEMENT

COMMUNITY

IN 2020, IRS:CI employees continued to help their

communities in time of need. When catastrophe strikes,

the President has the authority to approve sending

Federal support to states impacted by natural disasters

including hurricanes, tropical storms, flooding and the

like. As part of the Emergency Support Function #13, IRS

Special Agents were deployed to assist with the nation’s

Coronavirus response. Our agents were deployed to

Travis AFB in Fairfield, CA where they worked to cover

perimeter security at the base quarantine zone where

approximately 845 people were being housed.

IRS:CI employees across the country also assisted their

local communities where they live in many different ways.

From buying meals for local hospital employees working

tirelessly to take care of sick COVID-19 patients to

participating in local law enforcement torch run events to

support the Special Olympics, IRS CI employees continue

to show their human spirit and inherent nature to want to

support the communities they serve. u

All CI communicators work to balance media outreach

with training and education opportunities for the general

public, federal and Congressional communities, and

our global partners. C&E is structured to react swiftly to

unplanned communication needs. CI communicators face

unique challenges when engaging external audiences

due to the sensitive nature of CI’s work with grand

juries, taxpayer information, law enforcement material

and relationships with U.S. Attorneys’ Offices around

the country. C&E works through these challenges to

support CI’s mission. Their work directly contributes to the

deterrent effect surrounding financial crimes and promotes

voluntary compliance and confidence in our tax system. u

IRS:CI Annual Report 2020

Wildfire Response

COVID-19 Pandemic

AS WE WRAPPED up 2019 by celebrating our 100th

year as a law enforcement agency, 2020 began with

something unprecedented in our agency’s history: the

worldwide COVID-19 pandemic. Of utmost importance

during the pandemic has been the safety of our

employees and their families. Unfortunately, criminals

don’t stop committing crimes just because there is

a national health emergency. In fact, some criminals

pounce on the opportunity to take advantage of others

as well as government programs designed to help the

American people in times of crisis. IRS CI developed a

quick plan of action to adapt investigative techniques to

this new environment so our employees could continue to

do their jobs in a safe and efficient manner.

CI is heading up investigations into fraudulent claims

for economic impact payments, Paycheck Protection

Program (PPP) loans, and refundable payroll tax credits

from the Coronavirus Aid, Relief, and Economic Security

(CARES) Act (P.L. 116-136). The PPP offers billions of

dollars in potentially forgivable loans to keep workers on

the payroll, guaranteed by the Small Business Administration (SBA).

The division is also exercising its nontax jurisdiction to

investigate other pandemic-related fraud, including fake

cures and masks. Working with our law enforcement

partners, CI has opened investigations involving various

allegations of individuals attempting to take advantage

of the government programs designed to help struggling

individuals and businesses.

Some examples of these investigations include:

The arrest of David T. Hines, 29, of Miami, Florida, who

was charged by criminal complaint with fraudulently

obtaining $3.9 million in PPP loans

and using those funds, in part,

to purchase a 2020 Lamborghini

Huracan sports car worth $318,000.

At the time of his arrest, authorities

seized the Lamborghini and $3.4

million in bank accounts from Hines.

of their arrests, authorities seized a Range Rover worth

approximately $125,000, jewelry, over $120,000 in cash,

and over $3 million from ten bank accounts.

The owner of a Florida talent management company

and four others were charged in complaints for their

alleged participation in a scheme to file fraudulent loan

applications seeking more than $24 million in forgivable

PPP loans guaranteed by the SBA under the CARES Act.

Terror groups based in the Middle East are targeting

American first responders in an online scam. The groups

are allegedly trying to raise money by offering bogus

personal protective equipment at a time of desperate

shortages amid the coronavirus pandemic. ISIS allegedly

used the website facemaskcenter.com as a front for

peddling fake N-95 masks. Their targets allegedly

included hospitals, nursing homes and first responders.

Investigators found that terrorists from al-Qaida and

Hamas used social media and cryptocurrency to raise

money for weapons and operations. U.S. authorities

seized $2 million and over 300 cryptocurrency accounts

in what was described as the biggest case of its kind.

A Washington, D.C., man was arrested and charged by

a criminal complaint with fraudulently obtaining over

$2.1 million in PPP loans and Economic Injury Disaster

Loans (EIDL). He used those funds, in part, to purchase

a $300,000 yacht, a $1.13 million rowhouse, and a

$46,000 luxury sports sedan.

The charges in the case examples above are merely

allegations, and the defendants are presumed innocent

until proven guilty beyond a reasonable doubt in a court

of law. u

Georgia federal prosecutors have

accused five individuals with

attempting to steal $4.1 million from

the Paycheck Protection Program

designed to provide relief to small

business owners. The indictment

charges these individuals with

conspiracy to commit bank and wire

fraud, bank fraud, wire fraud, false

statements to a financial institution

and money laundering. At the time

IRS:CI Annual Report 2020

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IRS:CI Annual Report 2020

ATLANTA FIELD OFFICE

401 W. PEACHTREE STREET NW, ATLANTA, GA 30308 | (470) 639-2228 | AtlantaFieldOffice@ci.irs.gov

AUGUSTA, GA

BATON ROUGE, LA

BIRMINGHAM, GA

COLUMBUS, GA

DECATUR, GA

GULFPORT, MS

HATTIESBURG, MS

HUNTSVILLE, AL

JACKSON, MS

LAFAYETTE, LA

MACON, GA

MOBILE, AL

MONTGOMERY, AL

THE ATLANTA FIELD OFFICE covers the states of Georgia, Alabama,

Mississippi, and Louisiana and consists of eleven judicial districts. We work a

wide variety of criminal investigations across the four state region which includes

legal and illegal source income tax fraud, payroll tax fraud, stolen identity theft

/ tax refund fraud, public corruption, terrorism, general fraud, money laundering

and narcotics cases. With the recent merger of two field offices (the Atlanta

Field Office with the former New Orleans Field Office), the newly constituted

and expanded Atlanta Field Office has a diverse mix of employees with different

backgrounds who are finding creative ways to investigate our cases. The Atlanta

Field Office is continually building and strengthening its relationships with our

law enforcement partners, the United States Attorney’s Office and the public in

an effort to identify, investigate and refer quality cases for prosecution that will

encourage compliance with and confidence in the Internal Revenue laws.

IRS:CI Annual Report 2020

NEW ORLEANS, LA

OXFORD, MS

SAVANNAH, GA

SHREVEPORT, LA

Atlanta Field Office Case Files

Mississippi Pharmacy Owners Sentenced in $200

Million Compounding Pharmacy Scheme

On July 23, 2020, Glenn Doyle Beach, Hope Thomley

and Howard “Randy” Thomley, were sentenced for

conspiring to commit health care fraud, conspiring to

commit money laundering and tax evasion. Beach was

sentenced to 13 years in prison; Hope Thomley was

sentenced to 14 years in prison and Randy Thomley

was sentenced to 8 years in prison. Beach was ordered

to pay a monetary judgment of $9,109,872 along with

restitution of $185,407,641. Hope Thomley was ordered

to pay a monetary judgement of $29,249,018 along with

restitution of $189,200,787. Randy Thomley was ordered

to pay a monetary judgement of $3,651,173, along with

restitution of $3,651,173. Beach and Thomley were

both owners of Advantage Pharmacy in Hattiesburg,

and Thomley also owned and operated a compound

prescription distributor for Advantage Pharmacy. Beach

and Hope Thomley were involved in a scheme to defraud

health care benefit programs, including TRICARE, out of

at least $200 million. Beach and Hope Thomley were also

sentenced for their role in a money laundering and tax

evasion scheme that was used to conceal the fraudulent

proceeds of the scheme and evade taxes.

Pharmacy Owner Sentenced to 10 Years in Prison

for Role in Largest Health Care Fraud Case Ever in

Mississippi

On October 31, 2019, Thomas J. Spell, of Ridgeland,

Mississippi, was sentenced to 10 years in prison

for his involvement in a $243 million compounding

pharmacy fraud scheme. Spell was also ordered to pay

$243,550,503 in restitution and forfeiture of $26 million.

Spell previously pleaded guilty to participating in the

scheme to defraud TRICARE, the health care benefit

program serving our nation’s military, veterans, and

their respective family members. From approximately

December 2014 and January 2016, Spell owned and

operated a pharmacy in Madison County, Mississippi,

and several other pharmacies across the United States.

Spell and other co-conspirators marketed compounded

medications at his pharmacies. Rather than formulating

compounded medications based on the individualized

needs of patients, formulas were selected to maximize

profit based upon reimbursements from TRICARE and

other health care benefit programs. The result was

that TRICARE reimbursed Spell’s pharmacies on these

fraudulent claims totaling over $243 million. Spell’s

case is part of the largest health care fraud scheme ever

investigated and prosecuted in the State of Mississippi.

The investigation is ongoing, and prosecutions are

continuing nationwide, including in states such as

California, Tennessee, Arkansas, and Connecticut.

IRS:CI Annual Report 2020

Atlanta Field Office Case Files

‘Sovereign Citizen’ Who Targeted Federal Judges and

Government Officials Sentenced to 25 Years in Prison

City of Atlanta Official Sentenced

for Wire and Tax Fraud

Former Medical Center Foundation President

Sentenced for Wire Fraud and Money Laundering

On January 28, 2020, Timothy Pate, aka Akenaten Ali, of

Augusta, Georgia, was sentenced to 25 years in prison.

Pate was convicted in October 2019 on 15 counts of

filing false retaliatory liens against federal officials and

five counts of making a false bankruptcy declaration,

which stem from his efforts to put federal officials into

bankruptcy against their will. Pate filed tax returns from

2016 through 2018 falsely claiming he was owed more

than $7 million in tax refunds. Pate also attempted to

have the IRS pay his past-due child support. After the

IRS repeatedly rejected his false returns, Pate – a U.S.

citizen and Georgia resident who claimed to be a Moorish

national not subject to U.S. law – filed a federal civil case

against the IRS commissioner seeking tax refunds. Pate

attempted to have the court order the arrest of the IRS

commissioner and filed false liens against judges, the IRS

commissioner and other federal officials.

On January 7, 2020, Larry Scott, the former City of

Atlanta Director of the Office of Contract Compliance,

was sentenced to 2 years in prison and was ordered to

pay $125,000 in restitution. Scott previously pleaded

guilty to wire and tax fraud. The charges stemmed from

Scott’s failure to disclose to the City of Atlanta that

while he served as the Director of Contract Compliance,

he also secretly worked as the business manager for

consulting firm that was hired by businesses who wanted

construction contracts in the Atlanta-metropolitan

area. From 2012 to 2017, Scott earned approximately

$220,000 from Cornerstone while serving as a full-time

management or executive level employee with the City

of Atlanta. Scott never disclosed to the City of Atlanta

his employment with and income from Cornerstone.

Scott knew that if he had disclosed his income from

Cornerstone on his annual Financial Disclosure

Statements, the City of Atlanta could have terminated

Scott. From 2012 to 2017, Scott also filed six false and

fraudulent federal income tax returns – in that Scott

failed to report the majority of the income that he earned

from Cornerstone on his tax returns. For example, in

2015, Scott earned approximately $156,036 in income

– (a) $99,136 as the City of Atlanta’s Director of Contract

Compliance; and (b) $56,900 as Cornerstone’s business

manager. Yet, on his 2015 federal income tax return,

Scott falsely listed his “total income” as only $101,630.

On October 24, 2019, John Paul Funes, of Baton Rouge,

Louisiana, was sentenced to nearly 3 years in prison

following his conviction for wire fraud and money

laundering. Funes has already forfeited $796,309, and

he was also ordered to pay an additional $50,000 as a

fine. Funes executed a scheme to defraud Our Lady of

the Lake Foundation (the “Foundation”), a non-profit

organization that supports the Our Lady of the Lake

Regional Medical Center. The fraudulent scheme caused

a specific loss of $796,309. Funes prepared, signed, and

submitted numerous fraudulent vouchers to cause the

Foundation’s accounting personnel to issue checks for

payees, amounts, and purposes falsely reflected on the

vouchers. In furtherance of the scheme, for example,

Funes submitted numerous fraudulent vouchers in which

he represented that Foundation funds were necessary

to pay a charter flight company to make time-sensitive

“outbound patient transports” from Our Lady of the Lake

Children’s Hospital, when in fact Funes was repeatedly

using the flight company’s services for his own personal

benefit, unbeknownst to the Foundation. On numerous

occasions, Funes fraudulently caused the Foundation

to issue payments to other individuals and he directed

those individuals to funnel the majority of the funds back

to him. In August of 2018, when the Foundation’s finance

department began an internal audit of the expenses

described above, Funes created numerous false

documents in an effort to conceal the scheme.

IRS:CI Annual Report 2020

BOSTON FIELD OFFICE

15 NEW SUDBURY STREET, BOSTON MA, 02203 | 617.316.2080 | BostonFieldOffice@ci.irs.gov

BRIDGEPORT, CT

BURLINGTON, VT

HARTFORD, CT

MANCHESTER, NH

NEW HAVEN, CT

NORWALK, CT

PORTSMOUTH, NH

SOUTH PORTLAND, ME

SPRINGFIELD, MA

STONEHAM, MA

WARWICK, RI

WORCESTER, MA

THE BOSTON FIELD OFFICE covers six New England states, each with one

judicial district: Massachusetts, Connecticut, Rhode Island, New Hampshire,

Vermont and Maine. The field office’s relationship with the U.S. Attorney’s Office

and our law enforcement partners is one of the best in the country. IRS:CI

special agents are vital members of several task forces including Organized

Crime Drug Enforcement Task Force (OCDETF), Joint Terrorism Task Force

(JTTF), cybercrimes, securities fraud and health care fraud.

Boston Field Office Case Files

Varsity Blues - Investigations of College Admissions

and Testing Bribery Scheme

RI Businesswoman Sentenced in $10M Ponzi Scheme

that Defrauded 23 Individuals

Since June 2019, 24 individuals have been sentenced

for their involvement in a nationwide conspiracy that

facilitated cheating on college entrance exams and the

admission of students to elite universities as purported

athletic recruits. Athletic coaches from Yale, Stanford,

USC, Wake Forest and Georgetown, among others, are

implicated, as well as parents and exam administrators.

On February 11, 2020, Monique N. Brady, an East

Greenwich attorney and businesswoman, was sentenced

to 8 years in prison and was ordered to pay back her

victims a total of $4.78 million. Brady duped family

members, friends, and business associates as she

operated a $10.3 million Ponzi scheme to help finance

an extravagant lifestyle. As part of the scheme, Brady

fraudulently told investors that her company, MNB, had

secured contracts to perform large scale rehabilitation

projects on foreclosed properties in Rhode Island,

Connecticut, Massachusetts, and New Hampshire. She

represented to a total of 31 investors that payments

ranging from approximately $20,000 to $80,000 were

needed to pay subcontractors. She promised investors

a return of fifty percent of the profit realized. In reality,

MNB was hired by banks to perform menial tasks, the

majority of which were for less than $1,000. By the time

the scheme ended, 23 individuals had lost approximately

$4.8 million. Additionally, Brady attempted to obstruct

the IRS criminal investigation by asking investors to

delete or destroy all email correspondence, texts,

and documents relating to their investments in MNB

rehabilitation projects. After Brady became aware of the

investigation, she met with the Rhode Island Department

of the Attorney General and the Rhode Island State Police

to request an investigation of her victims for usury. As

the case proceeded toward federal indictment, Brady

purchased a one way ticket to Vietnam. Ms. Brady was

arrested one day before her scheduled flight.

The investigation into the conspiracy was named

Operation Varsity Blues. At least 22 parents have been

sentenced. William Rick Singer, the organizer of the

scheme, used part of the money to fraudulently inflate

entrance exam test scores and bribe college officials. A

principal purpose and object of the tax fraud conspiracy

was to allow clients of Singer to improperly deduct

the cost of the bribes from their federal income taxes,

resulting in an underpayment of federal income taxes.

Below is a list of some of the sentenced defendants.

These defendants have received sentences ranging from

weeks to months of probation and/or prison as well as

fines and orders of restitution.

• Abbott, Gregory

• Abbott, Marcia

• Bizzack, Jeffrey

• Buckingham, Jane

• Caplan, Gordon

• Center, Michael

• Flaxman, Robert,

• Henriquez, Elizabeth

• Hodge, Douglas

• Huneeus, Agustin

IRS:CI Annual Report 2020

• Janavs, Michelle

• Klapper, Marjorie

• Littlefair, Karen

• MacFarlane, Toby

• Sartorio, Peter Jan

• Sidoo, David

• Sui, Xiaoning

• Henriquez, Manuel

• Lori Loughlin

• Mossimo Giannulli

IRS:CI Annual Report 2020

Boston Field Office Case Files

Former Assistant Director of Real Estate

for City of Boston Sentenced

for Accepting $50,000 in Bribes

On January 24, 2020, John M. Lynch was sentenced

to more than three years in prison and was ordered to

pay restitution of $14,400 and to forfeit $50,000. Lynch

was a former Assistant Director of Real Estate in the

Boston Planning and Development Agency (BPDA). In

2017, a Boston real estate developer sought to sell a

parcel of residential real estate in Boston, but needed

Boston Zoning Board of Appeals (ZBA) approval to

extend a permit that would allow the property to be

sold as a multi-unit development. In order to secure a

permit extension, the developer agreed to pay $50,000

in bribes to Lynch, in return for Lynch using his influence

at the BPDA to secure a vote from a ZBA member. In

May 2017, the ZBA member voted to grant the permit

extension, enabling the developer to sell the property at

an additional half a million dollar profit that the developer

otherwise would not have received. Per their agreement,

the developer then paid Lynch $25,000 in cash and gave

Lynch a $25,000 check. Lynch then failed to report those

and another $10,000 payment he had received from the

real estate developer on this 2018 tax returns.

IRS:CI Annual Report 2020

Boston Field Office Case Files

Stamford Man Sentenced to 9 Years in Prison

for Surgical Glove Investment Scheme

Portland Tax Return Preparer Sentenced to Prison

for Preparing False Returns

On December 19, 2019, Thomas J. Connerton was

sentenced to nine years in prison for operating an

investment scheme that defrauded more than 70

individuals, including several women he met on a dating

website, of more than $2 million. Connerton was the

founder, president, and CEO of Safety Technologies, LLC

(“Safety Tech”), a Connecticut company. Safety Tech

was founded in 2006, purportedly for the purpose of

developing and commercializing what was represented

to be a highly durable material to be used in the surgical

glove market and other related markets. Connerton made

numerous false representations to fraudulently induce

victim-investors to provide him funds and to purchase

Safety Tech securities. Connerton actually used invested

funds to pay personal expenses and to repay loans to

an earlier investor. Through this scheme, Connerton

defrauded more than 70 victim-investors of more than

$2.2 million. Additionally, Connerton willfully failed to pay

$293,033 in federal income taxes between 2003 and

2015. The government is seeking full restitution for the

victim-investors and forfeiture of the two engagement

rings that Connerton purchased with proceeds of the

fraud scheme. Connerton also owes more than $500,000

in back taxes, interest and penalties.

On February 25, 2020, Ashraf Eldeknawey was sentenced

to six months in prison and was ordered to pay $97,191

in restitution to the IRS. Eldeknawey operated a tax

return preparation business located inside the Ahram

Halal Market in Portland from 2015 to 2018. He prepared

fraudulent tax returns for clients on which he reported

self-employment income that they did not earn. As a

result, the clients received tax refunds to which they were

not entitled. Eldeknawey also filed a 2014 tax return for

himself on which he overstated the expenses associated

with a painting business he operated.

IRS:CI Annual Report 2020

CHARLOTTE FIELD OFFICE

10715 DAVID TAYLOR DRIVE, CHARLOTTE NC, 28262 | 705.548.4241 | CharlotteFieldOffice@ci.irs.gov

CHARLESTON, SC

CHATTANOOGA, TN

COLUMBIA, SC

GREENSBORO, NC

GREENVILLE, SC

JACKSON, TN

JOHNSON CITY, TN

KNOXVILLE, TN

MEMPHIS, TN

MYRTLE BEACH, SC

NASHVILLE, TN

RALEIGH, NC

WILMINGTON, NC

THE CHARLOTTE FIELD OFFICE covers the states of North Carolina, which has

three judicial districts, South Carolina, which has a single judicial district, and

Tennessee, which has three districts. We work a diverse mix of cases throughout

the two states, including general tax fraud, refund fraud, terrorist financing,

public corruption, Organized Crime Drug Enforcement Task Force (OCDETF) and

employment tax fraud. The field office has excellent partnerships both internally

and externally. Charlotte is the second largest banking center in the United

States after New York City. Our office works closely with the respective U.S.

Attorney’s priority task forces, including the Joint Terrorism Task Force (JTTF),

Financial Crimes Task Force, and OCEDTF.

IRS:CI Annual Report 2020

Charlotte Field Office Case Files

Charlotte Man Sentenced for Conspiring

to Defraud the Government

Tennessee Woman Sentenced

for Wire Fraud and Tax Evasion

On November 12, 2019, Arthur Joseph Gerard III, of

Charlotte, NC, was sentenced to nearly four years in

prison and was ordered to pay $567,665 in restitution to

the IRS. Gerard was previously convicted of conspiracy

to defraud the U.S. Government. Gerard conspired with a

client to hide over $2.7 million in gross receipts earned by

his client from the IRS. He assisted his client in funneling

income through multiple layers of straw companies and

bank accounts held by nominees for a fee of between

$1,000 and $2,500 for each straw company. He assisted

his client in preparing and filing false documents with the

IRS. Additionally he assisted in filing false liens to give the

appearance that his client had no equity in his property in

effort to avoid IRS debt collection.

On November 1, 2019, Barbara Butler, of Murfreesboro,

Tennessee, was sentenced to two years in prison.

Butler was also ordered to pay more than $1.3 million

in restitution to Davis Stokes Collaborative, P.C., and

$521,207 in restitution to the IRS. Butler previously

pleaded guilty to wire fraud and tax evasion. Butler had

been the comptroller for D.S. Collaborative in Brentwood,

Tennessee, for over 20 years and was responsible for all

of the company’s financial affairs. Between December

2009 and July 2016, Butler wrote company checks to

herself and used the company’s credit cards for personal

use and for the use of her family members, without the

knowledge or approval of the company’s owners. She also

opened additional credit cards in the company name and

those credit lines were used to make personal purchases

for herself and family. During the course of the scheme,

Butler embezzled more than $1.8 million from the

company. In 2016, after learning that the company was

subjected to an IRS audit, Butler provided false financial

documents to the IRS auditor in an attempt to conceal the

fact that she had written company checks to herself, and

she altered general ledgers to make it appears as though

the checks were written to legitimate vendors. During tax

years 2010-2015, Butler failed to report to the IRS the

income resulting from the embezzlement and caused a

tax loss of $521,207.

IRS:CI Annual Report 2020

Charlotte Field Office Case Files

Multi-Million Dollar Investment Fraud Scheme and

Income Tax Evasion Nets Nearly 22 Years in Prison

Former Controller Sentenced

For Embezzlement Scheme

On August 29, 2019, Treyton Lee Thomas was sentenced

to nearly 22 years in prison for wire fraud and income

tax evasion. Thomas was also ordered to pay approx

imately $7.3 million in restitution to the victims of the

investment and bank fraud schemes, the IRS and the

U.S. Attorney’s Office and to forfeit an additional $7.3

million to the United States. Thomas, who represented

himself as a successful Harvard-educated investment

advisor, defrauded his father’s used car warranty

company, several of its customers, his wife and his

father-in-law. Thomas claimed he was conservatively

investing their money, but instead, he conducted risky

trades in the commodities and futures market. Thomas

provided victims and various financial institutions with

false information and fabricated bank and brokerage

statements. Thomas used the same false information and

fabricated statements to defraud financial institutions

out of approximately $1.9 million in loan proceeds. In

addition to losing the victims’ money in risky trades,

Thomas spent more than $1.6 million to pay personal

expenses. Thomas failed to file tax returns or pay taxes

for two decades. To conceal his income, Thomas used

offshore entities in the Cayman Islands, the British

Virgin Islands and Nevis, and employed individuals from

offshore corporation management companies to act

as his nominee in numerous business ventures. These

foreigners opened and managed bank accounts through

which Thomas moved the victims’ funds in and out of the

United States.

IRS:CI Annual Report 2020

South Carolina Drug Dealer Sentenced to 35 Years

in Prison After Offering Cellmate $10,000

to Kill Prosecutor and Witness

On March 13, 2020, Detric McGowan, aka “Fat,” of

Piedmont, South Carolina, was sentenced to 35 years

in prison. McGowan pleaded guilty to participating in a

drug conspiracy involving cocaine, heroin, fentanyl, and

tramadol; possessing a kilogram or more of heroin with

the intent to distribute; conspiring to launder money;

obstruction of justice/witness tampering; and obstruction

of justice/retaliation. McGowan was a member of a drug

trafficking organization operating in the Upstate of South

Carolina, primarily in Laurens and Greenwood Counties.

The organization was responsible for the distribution of

in excess of $1 million dollars’ worth of heroin, cocaine,

and/or fentanyl in the Upstate and elsewhere. McGowan

was indicted along with several co-conspirators in

February 2019 and taken into custody. In July 2019,

McGowan began to discuss with a person who was

incarcerated about his desire to have his prosecutor and

a witness killed. McGowan was recorded agreeing to pay

the person $10,000 to kill the prosecutor and witness

and providing information about how to find the targets.

On July 17, 2020, Shain A. Chappell, formerly of Johnson

City, Tennessee, was sentenced to more than 3 years in

prison. Chappell was ordered to pay restitution of over

$1 million to the victim and over $350,000 to the United

States. In October 2015, Greentech Environmental

LLC hired Chappell as its controller. During his time at

Greentech, Chappell developed a scheme to deceive

Greentech into paying for Chappell’s personal credit card

purchases, subsequently hiding the thefts by showing the

payments as purchases of inventory in Greentech’s books

and records. By July 2017, less than two years after his

hiring, Chappell had embezzled over a $1 million from

his former employer, using the embezzled funds to pay

for lavish lifestyle expenditures. In addition to stealing

from Greentech, Chappell filed false tax returns for 2017

and 2018 that failed to include as income the money he

stole from his employer, resulting in additional income tax

owed of over $350,000.

IRS:CI Annual Report 2020

CHICAGO FIELD OFFICE

230 S DEARBORN STREET, CHICAGO IL, 60604 | 312.292.4500 | ChicagoFieldOffice@ci.irs.gov

CARMEL, IN

DOWNERS GROVE, IL

DULUTH, MN

EAU CLAIRE, WI

EVANSVILLE, IN

FORT WAYNE, IN

GREEN BAY, WI

INDIANAPOLIS, IN

MADISON, WI

MATTESON, IL

MERRILLVILLE, IN

MILWAUKEE,WI

MINNEAPOLIS, MN

ORLAND PARK, IL

PEORIA, IL

THE CHICAGO FIELD OFFICE is one of the largest field offices in the country

consisting of sixteen groups of agents and professional staff. We cover a

large geographical area working in the states of Illinois, Indiana, Minnesota,

and Wisconsin with seven judicial districts. We investigate a wide variety

of cases and have excellent relationships with the U.S. Attorney’s Offices.

Our agents participate in numerous task forces including HIDTA, OCDETF,

JTTF, cybercrimes, and political corruption. We work complex and diverse

investigations such as tax evasion, corporate fraud, employment tax fraud,

public corruption, cybercrimes, health

care fraud, and drug trafficking.

The field office has exceptional

partnerships, both internally working

with our civil counterparts, and

externally with other federal, state, and

local law enforcement agencies.

IRS:CI Annual Report 2020

ROCHESTER, MN

ROCKFORD, IL

SCHILLER PARK, IL

SOUTH BEND, IN

SPRINGFIELD, IL

Chicago Field Office Case Files

Former Lawyer Sentenced for Tax Evasion

on Income Received over Two Decades, Including

Income Derived From Illinois Tobacco Litigation

On March 3, 2020, Daniel Soso, of Alsip, Illinois was

sentenced to 2 years in prison and was ordered to pay

nearly $1.8 million in restitution to the IRS. Soso, was an

associate of former Alderman Edward R. Vrdolyak. Soso

previously pleaded guilty to one count of tax evasion in

connection with payments both he and Vrdolyak received

from Illinois’ multibillion-dollar settlement negotiated

with tobacco companies. The investigation was centered

on the state of Illinois’ $9.2 billion court settlement

with tobacco companies decades ago, which included

payments to outside law firms that helped with the

litigation. Soso was not authorized to perform any work

for the State of Illinois on the lawsuit against the tobacco

companies. Vrdolyak paid Soso $1.9 million between

2000 and 2005.

Husband and Wife Sentenced to Prison

for Attempting to Bilk the IRS out of $1.3 Million

On December 19, 2019, Tillman Liggins III was

sentenced to more than 5 years in prison and his wife,

Chinita Williams-Liggins, was sentenced to 3 ½ years in

prison. The couple was also ordered to pay $331,154

in restitution to the IRS. The couple obtained personal

identifying information, including names, Social Security

numbers, and dates of birth, of at least ten individuals

without their knowledge or consent. They used that

information to prepare and file false and fraudulent

individual federal income tax returns (Forms 1040) for

the tax years 2011, 2012, 2013, and 2014. In total, the

pair caused to be filed with the IRS at least 219 false and

fraudulent tax returns seeking refunds of approximately

$1,323,793. As a result of the scheme, the IRS deposited

approximately $331,154 in fraudulent refunds into bank

accounts controlled by the couple and others.

IRS:CI Annual Report 2020

Chicago Field Office Case Files

Leader of Drug Trafficking Organization

Sentenced to 30 years in prison

Wisconsin Man Sentenced to 12 Years

for Mortgage Rescue Fraud Scheme

La Crosse Dentist Sentenced for Tax Evasion

On October 30, 2019, Ricardo Ochoa-Beltran, of San

Mateo, California, was sentenced to 30 years in federal

prison. Ochoa-Beltran was the leader of a drug trafficking

and money laundering organization that operated out of

California and Indiana to distribute methamphetamine,

heroin, and cocaine. Ochoa-Beltran’s drug trafficking

organization obtained drugs in various ways, including

via packages shipped from California to Indiana. Law

enforcement intercepted hundreds of thousands of

dollars’ worth of controlled substances over the course of

their two-year investigation. Ochoa-Beltran laundered the

funds generated by the drug trafficking organization by

funneling drug proceeds through 30 different individual

bank accounts, sending international wire transfers to

Mexico (primarily, Sinaloa) using false sender names

through InterCambio Express wire transfers, and by

smuggling cash in bulk across the country.

On March 17, 2020, Aston Wood, of New Richmond,

Wisconsin and Miami, Florida, was sentenced to 12 years

in prison for a mortgage rescue scheme. Wood pleaded

guilty to wire fraud and bankruptcy fraud on January 6,

2020. Between 2014 and 2019, Wood defrauded more

than 70 Wisconsin homeowners out of approximately

$390,000. Many homeowners unfortunately lost their

homes in connection with the scheme. Using the names

ASC Financial, LLC and Maywood Capital II, LLC, Wood

solicited people facing the possibility of foreclosure and

falsely represented to them that he could help them stay

in their home by obtaining loan refinancing or modifi

cation. He told customers to immediately make mortgage

payments to businesses he controlled while he worked

out the details. Although the homeowners believed their

payments were going to their mortgage lenders, Wood

spent their money on his own travel and living expenses.

Wood defrauded some homeowners out of additional

money even after they lost their homes by falsely telling

them that he would use the money to help them buy back

their foreclosed property or use the money to sue the

mortgage companies.

The remaining defendants were sentenced as follows:

• Joel Alvarado-Santiago, 7 ½ years

• Miguel Lara-Leon, more than 21 years

• Angelica Guzman-Cordoba, 20 years

• Cesar Salgado, more than 11 years

• Megan Castleton, 7 ½ years

• Bryan Stocker, 5 years

• Lissa Garcia, more than 3 years

• Roberto Martinez-Hernandez, 1 ½ years

IRS:CI Annual Report 2020

On May 19, 2020, Frederick G. Kriemelmeyer, of La

Crosse, Wisconsin, was sentenced to 6 years in prison

and was ordered to pay $226,839 in restitution to the

United States. Kriemelmeyer, a dentist, took a number

of actions to evade paying the taxes he owed. By 2012,

the IRS had assessed Kriemelmeyer for more than

$450,000 in taxes, interest, and penalties. From at least

2013 through 2015, Kriemelmeyer did not file tax returns

reporting the income from his dental practice, directed

his patients to pay him in cash or by check with blank

payee lines, and paid his business and personal expenses

with third-party checks and cash.

As part of his fraud scheme, Wood advised many

customers to file bankruptcy. The automatic stay

triggered by the bankruptcy filings temporarily stalled

the foreclosures, which extended the time in which Wood

could collect the monthly mortgage payments. Despite

a court order barring Wood from these actions, Wood

continued to engage in mortgage rescue fraud under a

new business name.

IRS:CI Annual Report 2020

CINCINNATI FIELD OFFICE

550 MAIN STREET, CINCINNATI OH, 45202 | 513.975.6343 | CincinnatiFieldOffice@ci.irs.gov

AKRON, OH

BOWLING GREEN, KY

CANTON, OH

CLEVELAND, OH

COLUMBUS, OH

DAYTON, OH

FLORENCE, KY

INDEPENDENCE, OH

LEXINGTON, KY

LOUISVILLE, KY

TOLEDO, OH

THE CINCINNATI FIELD OFFICE covers the states of Ohio and Kentucky, which

includes two federal judicial districts in each state. We work closely with our

federal, state, and local law enforcement partners to investigate and prosecute

tax, money laundering, Bank Secrecy Act, and related financial crimes that affect

the southern and northern judicial districts of the “Buckeye State” as well as

the eastern and western judicial districts of the “Bluegrass State.” Our special

agents and professional staff provide unparalleled financial expertise to lead

investigations of the most egregious white-collar criminals. We work in concert

with the United States Attorney’s office as well as our civil and law enforcement

partners to significantly impact regional and national priorities that include:

income tax evasion, questionable tax refund/return preparer fraud, ID theft,

cybercrimes, counterterrorism and narcotics related crimes, including opioidrelated drug investigations.

IRS:CI Annual Report 2020

Cincinnati Field Office Case Files

Ohio Woman Sentenced to 17 Years in Prison

for Stealing the Identities, Filing False Tax Returns

Ohio Glass Company Owner Sentenced

for Not Paying Employment Taxes

On October 4, 2019, Aesha Johnson was sentenced to

more than 17 in prison and was ordered to pay $63,708

in restitution to the IRS for stealing the identities of more

than a dozen people and filing false tax returns. Johnson

was previously convicted on one count of conspiracy

to commit wire fraud, 14 counts of wire fraud, and 14

counts of aggravated identity theft relative to stealing the

identities of more than a dozen people and filing false

tax returns. Aesha’s daughter, Brittany Williams, was

sentenced to three years of probation and was ordered

to pay $63,708 in restitution to the IRS on one count of

conspiracy to commit wire fraud, 14 counts of wire fraud,

and 14 counts of aggravated identity theft. Williams and

Johnson, when she was living in West Virginia, conspired

together to use stolen identities to file false tax returns

with the IRS, seeking tax refunds. Johnson acquired

many of these identities through a previous criminal

fraud scheme. Johnson and Williams used an address

in Cleveland associated with the family as the address

of record for many of the false tax returns. They often

communicated with each other using a code that referred

to the victims using numbers 1 through 31 and created

and used fictitious email accounts in the names of the

victims to communicate with the IRS. Williams filed the

false tax returns online, obtained prepaid debit cards in

the names of the identity-theft victims, and requested the

IRS deposit the refunds onto those cards. Williams then

withdraw cash or made purchases with the cards.

On October 29, 2019, Gail Cooper was sentenced to more

than a year in prison and was ordered to pay restitution

to the IRS of $659,262 for failing to truthfully account for

and pay over employment taxes. Cooper was the owner

of Greenville Architectural Glass (GAG). GAG paid wages

to its employees during the years 2013 through 2015,

and as the person responsible for GAG’s finances, Cooper

was required to withhold federal income taxes and Social

Security and Medicare taxes from the employees’ wages

and pay those amounts over to the IRS. Cooper was also

required to file quarterly employment tax returns with

the IRS. Although Cooper caused GAG to withhold taxes

from employees’ wages, she neither filed the required

quarterly returns for the first quarter of 2013 through the

second quarter of 2015, nor paid the withheld amounts

over to the IRS. Cooper also failed to pay over to the IRS

unemployment taxes. In all, Cooper caused more than

$280,000 in payroll taxes not to be paid.

Cooper also filed false individual income tax returns for

2008, 2009, and 2010, on which she understated GAG’s

gross receipts and overstated its expenses. Cooper

caused GAG’s bookkeeper to manipulate and delete

entries in the company’s accounting records. Specifically,

she directed the bookkeeper to delete invoices from the

software after GAG received payment from a client to

make it appear as if GAG had not received the payment.

Cooper also paid personal expenses with business

funds, including utility bills for her residence and rental

properties, and caused these to be classified as business

expenses. After filing fraudulent returns for 2008-2010,

Cooper did not file any individual income tax returns for

the next several years. In total, Cooper’s conduct caused

a tax loss of $587,516 to the United States.

IRS:CI Annual Report 2020

Cincinnati Field Office Case Files

Ohio Man Sentenced for $2.6 Million

Auto Loan Scheme

Man Sentenced in Costa Rica-Based

Telemarketing Scheme

On January 7, 2020, Albert Watson, of Columbus, Ohio,

was sentenced to 5 years in prison and was ordered

to pay $2,680,423 in restitution to the victim financial

institutions on one count of conspiracy to commit bank

fraud and one count of conspiracy to commit money

laundering relative to an auto-loan scheme in Texas and

Columbus, Ohio. From at least August 2014 through April

2018, Watson recruited people who were qualified for

membership in eligibility-based financial institutions like

USAA, Navy Federal Credit Union and Pentagon Federal

Credit Union to create accounts at those institutions.

Watson then caused fraudulent loan applications to

be submitted to the financial institutions. Initially, he

simply inflated the sales price of actual vehicle sales to

pocket the difference. Eventually, loan applications were

submitted when there was no actual transfer of vehicle.

In many cases, multiple fraudulent auto loan applications

were submitted on a single vehicle, with no intention that

the vehicle’s ownership would transfer in accordance with

the information submitted on the auto loan applications.

The loans obtained were as large as $40,000.

On April 22, 2020, Nicholas Richer, of Nashua, New

Hampshire, was sentenced to more than 4 years in prison

and was ordered to pay restitution, jointly and severally,

of $1,102,448 on one count each of international money

laundering, conspiracy to commit money laundering,

and conspiracy to commit wire and mail fraud relative

to his role in a Costa Rica-based telemarketing scheme

that defrauded victims in the United States, including the

elderly. Richer participated and facilitated a sweepstakes

telemarketing scheme from call centers located in Costa

Rica that convinced U.S. residents to pay money in an

effort to claim a fictitious sweepstakes prize. Richer

worked as a bridge defrauding the victims in the U.S.

and sending victims’ money to Costa Rica. The scheme

involved telephoning U.S. residents from call centers in

Costa Rica and falsely informing them that they had won

second prize in a lottery or sweepstakes. The victims

were told that in order to receive the prize money they

had to pay a purported tax or fee via Western Union,

MoneyGram, bank wire transfers, or through shipment

of postal money orders. Once a victim made an initial

payment, the victim received additional calls claiming a

mistake had been made and that the victim had actually

won first prize of a greater amount, or an issue had

occurred, and the victim needed to pay additional fees

to claim the prize. Calls were made to the victims for as

long as those victims were willing and able to continue to

transfer funds. Richer and his co-conspirators kept the

victims’ funds and never provided any prizes to them.

IRS:CI Annual Report 2020

Cincinnati Field Office Case Files

Kentucky Man Sentenced to Wire and Tax Fraud

On May 11, 2020, Joseph Peavler was sentenced to 2 ½

years in prison for committing wire fraud and assisting

in the preparation of a false income tax return. Peavler

was also ordered to pay an excess of $1.6 million in

restitution, of which, $246,637 is payable to the IRS.

Between 2004 and 2018, Peavler managed a warehouse

owned by someone else and, during that time, he

devised a plan to rent space in the warehouse to two

separate entities, keeping the money for himself without

knowledge or authority by the owners. Peavler’s fraud

scheme was furthered by interstate wire communications. Peavler also admitted to failing to declare this

rent money on his tax returns, for each of the years he

received the rent.

IRS:CI Annual Report 2020

DALLAS FIELD OFFICE

1100 COMMERCE, DALLAS TX, 75242 | 214.413.5929 | DallasFieldOffice@ci.irs.gov

AMARILLO, TX

BEAUMONT, TX

FARMERS BRANCH, TX

FAYETTEVILLE, AR

FORT SMITH, AR

FORT WORTH, TX

IRVING, TX

LITTLE ROCK, AR

LUBBOCK, TX

MUSKOGEE, OK

OKLAHOMA CITY, OK

TULSA, OK

TYLER, TX

THE DALLAS FIELD OFFICE covers the Northern and Eastern Districts of

Texas, Oklahoma and Arkansas. Our agents work a diverse mix of criminal

investigations, which include tax fraud, identity theft, public corruption,

narcotics, and terrorism investigations. Our agents hold pivotal roles on the

respective U.S. Attorney’s Office priority task forces, including the Organized

Crime and Drug Enforcement Task Force (OCDETF), the High Intensity Drug

Trafficking Area Task Force (HIDTA), the Financial Crimes Task Force and the

Joint Terrorism Task Force (JTTF).

IRS:CI Annual Report 2020

Dallas Field Office Case Files

Forest Park Anesthesiologist Sentenced

to 5 ½ Years in Prison

Tax Preparer Sentenced for Claiming $35 Million

in Fraudulent Refunds

On August 10, 2020, Richard Ferdinand Toussaint Jr.

was sentenced to 5 ½ years in prison and ordered to

pay more than $82.9 million in restitution. Toussaint,

an anesthesiologist, was at the center of the $200

million Forest Park Medical Center fraud. Before this

sentencing, Toussaint had already been sentenced to

more than 3 years in prison for a separate health care

fraud conviction and he will serve the two sentences

concurrently. In March 2018, Toussaint pleaded guilty

to his involvement in the Forest Park scheme, admitting

to conspiracy to pay health care bribes and kickbacks

and illegal remuneration under the Travel Act. In 2008,

Dr. Toussaint teamed up with co-defendant Dr. Wade

Neal Barker, a bariatric surgeon, to launch Forest Park

Medical Center, a physician-owned hospital for bariatric

and spinal surgery patients. Together with Forest

Park hospital manager Alan Andrew Beauchamp, Dr.

Toussaint, Dr. Barker, and their colleagues conspired to

steer lucrative patients – particularly those with high-reimbursing, out-of-network private insurance – to the now

defunct hospital by paying surgeons for referrals. Most

of the kickbacks, which totaled more than $40 million,

were disguised as consulting fees or “marketing money,”

doled as a percentage of surgeries each doctor referred

to Forest Park. Dr. Toussaint was one of 18 convicted in

the scheme.

On January 9, 2020, Ebenezer Olayiwola, was sentenced

to 5 years in prison and was ordered to pay more than

$30 million in restitution to the IRS. Olayiwola owned and

operated Peak Insurance and Tax Service. Between 2010

and 2013, Olayiwola and his preparers filed thousands of

tax returns claiming more than $35 million in fraudulent

tax refunds. Olayiwola trained his preparers to prepare

fraudulent tax returns. Olayiwola’s organization generated

millions of dollars in tax preparation fees during that

period. Juana Gabriela Ortiz, who worked for Ebenezer

Olayiwola, prepared a significant number of false tax

returns, and was ordered to pay restitution totaling nearly

$4 million.

IRS:CI Annual Report 2020

Dallas Field Office Case Files

Beaumont Family Sentenced for Tax Evasion

and Laundering of Gambling Proceeds

Tulsa Software Developer Sentenced

for $1 Million Payroll Tax Fraud

Northwest Arkansas Man Sentenced to 14 Years

in Prison for Drug Trafficking and Money Laundering

On October 29, 2019, Earenest J. Grayson Jr. was

sentenced to 2 years in prison and was ordered to pay

restitution of 904,091. Grayson, a computer software

development company owner, failed to account for and

pay over employment taxes withheld from his employees’

wages. As the owner and operator of Tulsa-based

Zealcon Corporation, Grayson was responsible for

withholding, accounting for and paying over to the IRS

payroll taxes and withholdings due on the wages paid to

Zealcon employees. From January 2014 through June

of 2016, Grayson caused a total tax loss of approximately $1 million by intentionally not paying to the IRS

income, Social Security and Medicare taxes withheld

from Zealcon employees’ wages and Social Security and

Medicare taxes due from Zealcon on those wages.

On March 12, 2020, Bryant Keethe Smith Ford, of

Fayetteville, Arkansas, was sentenced to 14 years

in prison and was ordered to pay a $20,000 fine for

conspiracy to distribute more than 100 kilograms of

marijuana. Ford was also sentenced to 10 years in

prison for money laundering. The sentences will run

concurrently. From around the beginning of January

2017, and continuing into July 2019, the Bryant Ford

Drug Trafficking Organization (DTO) operated in Arkansas

and was responsible for trafficking large quantities of

marijuana into the Fayetteville, Arkansas area from other

states. Once the marijuana was brought to Fayetteville by

Ford, he, or others he directed, distributed the marijuana

to others. Ford used proceeds from his unlawful

marijuana sales to pay for luxury cars in cash and he then

titled the luxury vehicles in another individual’s name.

As a result of search warrants conducted on the day of

his arrest, more than $260,000 in U.S. Currency, two

loaded firearms, and three luxury vehicles were seized.

During the course of the investigation, over 300 pounds of

marijuana were seized.

On June 12, 2020, Tillery, a Beaumont businessman, was

sentenced to nearly 3 years in prison. Tillery was also

ordered to pay restitution of $1,000,040 and to forfeit

approximately $2 million in cash, jewelry, and sports

memorabilia that were proceeds of his illegal gambling

enterprise. Additionally, he was ordered to pay a money

judgment of $32,758,541. From 1985 until April 2017,

Larry Tillery was engaged in the business of accepting

illegal wagers on sporting events. Tillery owned and

operated Daylight Motors, a used car dealership, and

Lamar Capital, a holding company for Daylight Motors,

and used these two companies as a front to launder illicit

proceeds from his illegal gambling enterprise. Between

2011 and 2016, Larry Tillery accepted at least $52

million in illegal wagers on sporting events. Larry did

not report these wagers to the IRS or pay gross excise

taxes. The gross wagering taxes that resulted from

wagers Larry Tillery accepted between 2011 and 2016

total $1,040,000. The investigation traced a total of 125

financial transactions in excess of $10,000 derived from

illegal gambling that utilized the United States banking

system. These financial transactions total $32,383,841

and occurred between 2010 and 2016.

IRS:CI Annual Report 2020

Judy Tillery assisted her husband in laundering cash

proceeds of his illegal gambling activities by structuring

deposits into her personal bank account (in amounts

under $10,000 to evade federal currency transaction

reporting requirements) and then writing checks to

bank accounts controlled by her husband. Judy Tillery

was sentenced to 2 years of probation and shares the

forfeiture judgment with her husband. Brian Tillery took

various actions to aid his father’s bookmaking enterprise.

Brian Tillery was sentenced to 2 years of probation and was

ordered to forfeit approximately $245,477 and a residence

with an appraised value of approximately $600,000.

IRS:CI Annual Report 2020

DENVER FIELD OFFICE

1999 BROADWAY, DENVER CO, 80202 | DenverFieldOffice@ci.irs.gov

BILLINGS, MT

BOISE, ID

CHEYENNE, WY

COEUR D'ALENE, ID

COLORADO SPRINGS, CO

DURANGO, CO

FORT COLLINS, CO

GRAND JUNCTION, CO

HELENA, MT

MISSOULA, MT

WESTMINSTER, CO

THE DENVER FIELD OFFICE covers a large geographic area (approximately

432,500 square miles) that includes the states of Colorado, Montana, Idaho

and Wyoming. Our Special Agents work a varied mix of criminal investigations

including all manners of tax fraud, money laundering and other federal frauds

with a financial nexus which impact regional and national priorities based on our

diverse geographic region.

IRS:CI Annual Report 2020

Denver Field Office Case Files

VA Employee Sentenced for Orchestrating

$19 Million Corruption Scheme

Denver CPA Sentenced for Conspiracy

to Defraud Xcel Energy and the IRS

On June 11, 2020, Joseph Prince, of Aurora, Colorado

was sentenced to 16 years in prison for health care fraud,

conspiracy, payment of illegal kickbacks and gratuities,

money laundering, and conflict of interest charges. Prince

was also ordered to pay $18,777,134 in restitution to the

Veteran’s Health Administration. Prince, as a Veteran’s

Administration Spina Bifida (SB) Health Care Benefits

Program beneficiary specialist, recruited family and

friends, including Roland Vaughn, to open “home health

agencies” knowing they lacked the proper licensing or

credentials to fraudulently bill the VA for SB beneficiaries

home services. Between June 2017 and June 2018,

Prince referred approximately 45 SB beneficiaries to

the sham home health entities which then submitted

claims totaling over $20 million to the VA. Prince

received approximately $1.5 million in kickbacks from

two of the home health entities in a six month period.

Co-conspirator, and long-time friend, Roland Vaughn was

sentenced on June 25, 2020, to 8 months in prison and

was ordered to pay $1,007,205 in restitution for paying

an illegal gratuity to a public official.

On June 15, 2020, Stephen Yobst, a former CPA, of

Denver, Colorado, was sentenced to more than 2 years

in prison for wire fraud, conspiracy to defraud the United

States, filing false tax returns and theft of government

funds. Yobst was also ordered to pay restitution totaling

$1,167,273, including $806,216 to Xcel Energy and

$361,057 to the IRS. While working for Xcel Energy,

Yobst, and co-conspirator James Brittain, created an

entity, Pacific Exchange Group (PEG) to hold proceeds

from the sale of utility properties, such as vehicles and

transformers, until Xcel needed the funds to purchase

replacement assets. Yobst and Brittain failed to provide

an accounting of the funds to Xcel and instead used

the proceeds to support their personal lifestyles while

failing to report this income on their individual income

tax returns. Brittain was sentenced on June 21, 2019,

to a year in prison and was ordered to pay restitution of

$806,216 to Great American Insurance Company and

$215,094 to the IRS.

IRS:CI Annual Report 2020

Denver Field Office Case Files

Colorado Tax Defier Sentenced for Tax Evasion

Fairfield Man Who Defrauded Family

of More Than $700,000 Sentenced

Coeur d’Alene Woman Sentenced for Embezzling

More Than a Million Dollars

On May 7, 2020, Michael Lee Van Auken was sentenced

to more than 2 years in prison and was ordered to pay

restitution of $719,340 to the victimized family and

$165,195 to the IRS. Van Auken, posing as a financial

services manager with both law and accounting degrees,

offered various financial services, including investments

opportunities, filing personal and business tax returns,

and wealth management planning as part of the scheme.

Van Auken created various business entities to perpetrate

the embezzlement while failing to provide the promised

services. He used the funds for personal expenses and

investing in foreign currency trading. The investigation

also showed that Van Auken owed $165,195 in taxes for

the years 2013-2015.

On October 2, 2019, Sue Ann Larson was sentenced to

more than 3 ½ years in prison for embezzling funds from

her employer and subsequently failing to report the illegal

income on her personal income tax returns. Larson was

ordered to pay restitution to her employer of $1,281,552

and restitution to the IRS of $175,054. Larson, a

bookkeeper for a local custom cabinet shop, embezzled

over $1.2 million from her employer between 2009 and

February 2018. During that time, Larson also falsified her

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