Click on a section to go to that page. (2021)

Agency decision

Ask Donna

What actually matters in this document.

Text

ANNUAL REPORT 2021

Click on a section to go to that page.

Message from the Chief

Field Office Map

2021 Snapshot

Case Closed:

Tax Crimes

Non-Tax Crimes

Atlanta

Cyber Crime Unit

Boston

Narcotics and National Security

Charlotte

PPP/EIDL/Covid Fraud

Chicago

Asset Recovery and

Cincinnati

Dallas

Investigative Services

Significant Case Summaries

Specialized Units

Denver

Nationally Coordinated

Detroit

Houston

Investigations Unit

Commissioner’s Protection Detail

Las Vegas

Office of International Affairs

Los Angeles

Digital Forensics

Miami

National Forensic Laboratory

Newark

Undercover Operations

New York

National Criminal Investigation

Oakland

Philadelphia

Training Academy

Office of Communication

Phoenix

Professional Staff

Seattle

Workforce Development

St. Louis

Equity, Diversity, and Inclusion

Tampa

Outreach and Community Engagement

Washington D.C.

Appendix

TABLE OF CONTENTS

Table of Contents

Navigation Menu

Table of Contents

2021 Snapshot Data

Field Office Map

Appendix: Investigation Data

Criminal Investigation

Guiding Principles

Message from the Chief

I am proud to share the FY 2021 IRS Criminal Investigation Annual Report.

The IRS, and our country, relies on CI’s ability to investigate and recommend

prosecution of criminal tax violations and other related financial crimes to

the Department of Justice. The deterrent effect from our work reinforces

the backbone of our voluntary compliance tax system -- a system that funds

our government, our military, and our infrastructure. Criminal tax cases

that are prosecuted and publicized provide a strong deterrent message to

would-be tax evaders, helping to ensure the integrity and fairness in the U.S.

tax system. It also provides deterrence to those who are considering other

financial crimes. Our efforts put criminals on notice – they will be caught

when they commit these crimes.

This year our country continued to face the challenge of the effects of

Covid-19. CI faced those challenges as well, both as we interacted with

the public and as we managed our internal workforce. Although our core

mission remained the same, we approached our investigations this year

with compassion. We recognized that among other Covid-19 difficulties,

members of families and friends were lost. We carefully approached our

work this year with this recognition in mind. We also provided vital public

safety messages about Covid-19-related scams to protect the public and

their financial interests.

But our underlying principles and our mission remained 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 2021 was defined.

HONOR THE BADGE. Our workforce honors the badge by working with a

sense of ingenuity, tenacity, and teamwork to uncover the truth. We honor

the badge by using not only the lessons learned in the past, but by looking

ahead and developing the tools that will make us successful in the future. But

honoring the badge many times comes down to doing the hard tax-related

work we have always done. This was exemplified by a CI case this year

where a software tycoon was charged in a 20-year scheme to hide $2 billion

in income – hailed as the largest U.S. tax case ever against an individual.

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 increasingly rely

on data analytics to augment good old-fashioned police work 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. This

year, a civil forfeiture complaint was filed for thousands of Bitcoin valued at

approximately $1 billion dollars, among the largest cryptocurrency seizures

ever by the federal government. The complaint related to the Silk Road case,

a sprawling black-market bazaar where unlawful goods and services were

bought and sold regularly by the site’s users.

MASTER YOUR CRAFT. 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. The internet

and the dark web have facilitated this change. CI has committed to staying

ahead of these developments and we have made significant investments in

training our employees in the latest tactics and techniques to be successful

in a digital financial world. This year, we saw the first-ever sentencing of a

Bitcoin case with a tax component. A former Microsoft employee defrauded

the company of over $10 million using a bitcoin mixer to hide taxable income.

He was sentenced to nine years in federal prison.

INSPIRE THE FUTURE. The world is in many ways a smaller place these

days, and financial crimes are increasingly international in scope. CI now

works on a global scale to address this evolving future of law enforcement.

We continued our partnership with the Joint Chiefs of Global Tax Enforcement

(J5), an alliance between the criminal tax authorities of the U.S., Australia,

Canada, the Netherlands, and the United Kingdom, and this year we netted

our second plea under this J5 umbrella in a $722 million cryptocurrency

mining scheme. Our work is changing and has been impacted by cybercrime,

but we have positioned ourselves to solve these sophisticated schemes. We

also increasingly rely on social media to alert the public of our cases and

warn them about possible scams.

Today’s 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 our

accomplishments from this year and look forward to continued successes

in the future.

HONOR

THE BADGE

I will honor the badge by working

with a sense of urgency, integrity,

and professionalism every day.

PRESERVE

THE LEGACY

I will preserve the legacy by doing

all that I can to ensure that we

maintain our place as the world’s

finest financial investigative agency.

MASTER

YOUR CRAFT

I will master my craft through

continuous learning, pursuit of

excellence, and engagement with

internal and external stakeholders.

INSPIRE

THE FUTURE

I will inspire the future through a

constant personal commitment

to mentor others within the

organization.

–Jim Lee, Chief

IRS:CI Annual Report 2021

2021 Snapshot

$2.19B

13%

27%

1497

$8.18B

TAX FRAUD IDENTIFIED

IRS:CRIMINAL INVESTIGATION

U.S. ATTORNEY'S OFFICE

OTHER FINANCIAL CRIMES

FINANCIAL CRIMES

ENFORCEMENT

NETWORK

89.4%

WARRANTS EXECUTED

13%

INVESTIGATION

SOURCES

CONVICTION RATE

IRS:CIVIL

INTERNATIONAL

STATE/LOCAL GOVERNMENT

CORPORATE

FRAUD

EMPLOYMENT

TAX

OTHER FEDERAL AGENCIES

PUBLIC

CORRUPTION

ABUSIVE

TAX SCHEMES

GENERAL

FRAUD

IDENTITY

THEFT

TAX

REFUND

FRAUD

31%

CYBER CRIMES

GENERAL

TAX FRAUD

PUBLIC

72%

15.4%

NON-TAX

NARCOTICS

11.2%

MONEY

LAUNDERING

IRS:CI STAFFING

SPECIAL AGENTS

OCDETF

Organized Crime

Drug Enforcement

Task Force

2021 2046

PROFESSIONAL

STAFF

2021

0.8%

DIRECT INVESTIGATIVE TIME SPENT*

2020

2030

889

7.4%

2020

828

PERCENTAGES

*1.4% UNCATEGORIZED

IRS:CI Annual Report 2021

TAX CRIMES

1372

INVESTIGATIONS INITIATED

850

PROSECUTIONS RECOMMENDED

REFUND FRAUD PROGRAM

The Refund Fraud Program consists of three parts:

Questionable Refund Program (QRP), identity theft refund

fraud investigations, and the Abusive Return Preparer

Program (RPP) for both individuals and businesses. These

programs investigate individuals 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.

IRS: CRIMINAL INVESTIGATION’S (CI) primary

resource commitment is to develop and investigate tax

crimes, including both legal and illegal source cases.

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, as well as 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, who 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, the

layering of transactions, and the international movement

of funds.

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 the

taxpayers’ willingness to self-assess taxes owed and

voluntarily file tax returns. CI investigations help show

law-abiding taxpayers that individuals who deliberately

under report or omit income from their tax returns will

be held accountable for their actions. One area within

this program is CI’s investigations regarding high income

taxpayers who have a filing requirement but deliberately

choose not to file returns and pay taxes owed. Other

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 QRP identifies fraudulent claims for tax refunds.

Generally, these schemes involve individuals filing

multiple fraudulent tax returns using the personally

identifiable information (PII) of individuals, either

knowingly or unknowingly, to facilitate the scheme.

A significant number of these investigations are also

considered identity theft investigations.

Identity theft refund fraud occurs when someone uses

the PII of another individual, without the person’s

permission. The PII could include another person’s

name, Social Security number, or address. These cases

are commonly referred to as stolen identify refund fraud

(SIRF) investigations. The crime 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 PII 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.

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

633

SENTENCED

expenses, false deductions, excessive exemptions, and

unallowable tax credits. The preparers’ clients may or

may not know their returns were falsified.

ABUSIVE TAX SCHEMES

CI focuses on the investigation of promoters and clients,

who willfully violate tax laws by participating in domestic

and offshore tax schemes. The schemes are usually

complex involving multi-layer transactions for the

purpose of concealing the true nature and ownership of

the income and/or assets. Participants 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.

EMPLOYMENT TAX FRAUD

Employment tax fraud includes cases involving

employee leasing, paying employees in cash, filing

false payroll tax returns, failing to file payroll tax

returns, and “pyramiding.” Pyramiding occurs when a

business withholds taxes from its employees, but then

intentionally fails to forward the tax payments to the

IRS. After a liability accrues, the individual starts a new

business and begins to accrue a new liability under the

new entity. Employment taxes include federal income

tax withholding, Social Security taxes, and federal

unemployment taxes. Some employers withhold taxes

from their employees’ paychecks and use the funds for

their personal expenses. Employment tax fraud can have

serious ramifications for both employers and employees. u

IRS:CI Annual Report 2021

NON-TAX CRIMES

1209

INVESTIGATIONS INITIATED

1132

PROSECUTIONS RECOMMENDED

635

SENTENCED

NEWARK FIELD OFFICE:

Special agents show their

badges while visiting a

person of interest during an

investigation.

IRS: CRIMINAL INVESTIGATION’S (CI) Illegal Source

Financial Crimes Program investigates tax and tax related

crimes, money laundering, and currency violations.

The special agents’ 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 third-party

money launderer. Frequent money laundering techniques

include manipulating currency reporting requirements,

layering transactions, the use of cryptocurrency, the use

of Black Market Peso, and moving funds internationally.

The domestic and international law enforcement

community recognize CI’s special agents as the premier

experts in money laundering investigations.

MONEY LAUNDERING

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. In contrast, criminals today can

utilize a computer, tablet, or smart phone 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, money transmitters, 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. When

uncovered, the trails often identify the main perpetrator

and accomplices, who willingly enable and finance the

criminal activity. The perpetrators often view crime with

deliberate blindness, negligence, or disregard.

BANK SECRECY ACT PROGRAM

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.

The U.S. Treasury Secretary delegated all criminal

enforcement of BSA 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 to identify leads for possible investigation. CI leads

SAR Review Teams (SAR RTs) and Financial Crimes

Task Forces (FCTFs) in all 94 judicial districts across the

country.

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

U.S. 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. The CI

BSA program has grown substantially since its start in

The SAR RTs and FCTFs 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. Each of the SAR RTs

and FCTFs operate in a slightly different fashion, based

on the direction and oversight from their respective

U.S. Attorney’s offices (USAO). Once CI special agents

CI special agents are experts at uncovering money trails

through traditional and virtual financial banking systems.

They take part in a 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).

IRS:CI Annual Report 2021

Non-Tax Crimes

identify leads in their respective areas, they meet with

participating law enforcement agencies to discuss and

disseminate the leads for action. While all of the major

federal agencies use BSA data to supplement their

investigations, 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 investigations initiated in fiscal year 2021 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 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, both in-person and virtually, and presented

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.

PUBLIC CORRUPTION

CI investigates elected and appointed individuals who

violate the public’s trust. These individuals are from all

levels of government including local, county, state, and

federal, as well as foreign officials. Public corruption

investigations include such criminal offenses as bribery,

extortion, embezzlement, kickbacks, tax fraud, and

money laundering. Corruption by public officials results in

the loss of taxpayer dollars. 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.

Public officials, who violate the public trust, are often

prosecuted to the fullest extent of the law, with large

fines and increased jail time for offenders.

CORPORATE FRAUD

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 then use

the false information to complete tax returns, financial

statements, and reports for regulatory agencies or

investors. Corporate fraud can also include executives

who receive unauthorized compensation, unapproved

payments and bonuses, corporate funds, or fraudulent

loans used to pay personal expenses.

GENERAL FRAUD

CI special agents also investigate healthcare, financial

institution, and Covid-19 related fraud. Covid-19

related fraud includes schemes targeting the Paycheck

Protection Program (PPP), Economic Injury Disaster

Loan (EIDL) program, and Unemployment Insurance

(UI) programs. CI special agents often work with federal,

state, and local law enforcement partners, as well as

with foreign tax and law enforcement agencies, to bring

income tax and money laundering charges to criminal

cases, which enhance the prosecutors’ effectiveness to

combat these and other types of fraud.

SIGNIFICANT CASE

August 2021, the United States District Court for the

Middle District of Florida sentenced two sisters for

their $25 million tax fraud scheme. Petra Gomez was

sentenced to eight years in federal prison for conspiracy

to defraud the government and tax evasion. Gomez’s

sister, Jakeline Lumucso, previously pleaded guilty to

conspiracy to defraud the government and was sentenced

to four years in prison. The court also ordered Gomez

and Lumucso to pay $24,940,495 in restitution to the

IRS. Gomez was ordered to pay an additional $510,999

to the IRS for tax evasion. From January 2012 to June

2016, Gomez and Lumucso conspired to defraud the IRS

by submitting more than 16,000 false tax returns, which

resulted in nearly $25 million in fraudulent tax refunds.

To conceal the fraud, Gomez and Lumucso created five

different tax preparation companies. In some instances,

they opened the companies in the names of other people

to conceal the fraud. In addition, when filing her 2014 tax

return, Gomez failed to declare more than $800,000 in

income. Gomez claimed $213,434 in earnings, when she

actually earned $1,110,508. This resulted in an additional

tax liability of $510,999 for tax year 2014. u

NEWARK FIELD OFFICE:

Special agents arrest

a suspect during an

investigation.

DENVER FIELD OFFICE:

Special agents conduct

training on how to safely

secure an office building.

IRS:CI Annual Report 2021

CYBER CRIME UNIT

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.

Over the last few years, CI has prioritized training and

the deployment of cryptocurrency, blockchain and

open-source intelligence (OSINT) technologies to unravel

complex cyber-financial criminal schemes. To ensure

CI’s capabilities continue to evolve with the online

and digital payment landscape, CI plans to launch an

Advanced Collaboration & Data Center (ACDC) in the

Northern Virginia area in 2022. The focus of the center

will be to bring together data, technology, and specialized

personnel from across Treasury and government to work

on high impact solutions to protect the integrity of our tax

and financial systems. The integration of the Eastern CCU

(Washington D.C Field Office) and Cyber Support Unit will

ensure ACDC maintains an operational focus and strives

to bring high-tech solutions posing the most significant

threats to our tax, financial and economic systems.

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 almost

always 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), Covid fraud, and other refund fraud using the tax

system as a facilitator to receive government payments.

During this same period, data loss incidents reported

to the IRS have drastically increased. These data

loss incidents include data intrusions, 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

$3.5B

enforcement agencies and

their capabilities as law

enforcement officers to

gather valuable intelligence

about SIRF, refund fraud

crimes, and information that

affects the integrity of IRS

online systems and the tax

system as a whole. 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, and

elude law enforcement while concealing 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.

CRYPTOCURRENCY

SEIZED

OF ALL CI SEIZURES

SIGNIFICANT CASES

Feds Seize over $1 Billion in Crypto Currency

November 5, 2020, the United States moved to forfeit

thousands of bitcoins, valued at over $1 billion, seized

by CI CCU. Silk Road creator Ross Ulbricht was convicted

in 2015 by a New York federal jury of seven criminal

counts, including conspiracy to distribute narcotics and

money laundering. His prosecution left open a billiondollar question – where did the money go? This forfeiture

answers that question, at least in part. This was the

largest seizure of cryptocurrency in U.S. history. CCU

special agents and personnel used a third-party bitcoin

attribution company to analyze bitcoin transactions

executed by Silk Road and were able to identify 54

previously undetected bitcoin transactions executed by

Silk Road, which were the proceeds of unlawful activity,

stolen from Silk Road in or about 2012 and 2013. These

funds were traced to a bitcoin address. Further investigation of that bitcoin address by CCU special agents &

personnel revealed that the funds were connected to

Individual X. It was further determined that Individual X

had hacked the funds from Silk Road.

Pursuant to the investigation of the hack, CCU

special agents seized

several thousand Bitcoins

on November 3, 2020. On

November 4, 2020, the

seized Bitcoin had a value of

over $1 billion.

CI Lifts the Fog on

Notorious Darknet

Cryptocurrency Mixing

Service

April 27, 2021, Roman

Sterlingov, a dual RussianSwedish national, was

arrested at Los Angeles

International Airport on criminal charges related to

his alleged operation of the longest-running bitcoin

money laundering service on the darknet. Sterlingov, 32,

operated Bitcoin Fog since 2011. Bitcoin Fog was the

longest-running cryptocurrency “mixer,” gaining notoriety

as a go-to money laundering service for criminals seeking

to hide their illicit proceeds from law enforcement. Over

the course of its decade-long operation, Bitcoin Fog

moved over 1.2 million bitcoin – valued at approximately

$335 million at the time of the transactions. The bulk of

this cryptocurrency came from darknet marketplaces

and was tied to illegal narcotics, computer fraud and

abuse activities, and identity theft. Sterlingov is charged

with money laundering, operating an unlicensed money

transmitting business, and money transmission without

a license in the District of Columbia. This is only the

second cryptocurrency mixing service case brought by

the Department of Justice, and both were investigated

by CI CCU. The investigation illustrates CI’s dual focus of

fighting crypto-related crime and protecting the tax and

financial systems from illicit activity.

Microsoft Employee Sentenced to 9 Years for Stealing

more then $10 Million and Using a Bitcoin Mixing

Service to Hide the Proceeds

November 9, 2020, Volodymyr Kvashuk, was sentenced

to 9 years in prison for 18 felonies related to his scheme

to defraud Microsoft of more than 10 million dollars.

Volodymyr Kvashuk, 26, was convicted in February

of wire fraud, money laundering, and filing false tax

returns, among other charges, connected with his

scheme to embezzle over $10 million worth of gift cards

from Microsoft. Kvashuk was a software developer for

Microsoft that exploited a vulnerability in Microsoft’s

program for testing software related to their online store.

This vulnerability allowed Kvashuk to obtain over $10

million in virtual gift cards at no cost. Kvashuk sold the

gift cards on a third-party website at a large discount

in exchange for bitcoin, which he attempted to launder

through the use of bitcoin mixing services. He then used

the laundered funds to purchase a $1.6 million waterfront

property, a $160,000 Tesla vehicle, and fund a milliondollar investment account. Kvashuk then lied to his tax

return preparer regarding the source of his wealth and

filed a fraudulent tax return, failing to report his income

from the scheme. CI CCU special agents and personnel

investigating the case were able to connect Kvashuk to

the theft of over 150,000 gift cards, track their sale for

bitcoin, and follow the proceeds through bitcoin mixing

services until Kvashuk ultimately converted the bitcoin

to cash, and identified the assets he subsequently

purchased. CCU special agents were able to document

and explain methods used by Kvashuk at trial, leading to

a conviction on 18 counts, including wire fraud, money

laundering, and filing false tax returns.

Ukrainian Cyber Criminal Extradited for Decrypting

the Credentials of Thousands of Computers across

the World and Selling Them on the Dark Web to

Facilitate Tax Fraud, Ransomware and Other Crimes

September 7, 2021, Glib Oleksandr Ivanov-Tolpintsev

(28, Chernivtsi, Ukraine) was ordered detained by U.S.

Magistrate Julie S. Sneed pending trial. Glib Oleksandr

Ivanov-Tolpintsev was extradited in connection with

charges of conspiracy, trafficking in unauthorized access

devices, and trafficking in computer passwords. IvanovTolpintsev faces a maximum penalty of 17 years in

federal prison. Ivanov-Tolpintsev was taken into custody

by Polish authorities in Korczowa, Poland, on October

3, 2020, and extradited to the United States pursuant

to the extradition treaty between the United States and

the Republic of Poland. Ivanov-Tolpintsev controlled a

“botnet,” which is a network of computers infected with

malware and controlled as a group without the owners’

knowledge. He used the botnet to conduct brute-force

attacks designed to decrypt numerous computer login

credentials simultaneously. During the course of the

conspiracy, Ivanov-Tolpintsev stated that his botnet

was capable of decrypting the login credentials of at

least 2,000 computers every week. Ivanov-Tolpintsev

then sold these login credentials on a dark web website

that specialized in the purchase and sale of access to

compromised computers. Once sold on this website,

credentials were used to facilitate a wide range of illegal

activity, including tax fraud and ransomware attacks. CI

CCU special agents and personnel helped unwind the

digital and financial trails to bring Ivanov-Tolpintsev and

others to justice. Through this work, CI helped identify

thousands of victims and protect thousands more from

tax fraud and other financial crimes. u

IRS:CI Annual Report 2021

NARCOTICS AND NATIONAL SECURITY

IRS:CI SIGNIFICANTLY CONTRIBUTES to the success

of U.S. national security programs by identifying,

disrupting, reducing, or eliminating the profits and

financial incentives of individuals, entities, and

transnational criminal organizations (TCOs) engaged

in crimes associated with narcotics trafficking, human

trafficking, terrorism financing, economic espionage, and

money laundering crimes in support of these crimes.

CI special agents investigate criminal violations of the

Internal Revenue Code, Bank Secrecy Act, federal money

laundering statutes, and the International Emergency

Economic Powers Act. CI special agents utilize their

unique financial investigation skills to trace financial

transactions between individuals, businesses, and

criminal organizations and to identify sophisticated

schemes designed to disguise illegal transactions.

Criminal prosecutions in these cases dismantle and

disrupt criminal networks through criminal prosecution.

CI’s office of Narcotics and National Security section

has senior liaison officers who provide interagency

coordination, deconfliction, advice, strategy, financial

analysis, network exploitation and coordination of field

office resources, in support of a whole of government

approach to our national security threats.

Some of the multi-agency task forces with CI presence

and participation include:

• Organized Crime Drug Enforcement Task Force

(OCDETF) - Executive Office

• OCDETF Regional Coordinators

• Drug Enforcement Administration

Special Operations Division (SOD)

• OCDETF Fusion Center (OFC)

• International Organized Crime Intelligence

and Operations Center (IOC2)

• Joint Criminal Opioid Darknet Enforcement (J-CODE)

• National Joint Counterterrorism Task Force (NJTTF)

• National Counterintelligence Task Force (NCITF)

• High Intensity Drug Trafficking Area (HIDTA)

Assessment. The purpose of the risk assessment is to

identify, assess, and understand the changing landscape

of money laundering and terrorist financing within

the United States, so that agencies, prosecutors, and

legislative changes can be considered and implemented

to mitigate these risks.

In September 2020, CI’s Director of Narcotics and

National Security participated in the Federal Bureau

of Investigation’s inaugural kick off of their National

Counterintelligence Task Force (NCITF), where CI was

an inaugural member. As of May 2021, CI formalized its

partnership in NCITF.

Special agents meet about an investigation as they enter

the Narcotics and National Security main office.

The Narcotics and National Security sections also support

the following programs: the U.S. National Drug Control

Strategy, the White House’s Strategy to Combat Transnational Organized Crime, the 2020 National Illicit Finance

Strategy, the U.S. Government’s National Counterterrorism Strategy, the National Strategy for Countering

Domestic Terrorism, and the National Counterintelligence

Strategy.

Beginning with FY 2021, Narcotics and National Security

established the Cyber-OCDETF initiative. This is a pilot

program working with field offices, contractors, and law

enforcement partners to coordinate on cyber-related

narcotics investigations. This initiative led to CI ‘s

Narcotics and National Security section formalizing our

participation and engagement with Joint Cyber Opioid

Darknet Enforcement (JCODE) task force. In June 2021,

CI assigned a liaison officer to the JCODE mission to

develop, research, coordinate, and refer cyber narcotics

investigations to CI special agents.

SIGNIFICANT CASE

August 2019, CI special agents worked with 30 other law

enforcement agencies in Virginia, North Carolina, and

Texas in a joint OCDETF operation known as Operation

Cookout. The investigation pertained to a transnational

criminal organization linked to the Sinaloa Cartel.

The organization had a narcotics distribution network

operating on both the east coast of the United States

and California. The investigators executed simultaneous

search, arrest, and seizure warrants, which resulted in

the arrest of 35 defendants for their respective roles in

the ongoing criminal conspiracy enterprise. Investigators

also seized 24 firearms, 30 kilograms of fentanyl, 30

kilograms of heroin, 5 kilograms of cocaine, and over

$700,000 in cash. In July 2021, the ringleader and

last defendant to be convicted was sentenced to 33

years in prison. In all, 45 defendants were charged in

Operation Cookout and all have pleaded guilty. Most of

the defendants’ sentences ranged from 2 to 10 years

in prison. However, five defendants were sentenced to

between 15 and 25 years in prison. u

IRS:CI focuses heavily on narcotics and financial investigations related to high-priority targets identified by

OCDETF. These cases often involve the convergence of

program areas, and these prosecutions have a greater

effect on dismantling large TCOs. In 2019, Narcotics

and National Security partnered with the Organization

for Economic Cooperation and Development Task Force

on Tax Crimes and Other Crimes to update their Money

Laundering and Terrorist Financing Awareness Handbook

for tax examiners and tax auditors. This work continued

in 2020 and 2021 and resulted in updates to the Financial

Action Task Force’s recommendations for member

countries to improve money laundering compliance.

The products and engagement raise awareness on

money laundering and terrorist financing techniques

with our international partners and encourage bi-lateral

investigations. In 2021, Narcotics and National Security

partnered with Treasury’s Office of Terrorism Finance

and Financial Crimes to update the FY 2021/FY 2022

National Money Laundering and Terrorist Financing Risk

NEWARK FIELD OFFICE:

Special agents collect

documents, records, and

computer assets during

a search and seizure.

IRS:CI Annual Report 2021

PPP/EIDL/COVID FRAUD

THROUGHOUT FISCAL YEAR 2021, we continued

to deal with the effects of the Covid-19 pandemic.

Unfortunately, criminals haven’t stopped 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.

We lead 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. The PPP offers billions of dollars

in potentially forgivable loans to keep workers on the

payroll, guaranteed by the Small Business Administration

(SBA). Working with our law enforcement partners, CI

has opened investigations involving various allegations

of individuals attempting to take advantage of these

government programs designed to help struggling

individuals and businesses.

Some examples of these investigations include:

February 10, 2021, David T. Hines of Miami, Florida, pled

guilty to fraudulently obtaining nearly $4 million in PPP

loans. Hines fraudulently sought millions of dollars in

PPP loans through applications to an insured financial

institution on behalf of various companies. These loan

applications made numerous false and misleading

statements about the companies’ respective payroll

expenses. Instead of using the received PPP funds to

make payroll payments, Hines instead used approximately $318,000 of those funds to purchase a 2020

Lamborghini Huracan sports car. Hines was sentenced

to 78 months confinement and 36 months of supervised

release.

March 15, 2021, Mukund Mohan of Clyde Hill,

Washington, pled guilty in connection with his role

in obtaining over $5.5 million in PPP loans. Mohan

submitted at least eight fraudulent PPP loan applications

to federally insured financial institutions in which he

made false and misleading statements, as well as

submitted fake and altered tax filings and incorporation documents. Mohan was sentenced to 24 months

confinement, 36 months of supervised release and a fine

of $100,000.

June 2, 2021 Thomas Smith of Pewaukee, Wisconsin,

was sentenced to 57 months confinement, 24 months

of supervised release and ordered to pay $960,000

in restitution for fraudulently obtaining over $1 million

in PPP loans. Smith fraudulently sought over $1.2

million in PPP loans through applications to a federally

insured financial institution on behalf of eight different

companies. According to his plea agreement, Smith

caused to be submitted fraudulent loan applications

containing numerous false and misleading statements

about the companies’ respective payroll expenses.

Based on these representations, the financial institution

approved and funded over $1 million in loans. Smith then

directed his co-conspirators to send him portions of the

PPP funds.

July 28, 2021, Dinesh Sah of Coppell, Texas, was

sentenced to 135 months of confinement, 36 months

of supervised release and ordered to pay $17,284,649

in restitution in connection with his fraudulent scheme

to obtain approximately $24.8 million in PPP loans. Sah

submitted 15 fraudulent applications, filed under the

names of various purported businesses that he owned

or controlled, to eight different lenders seeking approximately $24.8 million in PPP loans. Sah claimed that these

businesses had numerous employees and hundreds of

thousands of dollars in payroll expenses when, in fact,

no business had employees or paid wages consistent

with the amounts claimed in the PPP applications. Sah

received over $17 million in PPP loan funds and diverted

the proceeds for his personal benefit, using them to

purchase multiple homes in Texas, pay off the mortgages

on other homes in California and buy a fleet of luxury

cars, including a Bentley convertible, Corvette Stingray

and Porsche Macan.

September 16, 2021, Fahad Shah of Murphy, Texas, was

sentenced to 31 months confinement and 36 months

of supervised release for perpetrating a scheme to

fraudulently obtain more than $3.3 million in PPP loans.

According to court documents, Shah sought approximately $3.3 million in PPP funds by claiming that his

family’s business, WBF Weddings by Farah Inc. (WBF),

employed more than 100 individuals and paid millions

of dollars in compensation to those employees. In

actuality, WBF had no employees aside from Shah and his

wife. Based on Shah’s false representations and forged

documents, an SBA-approved lender provided over $1.5

million in PPP loan funds to Shah. Shah then used the

funds for personal gain contrary to program’s terms,

paying off his home mortgage and purchasing two Teslas

and a Mercedes, among other items. u

ASSET RECOVERY

& INVESTIGATIVE SERVICES

IRS:CI ASSET FORFIETURE 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. IRS:CI conducts criminal

investigations that use our financial expertise and

resources. In part, IRS:CI is one of the larger contributors

to the Treasury Forfeiture Fund (TFF), which the Treasury

Executive Office for Asset Forfeiture manages. Forfeited

funds are returned to identified victims of criminal

activity as well as to reimburse for law enforcement

related expenses, such as additional training, equipment,

and the cost of conducting significant investigations.

In addition, the TFF shares a portion of forfeited funds

with federal, state, and local law enforcement agencies.

As of September 30, 2021, IRS:CI seized assets having

an estimated value of approximately $1.3 billion and

forfeited approximately $91 million in ill-gotten proceeds.

SIGNIFICANT FORFEITURES

New York Field Office

Switzerland’s largest insurance company, Swiss Life

Holding AG, and three subsidiaries entered a deferred

prosecution agreement (DPA) with the Department

of Justice in the Southern District of New York. Swiss

Life admitted to conspiring with U.S. taxpayers to hide

assets and income in offshore accounts and as part of

the agreement, Swiss Life will pay a total of $77,374,337

to the United States, to include a forfeiture of $35.7

million. From 2005 to 2014, Swiss Life through affiliated

insurance carriers in Liechtenstein, Luxembourg, and

Singapore maintained approximately 1,608 Private

Placement Life Insurance (PPLI) policies. The PPLI

Carriers’ issuance and administration of those policies

and the related investment accounts were often done in

a manner to assist U.S. taxpayers in evading U.S. taxes

and reporting requirements as well as concealing the

ownership of offshore assets.

Atlanta Field Office

Wade Ashley Walters, a co-owner of numerous

compounding pharmacies and pharmaceutical

distributors, was sentenced to 18 years imprisonment

in the Southern District of Mississippi for his role in a

multimillion-dollar scheme to defraud TRICARE, the

health care benefit program serving the U.S military,

veterans, and their families, as well as private health care

benefit programs.

WASHINGTON D.C. FIELD OFFICE: Special agents seize a

airplane as part of an investigation.

Walters was also ordered to pay $287,659,569 in

restitution and forfeit $56,565,963, representing the

proceeds he personally derived from the fraud scheme.

Between 2012 and 2016, Walters orchestrated the

scheme to defraud the health care benefit programs

by distributing compounded medications that were

not medically necessary in an amount exceeding

$287 million. Walters further conspired with others to

launder the proceeds of his fraud scheme by engaging

in monetary transactions in amounts of over $10,000 in

proceeds from the fraud scheme, including transactions

relating to his participation in a sham intellectual property

scheme. u

IRS:CI Annual Report 2021

SPECIALIZED UNITS

INTERNATIONAL TAX AND

FINANCIAL CRIMES

IRS:CI increased voluntary compliance and reduced the

tax gap related to offshore tax evasion through several

well-publicized programs and investigations, including

the Swiss Bank Program and the UBS, Credit Suisse and

the HSBC investigations. CI started the International Tax

and Financial Crimes (ITFC) group in late 2017. The group

is a specialty group within the Washington, D.C. Field

Office and is made up of special agents from across the

United States. The special agents are experts in international tax investigations and use their skills to identify and

investigate international tax evasion schemes.

The ITFC utilizes strategic partnerships with external

agencies, including the United States Attorney’s offices

and the Department of Justice Tax Division. IRS:CI

also created a network of internal resources that assist

in identifying leads, analyzing data, and performing

investigative tasks. The ITFC works with investigative

analysts, foreign-based attachés, personnel from special

investigative techniques, and International Operations.

The ITFC is also a major contributor to the Joint Chiefs

of Global Tax Enforcement (J5) and collaborates with the

other J5 countries (United Kingdom, Canada, Australia,

and the Netherlands) to further CI’s international mission

to combat offshore tax evasion.

The IFTC works to identify and investigate enablers,

financial institutions, third-party asset managers,

promotors, referral agents, and expatriated U.S. citizens,

who utilized international jurisdictions to effect tax fraud.

The ITFC also ensures compliance with the Bank Secrecy

Act by identifying and investigating those U.S. persons

who fail to report their foreign accounts.

SIGNIFICANT CASE

May 2021, the United States District Court for the

Southern District of Florida sentenced Dusko Bruer to 24

months in prison for willfully evading the assessment of

millions of dollars in taxes between 2007 and 2014 and

for not reporting his foreign financial accounts from 2006

through 2015. Bruer, a Croatian national and naturalized

United States citizen, filed income tax returns for the

tax years 2007 through 2014, which he knew did not

include income received from his company or through

his foreign bank accounts. Bruer used bank accounts in

Croatia, Germany, Serbia, and Switzerland to conceal

his income from the IRS from 2006 to at least 2015,

and he did not report the bank accounts, as required by

law. Between 2007 and 2011, Bruer transferred $5.8

million from domestic accounts to these foreign financial

accounts. In total, between 2007 and 2014, Bruer did not

report $7,726,213 in income, which would have resulted

in an additional tax due of $2,789,538. Bruer used his

unreported offshore accounts to fund a lavish lifestyle,

which included the purchase of foreign property, a

$1,350,000 yacht, and $1,650,000 home in Lake Worth,

Florida.

November 5, 2020, the IFTC executed a global day

of action on a case involving a tax evasion case

with multiple targets. Special agents from the IFTC

coordinated enforcement activity in nine states and

three countries, on three separate continents. The IFTC

coordinated with J5 personnel, seven IRS:CI field offices,

and IRS:CI attaches in London, The Hague, and Dubai. In

connection with this day of action, the following activities

occurred:

GLOBAL ILLICIT FINANCIAL TEAM

The Global Illicit Financial Team (GIFT) is a task force

led by IRS:CI that investigates organizations that illicitly

move money used to support international crime organizations. GIFT is a major conduit of CI’s money laundering

strategy and a focal point for the CI Money Laundering

Cadre. GIFT works with various partner agencies,

including Homeland Security Investigations (HSI) and

the Department of Defense Office of Inspector General

(DOD OIG). GIFT and CI Money Laundering Cadre consist

of special agents from all CI field offices, as well as

partner agencies. The group is supervised by an IRS:CI

Supervisory Special Agent (SSA), who reports to the

Special Agent in Charge of the Washington, D.C. Field

Office.

GIFT investigations are centered on international

third-party money laundering and include investigations

of illegal money transfer businesses, professional

enablers of money laundering, money laundering through

real estate or investment products, financial institutions

concealing and disguising illegal transactions, laundering

of business email compromise or other cyber intrusions,

public corruption and extortion, government contract

fraud, the sale of contraband goods, and terror financing

and sanctions violations.

ALCOHOL AND TOBACCO

TAX AND TRADE BUREAU

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 (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 the 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. This group

is supervised by an SSA, who reports to the Special Agent

in Charge of the Washington D.C. Field Office. This group’s

sole focus is combating the illicit trade of tobacco and

alcohol. Since the agreement began in 2009, the group

has initiated over 180 investigations. u

Since its inception in 2010, GIFT investigations have

resulted in seizures and forfeitures of over $4.2 billion,

fines and penalties on settlements of over $15 billion,

and a conviction rate of over 90%.

• Search warrants were executed at three locations

in the United Kingdom and at two locations in the

Netherlands.

• Agents interviewed 25 witnesses in nine U.S. states,

including Oregon, Florida, California, Texas, Hawaii,

Alabama, New York, Colorado, Memphis, and in three

countries (the United Kingdom, the Netherlands, and

the United Arab Emirates). Offers of cooperation were

secured from several witnesses/subjects.

• Agents served 43 grand jury subpoenas.

WASHINGTON D.C. FIELD OFFICE:

Special agents investigate an

illegal distillery where untaxed

moonshine is prepped for

interstate transport.

IRS:CI Annual Report 2021

NATIONALLY COORDINATED

INVESTIGATIONS UNIT

THE NATIONALLY COORDINATED INVESTIGATIONS

UNIT (NCIU) contributes to CI’s strategy by using

technology and data to drive decisions in case selection

and to identify patterns of non-compliance. The NCIU

works alongside data scientists and data analysts to

develop models that identify individuals whose financial

activities match patterns linked to non-compliance with

tax laws. The NCIU focuses on identifying domestic

and international tax evasion and money laundering

schemes. The NCIU evaluates the leads for the presence

of criminal acts and refers investigative leads to CI’s

field offices for further investigation. In FY 2021, NCIU

made 164 referrals to field offices. The NCIU continues

to modernize the way CI develops cases. The NCIU

identifies trends in non-compliance and emerging threats

by building strategic partnerships with internal and

external stakeholders. Through partnerships with CI’s

field offices, the NCIU has expanded regional projects

to national projects. The NCIU works closely with

multiple IRS business operating divisions to facilitate a

collaborative, service-wide approach to enforcement, and

to promote data analytics throughout the IRS. In addition

to case development, the NCIU offers continuous support

to CI’s field offices by offering initiative-specific training

and investigative research.

164

INVESTIGATION

REFERRALS

COMMISSIONER’S

PROTECTION DETAIL

During FY 2021, the NCIU applied resources to case

development in the following areas of focus: international, virtual currency, employment taxes, abusive

schemes, Forms 1099-K, gambling, exempt organizations, Schedule Cs, and social media. The NCIU also

works in partnership with other organizations to develop

cases in certain areas. For example, the NCIU works in

partnership with the IRS’s Office of Fraud Enforcement

(OFE) for matters of Covid-19 related fraud, with other

law enforcement agencies in National Targeting Center

cases to combat money laundering through transnational

organized crime, with the Miami Field Office and the

Departamento de Hacienda for fraud related to Acts

20/22, a Puerto Rican tax incentive.

Special agents assigned to the Commissioner’s Protection Detail meet with Charles P. Rettig, IRS Commissioner.

Members of the NCIU and Miami Field Office meet with

representatives from Departamento de Hacienda, Puerto

Rico’s taxation authority.

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.

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.

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

IRS:CI Annual Report 2021

OFFICE OF INTERNATIONAL AFFAIRS

IRS:CI HAS SPECIAL AGENT attachés strategically

stationed in 11 foreign countries, including Mexico,

Canada, Colombia, Panama, Barbados, China, Germany,

the Netherlands-Europol, England, Australia, and the

United Arab Emirates. Attachés continuously build and

maintain strong alliances with foreign governments, law

enforcement, embassy personnel, and industry partners.

These alliances give IRS:CI the ability to develop leads

for domestic and international investigations with an

international nexus. In addition, attachés provide support

and direction for investigations with international issues,

a foreign witness, foreign evidence, or overseas special

investigative technique operations. The vigilance of CI’s

special agent attachés helps uncover emerging schemes

perpetrated by promoters, professional enablers, and

financial institutions. These entities facilitate tax evasion

of federal tax obligations by U.S. taxpayers, as well as

other financial crimes.

In FY 2021, International Affairs had several significant

accomplishments:

IRS:CI applied for membership with Europol’s Joint

Cybercrime Action Taskforce (J-CAT) and was officially

approved as a full member in July 2021. The J-CAT

is a taskforce operated through Europol’s European

Cybercrime Centre. Their objectives are to drive

coordinated action against key cybercrime threats

and targets by facilitating the joint identification,

prioritization, preparation, initiation, and execution of

cross-border investigations and operations to target

cyber dependent crimes, transnational payment

fraud, online child exploitation, and cross-crime cyber

facilitators. In addition to IRS:CI, current member

International Affairs 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 the Guardia di Finanza Economic and Financial Police

School in Ostia, Italy. The training is sponsored by the

Organization for Economic Cooperation and Development

and the U.S. Department of State.

Attachés also partner with the CI’s International Training

Team (ITT) to deliver virtual training to representatives

from multiple countries, including Taiwan, Palau,

Philippines, Trinidad and Tobago, Grenada, Namibia,

Moldova, and Azerbaijan. One notable training coincided

with the announced partnership between CI and the

South African Revenue Service to coordinate efforts to

investigate crimes affecting both countries. As part of the

alliance, the ITT provided training to approximately 40

South African law enforcement officers and government

officials and committed to providing additional training

in the future. These strategic partnerships are essential

for fighting global financial crimes. As Global Operations

Executive Director Guy Ficco stated when this alliance

was announced, “The global fight against financial crimes

is not one that can be fought alone by any one country.

Our partnership with the South African Revenue Service

will soon reveal operational results made possible by our

strong alliance and collaborative efforts.”

countries of the J-CAT include nine European Union (EU)

Member States (Austria, France, Germany, Italy, the

Netherlands, Romania, Poland, Sweden, and Spain) and

seven Non-EU members (Australia, Canada, Columbia,

Norway, Switzerland, the United Kingdom, and the

U.S. [FBI and Secret Service]). To further support CI’s

cyber program this year, International Affairs deployed

its first cyber attaché internationally to Europol in The

Hague, Netherlands. The attaché proactively supported

cyber investigative needs of CI’s Cybercrime Units and

field offices through onsite coordination and contact

with cyber partners at Europol. The cyber attaché also

focused on case development from cyber related investigative data, shared emerging trends and technologies,

and facilitated the exchange of cyber-related information.

In addition, the cyber attaché was assigned as CI’s Cyber

Liaison Officer to the J-CAT. CI continued its partnership

with the Joint Chiefs of Global Tax Enforcement (J5),

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

and information sharing using each country’s collective

resources. In FY 2021, the J5 continued its focus on

professional enablers, virtual currency crimes, international tax evasion, technology sharing, and innovation.

CI has developed Public-Private Partnerships with financial

institutions and the Fin-Tech industry to further facilitate

cooperation, deterrence, identification, and enforcement of

international tax evasion and related financial crimes. u

THE HAGUE

LONDON

FRANKFURT

OTTAWA

WASHINGTON, D.C.

MEXICO CITY

PANAMA CITY

BOGOTA

HEADQUARTERS

BARBADOS

DUBAI

HONG KONG

ATTACHÉ

ATTACHÉ (J5)

BRANCH A:

OTTAWA

LONDON

THE HAGUE

DUBAI

CANBERRY

& SYDNEY

BRANCH B:

MEXICO CITY

PANAMA CITY

BOGOTA

BARBADOS

FRANKFURT

HONG KONG

SYDNEY

CANBERRA

IRS:CI Annual Report 2021

DIGITAL FORENSICS

THIS YEAR, DIGITAL FORENSICS joined with IRS:CI’s

CyberCrimes Unit and the National Forensics Lab as

part of the new Headquarters Cyber and Forensic

Services section. Under this new structure, Digital

Forensics is positioned to continue providing world class

digital forensic services to special agents and other

law enforcement stakeholders, while combining CI’s

respective electronic, cyber and technical expertise

and talents. The primary mission of Digital Forensics is

the forensic acquisition, preservation, and analysis of

the digital and multimedia evidence related to ongoing

criminal investigations. To carry out this mission, our

Computer Investigative Specialists (CISs) are routinely

called upon to assist agents with the acquisition of digital

evidence, to assist in the preparation and execution of

search warrants, to analyze the resulting evidence, and to

testify.

This year, a CIS testified in federal court in Reno, Nevada,

regarding a case against an attorney accused of evading

federal income tax. The CIS agent was qualified as

an expert witness in the recovery, interpretation and

reporting of file metadata by the magistrate judge.

The attorney created and used multiple spreadsheets,

together with his administrative assistant, to

keep track of cash inflows and outflows. The

metadata was an important evidentiary item

with respect to file attribution, time, date, and

author. The testimony was useful in showing

that the defendant had accessed, edited,

printed, and sent files on his work and personal

computers, proving that his defense that he

never saw or edited the files was false. He was

convicted and sentenced to 2½ years in prison,

and he forfeited his law license.

Electronic evidence and digital forensics are

used in every criminal investigation. Such

digital evidence can be as simple as a query

of subpoenaed email production to the most

complex of digital tasks, like imaging a server

farm and subsequently analyzing the terabytes

of data in a virtual environment. Experts

in digital forensics specialize in extracting

evidence from a variety of sources, including

personal computers, mobile phones, tablets,

business computer networks and systems,

servers, cloud storage, and even the Dark

web. Criminals continue to use advanced

technologies to hide evidence in the digital

world. In response, CI’s digital examiners

continue to advance, as well. IRS:CI’s Digital

830

1350

SEARCH WARRANTS

TERABYTES OF DATA

3000

COMPUTER DEVICES

Computer Investigative Forensic Specialist Greg Masi

works to recover data from a hard drive.

Forensics examiners are recognized leaders in the

extraction of data from unique devices, such as vehicles,

drones, smart devices, and various other electronic

media known as the Internet of Things.

Digital Forensics current staffing includes seven groups

of CISs spread throughout 47 local laboratories. Digital

Forensics also maintains an 11,000-square foot lab and

training center, which houses forensic specialists. The

specialists are skilled in various digital forensic

disciplines, such as data recovery, mobile support,

hardware and software testing and deployment, and the

planning and delivery of the vital training needed to keep

the CISs highly skilled and current on technology and

processes. The lab assists with solving more complex

data extractions and challenges encountered by the

digital forensic examiners.

SEATTLE

CLEVELAND

BOSTON

CHICAGO

DENVER

NEW YORK

PHILADELPHIA

KANSAS CITY

WOODBRIDGE

OAKLAND

CHARLOTTE

LOS ANGELES

PHOENIX

DALLAS

HOUSTON

ATLANTA

TAMPA

MIAMI

LAB LOCATION

GROUP 1

GROUP 2

GROUP 3

GROUP 4

GROUP 5

GROUP 6

GROUP 7

This year, Digital Forensics continued to see

advancement in the goal of consolidating the

current local CIS labs into 18 regional digital

forensics laboratories (RDFLs). IRS:CI invested

heavily in acquiring the latest technology to

provide CISs the equipment needed and to

deploy the RDFLs as they begin to open in

FY 2022. In addition, Digital Forensics took

a leading role in the lawful seizures of digital

currency that were proceeds or facilitated

financial crimes, by working with headquarter’s

Warrants and Forfeiture section to provide a

more effective and secure seizure process.

Digital Forensics CISs and specialists also

played a large part in the development of a

new tactical law enforcement network, which

will greatly enhance CI’s ability to deploy tools

and resources to special agents in a secure and

flexible environment.

In FY 2021, Digital Forensics personnel participated in over 830 search warrants or other

digital forensic operations and lawfully seized

more than 1,350 terabytes of data from over

3,000 computers, laptops, external devices and

mobile devices. IRS:CI’s Digital Forensics unit

continues to be the premier digital forensics unit

in federal law enforcement. u

IRS:CI Annual Report 2021

NATIONAL FORENSIC LABORATORY

National Forensic Lab Cases

113

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

to provide pivotal direction in their investigations. Often,

support provided by the NFL doesn’t end with delivery

of a scientific report or product. Visual information

specialists design and develop interactive professional

presentations for trial and forensic scientists testify

to their findings. An integral important function of the

laboratory role is to support judicial proceedings where

and when required.

138

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. The Scientific Services

section offers forensic disciplines that include electronics

(audio, video, and image intelligibility), latent prints

(finger and palm print development and comparison),

polygraph, questioned documents, chemistry, and

DNA collection. The Trial Graphics and Design section

simplifies 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. 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 efficiently

manage and analyze case-related data. By doing so, the

DATA PROCESSING CENTER

DPC saves investigators countless hours of tedious labor,

while enabling them to focus their energy on other key

areas of the investigation.

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 their cases 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. Regardless of the outcome, the NFL scientists

and technical experts continue to strive in their role as

servants of the criminal justice system. u

NBC Nightly News met with

National Forensic Laboratory

scientists and technical

experts to broadcast a

segment on the forensic

science behind financial

crime. Segments included

questioned documents (top),

latent prints (left), polygraph

(middle), and chemistry

(right).

IRS:CI Annual Report 2021

UNDERCOVER OPERATIONS

SIGNIFICANT CASES

IN APRIL 2021, the United States District Court for

the District of New Hampshire indicted six individuals,

including Ian Freeman, for participating in a conspiracy

to operate an unlicensed money transmitting business,

wire fraud, money laundering, and operating a continuing

financial crimes enterprise.

According to the indictment, the individuals operated a

business that enabled customers to exchange over $10

million in fiat currency for virtual currency, charging a fee

between 10 to 14% for their service. They operated their

virtual currency exchange business using websites and

virtual currency ATM machines in New Hampshire.

NEWARK FIELD OFFICE: Special agents conduct surveillance on suspected illegal activities.

IRS: 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 to 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 to gain evidence needed to prosecute

their crimes. In FY 2021, agents conducted

approximately 292 undercover operations.

292

UNDERCOVER

OPERATIONS

They knowingly operated the virtual currency exchange

business in violation of federal anti-money laundering

laws and regulations. In furtherance of their scheme,

some individuals opened bank accounts in the names of

purported religious entities. They engaged in substantial

efforts to evade detection of their unlawful virtual

currency exchange scheme by avoiding answering

questions from financial institutions regarding the nature

of the business and by misleading financial institutions

into believing their unlawful virtual currency exchange

business was instead a religious organization that

received charitable contributions. Ian Freeman also told

the banks that he was dealing in rare coins. Freeman

claimed that there are only 21 million bitcoins ever

mined, so bitcoin are rare coins. He argued that he did not

defraud banks by saying he was dealing in rare coins.

During the investigation, an IRS:CI undercover agent

posed as a drug dealer looking to conceal and disguise

proceeds from narcotic sales. The undercover agent

communicated with Freeman and others on multiple

occasions and met with the individuals named in the

indictment in New Hampshire. The undercover agent

also engaged in multiple transactions with Freeman

to exchange proceeds from narcotic sales for bitcoin

through Freeman’s business and ATMs. Specifically, one

transaction was conducted through Freeman’s ATM in

the amount of $19,900 dollars for approximately 1.54

bitcoins. Freeman was aware that the proceeds were

from narcotic sales.

IN JUNE 2021, the United States District Court for

the District of Columbia, indicted Roman Sterlingov, a

resident of Sweden and a citizen of Russia, for money

laundering, operating an unlicensed money transmitting

business, and money transmission without a license

in the District of Columbia. Sterlingov operated the

business Bitcoin Fog since 2011. Bitcoin Fog was

the longest-running cryptocurrency “mixer,” gaining

notoriety as a go-to money laundering service for

criminals seeking to hide their illicit proceeds from law

enforcement. Bitcoin Fog moved over 1.2 million bitcoins

valued at approximately $335 million. The bulk of this

cryptocurrency came from Dark web marketplaces

and was tied to illegal narcotics, computer fraud, illicit

activities, and identity theft.

During the investigation, an IRS undercover agent

communicated with Sterlingov, while posing as a drug

dealer looking to clean proceeds from narcotic sales.

Sterlingov did not prevent the deposit or withdrawal

of funds through Bitcoin Fog when the funds were

represented to him as narcotics proceeds. u

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.

IRS:CI Annual Report 2021

NATIONAL CRIMINAL INVESTIGATION

TRAINING ACADEMY

months

TRAINING FOR

NEW SPECIAL AGENTS

IRS:CI SPECIAL AGENTS are among the most highly

trained financial investigators in the world. They begin

their training at the National Criminal Investigation

Training Academy (NCITA). NCITA is located at the

Federal Law Enforcement Training Center (FLETC) in

Brunswick, Georgia. NCITA is dedicated to fostering the

highest levels of professionalism and ethical behavior

throughout the CI workforce. NCITA’s primary focus

is training new special agents in the fundamentals of

financial investigations, and agents learn to recognize

the elements of tax offenses and methods of proof

unique to federal tax investigations. They acquire the

knowledge, skills, and abilities required to be federal law

enforcement’s finest financial investigators.

New special agents complete six months of training,

which begins with an 11-week Criminal Investigator

Training Program (CITP) run by FLETC. CITP covers topics

common to all federal law enforcement agents, including

basic criminal investigation skills, federal criminal

law, courtroom procedures, enforcement operations,

interviewing skills, and firearms training. Following CITP,

new special agent trainees take a 14-week NCITA Special

Agent Investigative Techniques (SAIT) course. The SAIT

program trains new agents 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, which includes firearms, weaponless

tactics, and building entry.

In addition to SAIT, NCITA assists in providing advanced

training to special agents in use of force, firearms

instruction, defensive tactics, and building entry. Each

year, NCITA assists in developing continuing professional

education courses for special agents and professional

staff, with an emphasis on emerging trends and issues

within the law enforcement environment.

IRS:CI special agents receive regular refresher training.

They attend quarterly training in firearms, defensive

tactics, and building entry. Through frequent use of force

training, they maintain their skills and abilities to ensure

good judgement and to apply the appropriate degree of

force necessary to safely carry out enforcement activities,

including issuing search warrants, arrests, surveillance,

dignitary protection, undercover activities, and seizures.

NCITA also provides training to foreign governments

and agencies regarding crime detection, investigative

techniques, case studies, developing trends, and best

practices. The International Training Team (ITT) delivered

24 training events in FY 2021, 22 of which were virtual.

In total, the ITT made 910 new contacts with foreign

officials through the delivery of international training. The

foreign officials held various positions in their government

agencies, including positions with Financial Intelligence

Units, Tax/Revenue Authorities, National Police Units,

Attorney General’s Offices, and Ministries of Justice.

In addition to working with these foreign officials, the

ITT also partnered with numerous U.S. entities for the

delivery of international training, including partnerships

with the FBI, the U.S. Department of State, the State

Department’s Bureau of International Narcotics and Law

Enforcement Affairs (INL), the Department of Justice

Office of Overseas Prosecutorial Development Assistance

and Training Program (OPDAT), and the National Center

for State Courts.

weeks

CRIMINAL INVESTIGATOR

TRAINING PROGRAM

NCITA and CI are committed to continual improvement of

new agent training through modernization. In doing so, CI

has revamped case study videos, automated case activity

documents, and created tax lessons that will eventually

be completed virtually, prior to arrival at FLETC. These

changes have allowed NCITA to increase the flexibility

for scheduling instructors, reduce travel and associated

costs, and reduce in person training by five training days.

Overall, these changes will ensure NCITA continues to

produce effective and modern training for IRS:CI special

agents. u

weeks

SPECIAL AGENT

INVESTIGATIVE TECHNIQUES

FY 2021 HIGHLIGHTS

Although NCITA continued to overcome Covid-related

issues during FY 2021, the following training classes were

held for IRS:CI special agents:

• Six Special Agent Basic Training (SABT) classes,

which graduated 124 new special agents

• Three Integrated Use of Force Instructor Trainings

(IUOFIT) classes

• One Integrated Use of Force Instructor Refresher

Training (IUOFIRT) class.

IRS:CI Annual Report 2021

OFFICE OF COMMUNICATION

PROFESSIONAL STAFF

PHOENIX FIELD OFFICE: A special agent participates in a television interview with Channel 3 KTVK.

Professional staff members have a meeting.

CRIMINAL INVESTIGATION (CI) serves the American

public by investigating potential criminal violations of the

Internal Revenue Code and related financial crimes. This

includes promoting CI’s activities to foster compliance

and educating taxpayers about the agency’s enforcement

efforts. Doing so builds confidence in our nation’s tax

system and puts criminals on notice – they will be

prosecuted when they commit crimes.

DURING 2021, IRS:CI hired a record number of

professional staff, raising the ranks to 889 employees,

which is nearly one-third of CI’s workforce. In addition

to traditional hiring, CI continued to capitalize on

excepted hiring, including The Veteran’s Recruitment

Act, Schedule-A, and 30% disability hiring authorities.

Over 100 individuals were hired through these programs

during this fiscal year. Our investigative analysts,

budget analysts, management and program analysts,

administrative officers, secretaries, and technical

professionals are embedded in every facet of CI. Each

professional staff role supports the goals and missions of

the IRS and CI respectively.

The Office of Communication directly supports CI’s

mission by building awareness with internal and external

stakeholders about the agency’s work, and it provides

vital public safety messages about Covid-19-related

scams and IRS impersonation schemes to protect the

public and their financial interests.

The Office continues to expand its efforts in two

important areas – the international arena and social

media. CI’s work has an increasingly global reach

through its partnership with the Joint Chiefs of Global

Tax Enforcement (J5), an international group comprised

of tax organizations from five countries. The J5 combats

tax crime through collaboration, information-sharing,

and enforcement operations. Communication between

participating countries on topics like cryptocurrency, tax

crimes, and financial crimes continues to expand each

year.

CI also maintains the Twitter account, @IRS_CI, to

supplement IRS compliance and enforcement messaging.

This account creates awareness about CI while providing

real-time information on criminal cases to the media and

public. Since its launch in May 2020, CI’s Twitter account

averages over one million impressions per quarter,

generates hundreds of tweets and continues to grow

exponentially.

In September 2021, CI launched its agency account on

LinkedIn. This account, in addition to the J5 LinkedIn

account, serves as a channel for CI to disseminate

information to taxpayers, particularly about recruiting and

job opportunities within the agency. It also provides an

outlet to reach a new population of social media users,

who may not be avid Twitter users, but have a special

interest in CI’s work.

The Office of Communication houses two CI legislative

liaisons. Legislative liaisons serve as conduits for

communicating information to and from Capitol Hill. They

assist with hearing preparation for senior-level officials

and provide Congressional briefings. They analyze,

research and formulate official responses to requests

from House and Senate members and their staff, as well

as oversight committees.

IRS:CI communicators have implemented a comprehensive communications strategy that balances outreach

to the public, federal and legislative communities, and

CI’s global partners, while protecting the sensitive nature

of CI investigations. The Office of Communication’s

efforts serve as an integral part of building understanding

about CI’s work and deterring violations of the U.S. tax

system. u

Our investigative professional staff are critical to

advancing the law enforcement efforts of CI. Professional staff can be found on the front lines of case work

and behind the scenes of every CI activity. Tax fraud

investigative assistants (TFIA) and investigative analysts

(IA) work with special agents in field offices throughout

the country and in our international posts of duty. They

actively participate in all aspects of criminal investigations from inception to prosecution. Additionally, our

non-investigatory professional staff are critical at keeping

CI’s wheels turning by ensuring available finances and

functioning equipment.

In FY 2021, CI provided innovative virtual training

to TFIAs and IAs. This created an opportunity to be

inclusive, as all CI employees were invited to attend the

foundational sessions. Topics included: CI organizational

structure, elements of a crime, badges of fraud, lifecycle

of a criminal investigation, the role of a special agent,

and the role of the investigative analyst. All employees

learned about the mission of Criminal Investigation and

how their position impacts the work we do. IAs and TFIAs

received additional specialized training and participated

in practical exercises encompassing research, case

development, report writing, and case presentations.

Beyond just supporting CI field offices, professional

staff support CI’s essential and innovative work in the

areas of cybercrime, data analytics, finance, technical

operations, cybersecurity, national investigative priorities,

refund fraud, and the crime lab. Data scientists, forensic

scientists, technical specialists, and investigative analysts

are experts in their fields and work across all areas of CI

operations.

The Workforce Development section furthered CI’s

commitment to its workforce by leading a series

on self-development. Hundreds of employees took

advantage of Zoom sessions facilitated by experts in

career and personal development. Key topics included

mental health and suicide awareness, knowledge

retention and information sharing, job interviewing

techniques, and identifying great leadership qualities.

These sessions fostered an environment of inclusion and

the sharing of best practices amongst CI’s administrative,

technical, and investigative personnel.

FY 2021’s continued investment in CI’s Professional Staff

community positively impacted CI’s ability to accomplish

its law enforcement mission and has set a standard for

years to come. u

IRS:CI Annual Report 2021

WORKFORCE DEVELOPMENT

Two special agents review a report as they discuss the

recruiting and development needs necessary to support

organizational changes across CI this year.

WORKFORCE DEVELOPMENT

(WD) was created to address

the development and leadership

needs of IRS:CI’s most important

resource – its employees. WD is

building on the early successes of the

former Leadership, Education, and

Development group by expanding

its reach to all employees. WD now

provides leadership development

training to agents beginning at the

training academy and continuing

through their entire leadership

progression. WD also addresses the

development of investigative and

administrative professional staff

through leadership development and

career pathing for those not aspiring

to a formal leadership position.

Finally, WD is responsible for the

recruiting and retention of a diverse

and highly qualified workforce, which

will ensure CI continues to be the

leader in financial investigations for

the foreseeable future.

EQUITY, DIVERSITY, AND INCLUSION

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 CI’s programs, activities, and

services. EDI works 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.

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.

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 potential.

When field offices need to obtain EEO information, EDI

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. EDI can

also give advice, guidance, and recommendations on EDI

diversity questions, as well as educating employees of

where sources can be obtained and the impact it has on

their job or role in CI. u

IRS:CI Annual Report 2021

OUTREACH & COMMUNITY ENGAGEMENT

ATLANTA FIELD OFFICE: Special agents meet at

a community event in Lake Charles, Louisiana.

CHICAGO FIELD OFFICE: Special

agents (left to right) Chris Klein,

Robert Zehme, Mike D’Andrea,

and Collin Thompson participate

in the US Marshalls Honor Run.

MIAMI FIELD OFFICE: Special agents work closely

with the Puerto Rico Department of Treasury to

improve investigation coordination.

NEW YORK FIELD OFFICE: IRS:CI launched a digital

billboard campaign in Buffalo, New York, asking

for the public’s help in identifying individuals and

organizations who commit financial crimes.

CHARLOTTE FIELD OFFICE:

A special agent wins Top Shot.

MIAMI FIELD OFFICE:

ST. LOUIS FIELD OFFICE: A special agent

talks to a student during a career fair at

the University of Kansas.

Emergency Support Function #13

The Homeland Security

Investigations (HSI)

manager overseeing

the Champlain Towers

investigation recognized

Miami FO Group 40 for

its support in helping

track missing people

from the building

collapse in Surfside,

Florida. Group 40’s

efforts resulted in them

being able to quickly

locate all 40 people and/

or their family members.

IRS:CI’s Emergency Support Function (ESF) #13

provides federal public safety and security assistance to

local, state, tribal, territorial, and federal organizations

overwhelmed by the results of an actual or anticipated

natural/manmade disaster or act of terrorism. IRS:CI

has been supporting the ESF #13 mission since 2018

and currently has a cadre exceeding 100 agents. In

September, IRS:CI deployed 22 ESF special agents to

Louisiana to assist with the aftermath of Hurricane Ida.

IRS-CI’s ESF team was assigned to protected and assist

New York Task Force 1 and Massachusetts Task Force

1 Urban Search and Rescue teams (USAR). The ESF

agents accompanied USAR teams on foot, in the water,

and in boats, providing security and assistance during

the search and rescue efforts.

IRS:CI Annual Report 2021

FIELD OFFICE MAP

Click on a location to go to that Field Office section.

WESTERN AREA

NORTHERN AREA

SEATTLE

DETROIT

BOSTON

CHICAGO

Guam

CINCINNATI

DENVER

NEW YORK

NEWARK

PHILADELPHIA

ST. LOUIS

OAKLAND

LAS VEGAS

LOS ANGELES

WASHINGTON, D.C.

(HEADQUARTERS)

PHOENIX

CHARLOTTE

ATLANTA

Puerto Rico

DALLAS

HOUSTON

TAMPA

U.S. Virgin Islands

MIAMI

* The Las Vegas field office merged into

the Phoenix field office in July 2020.

SOUTHERN AREA

IRS:CI Annual Report 2021

CASE CLOSED:

A SUMMARY OF

SIGNIFICANT CASES

FOR IRS:CI IN 2021

ST. LOUIS FIELD OFFICE: Special Agent Liliana Nin

assembles her gear for a National Night Out with

her local community.

NORTHERN AREA

Multiple Individuals Sentenced in Massive

Contracting Fraud and Money Laundering Scheme

December 7, 2020, John Williams was sentenced to

9 years in prison and was ordered to pay $10 million

in restitution. Williams was convicted of tax evasion,

money laundering conspiracy, money laundering, and

embezzlement by a bank employee. Williams embezzled

over $8.4 million from his employer.

Williams was employed as a construction project

manager in the Indianapolis regional office of a bank. His

responsibilities included overseeing the bank’s internal

real estate projects. Williams used information available

to him as a bank employee to identify construction and

renovation projects that were projected to come in under

budget. Williams then contacted co-conspirators, Ernie

Perkins, Robert Finch, Walter Watson and Donald Landis,

and instructed them to submit fraudulent invoices on

those under-budget projects. The invoices listed work

that was never performed and materials that were never

supplied. Williams then approved the payments of the

fraudulent invoices. Perkins, Finch, Watson, and Landis

kicked back a large percentage of the payments to CB

Consulting, a fictitious business entity controlled by

Williams. Williams did not report his illegal income on his

federal tax returns, which resulted in a tax loss of $1.9

million.

• Ernie Perkins, the owner of Remarkable Creative

Enterprises (“RCE”), was sentenced to nearly 6 years

in prison.

• Robert Finch, the owner of Finch Constructors and

Finch Management, was sentenced to 4 years in

prison.

• Donald Landis, the owner of P&L Supply, was

sentenced to 3 years in prison.

• Walter Watson, the owner of

W-3 construction company,

was sentenced to 1½ years in

prison.

Eight Individuals Sentenced for Laundering $44

Million in Drug Proceeds to Mexico Through Local Cell

Phone Store Fronts

April 9, 2021, Rodrigo Esqueda-Vazquez was sentenced

to 15 years in prison. Esqueda-Vazquez was the final

of eight defendants sentenced in a $44 million money

laundering case. Sentences imposed ranged from 5 to 18

years in prison. From 2013 through September 2019, the

defendants conspired to distribute heroin, fentanyl, and

marijuana and to commit money

laundering. The scheme relied on

the use of small businesses that

purported to be cell phone stores.

The stores conducted little, if

any, legitimate business; rather,

the stores were merely front

businesses for drug traffickers

to send large amounts of drug

trafficking proceeds to Mexico.

Jose Luis Rosales-Ocampo, of

Columbus, Ohio, and his family

members ran the so-called

cell phone stores. The investigation and prosecution of these

defendants removed approxi-

Another co-conspirator, Shalonda

Coleman, was sentenced to 2

years in prison and was ordered

to pay $309,088 in restitution.

Coleman embezzled $282,432

from her employer, an insurance

company, by approving fictitious

invoices submitted by Ernie

Perkins, for payment. Once Perkins

received the fraud proceeds,

he then wrote checks back to

Coleman for her cut. Coleman did

CHICAGO FIELD OFFICE : Assistant Special Agent in

not report her illegal income on

Charge Donald Eakins (right) administers the oath of office

her tax returns.

for Special Agent Matthew Kron on his first day of duty.

CINCINNATI FIELD OFFICE : Special agents

conduct firearms training.

mately 34 kilograms of heroin, 516 grams of cocaine, 76

grams of fentanyl, and 250 pounds of marijuana from

Central Ohio streets. Additionally, investigators seized

$458,500 in U.S. currency and a home valued at nearly

$248,000.

IRS:CI Annual Report 2021

FCA US LLC Pleads Guilty and Former

UAW and FCA Officials Sentenced

March 1, 2021, FCA US LLC (FCA,

a/k/a Fiat Chrysler Automobiles), one

of the big three American automobile

manufacturers, pleaded guilty to

conspiring to violate the Labor

Management Relations Act, also known

as the Taft-Hartley Act, by making illegal

payments to officers of the United Auto

Workers union. FCA is the American

operating subsidiary of Stellantis, and

it is headquartered in Auburn Hills,

Michigan. As part of the plea agreement,

FCA agreed to pay a fine of $30 million

and be subject to federal oversight.

The company conspired with other

entities and individuals to violate the

Taft-Hartley Act by making more than

$3.5 million in illegal payments to

officers of the International Union,

United Automobile, Aerospace, and

Agricultural Implement Workers of

America (UAW) during the years 2009

through 2016. During the conspiracy,

executives of FCA, including Alphons

Iacobelli and Jerome Durden,

engineered the illegal payments

to senior officials of the UAW. The

payments violated federal labor

laws and undermined the collective

bargaining process. As part of the

investigation, senior UAW officials

were also found to have participated

in a multi-year conspiracy to embezzle

money from the UAW for their personal

benefit.

Several of the recent sentencings

include:

July 6, 2021, Vance Pearson, former

Director of the United Auto Worker’s

Region 5 and a former member of the

UAW’s International Executive Board,

was sentenced to one year in prison

and was ordered to pay $250,000 in

restitution to the UAW and to forfeit

$122,258 for conspiring with other UAW

officials to embezzle UAW dues money

and for further racketeering crimes.

WESTERN AREA

Private Equity CEO Enters into

Non-Prosecution Agreement on

International Tax Fraud Scheme

June 10, 2021, Gary Jones, former

President of the international United

Auto Workers union, was sentenced to

more than 2 years in prison and was

ordered to pay $550,000 in restitution

to the UAW, $42,000 in restitution to

the IRS, forfeiture of $151,377, and a

$10,000 fine, for conspiring with other

UAW officials to embezzle UAW funds

and to defraud the United States.

DALLAS FIELD OFFICE: Special

agents conduct building entry

training drills at the Denton Public

Safety Training Center in Denton,

Texas.

May 11, 2021, Dennis Williams, former

President of the international United

Auto Workers union, was sentenced to

nearly 2 years in prison and was ordered

to pay restitution of $132,000 and a

$10,000 fine for conspiring with other

UAW officials to embezzle UAW funds.

January 27, 2021, Edward “Nick”

Robinson, former President of the

United Auto Workers Midwest CAP and

former Director of the UAW Labor and

Employment Training Corporation, was

sentenced to one year in prison and was

directed to pay $342,000 in restitution.

The following other individuals have

already been sentenced for their

participation in the corruption within the

UAW or illegal payments by FCA to UAW

officials: former FCA Vice President for

Employee Relations Alphons Iacobelli (5

½ years in prison), former FCA Financial

Analyst Jerome Durden (more than one

year in prison), former Director of FCA’s

Employee Relations Department Michael

Brown (one year in prison), former

senior UAW official Virdell King (60 days

in prison), Keith Mickens (one year in

prison), Nancy A. Johnson (one year in

prison), Monica Morgan, the widow of

UAW Vice President General Holiefield

(1½ years in prison), former UAW Vice

President Norwood Jewell (more than

one year in prison), former senior UAW

official Michael Grimes (more than 2

years in prison) and former UAW Vice

President Joseph Ashton (2½ years

in prison). Former senior UAW official

Jeffrey “Paycheck” Pietrzyk passed

away before being sentenced.

DENVER FIELD OFFICE : A special

agent conducts firearms training

drills with a shotgun at an outdoor

shooting range.

TAMPA FIELD OFFICE : Special

agents conduct firearms training

drills in an indoor training facility.

October 15, 2020, Robert F. Smith, the

Chairman and Chief Executive Officer

of a San Francisco based private equity

company, entered into a Non-Prosecution Agreement for his involvement

from 2000 through 2015 in an illegal

scheme to conceal income and evade

millions in taxes by using an offshore

trust structure and offshore bank

accounts. In that agreement, Smith

admitted his involvement in the illegal

scheme, agreed to cooperate with the

ongoing investigation, and agreed to pay

back taxes and penalties in full. Smith,

a resident of Austin, Texas, formed the

Excelsior Trust in Belize, and a shell

company, Flash Holdings, in Nevis in

2000, in order to avoid the payment of

U.S. taxes. Smith used third parties to

conceal his beneficial ownership and

control of the Excelsior Trust and Flash

Holdings. In reality, Smith controlled

both offshore structures. Additionally,

over the years, Smith used millions of

unreported income to acquire and make

improvements to real estate used for his

personal benefit. Under the terms of the

agreement, Smith agreed to cooperate

with the Department of Justice in other

related investigations. Further, Smith

agreed to pay approximately $56 million

in taxes and penalties stemming from

the unreported income and another

$82 million in penalties stemming from

his concealment of his offshore bank

accounts. Altogether, Smith will pay

more than $139 million in taxes and

penalties. Additionally, Smith agreed

to abandon his protective claims for

a refund totaling approximately $182

million that were filed with the IRS. The

protective refund claims consisted, in

part, of claims for charitable contribution deductions filed with the IRS

on September 21, 2018 and October

11, 2019. As a result of the agreement,

Smith shall take no further direct or

indirect tax benefit from such claims.

Political Donor Sentenced to 12 Years

in Prison for Lobbying and Campaign

Contribution Crimes, Tax Evasion,

and Obstruction of Justice

February 18, 2021, Imaad Shah Zuberi,

of Arcadia, California, was sentenced

to 12 years in prison and was ordered

to pay $15 million in restitution and

a criminal fine of $1.75 million. In

November 2019, Zuberi pleaded

guilty to violating the Foreign Agents

Registration Act (FARA) by making false

statements on a FARA filing, tax evasion,

and making illegal campaign contributions. In June 2020, Zuberi pleaded

guilty in a separate case to obstruction

of justice. His sentence pertains to both

cases.

Zuberi, a venture capitalist and political

fundraiser, falsified records to conceal

his work as a foreign agent, while

lobbying high-level U.S. government

officials. Zuberi became wealthy, largely

through his theft of client funds and

unlawful lobbying on behalf of foreign

interests. Zuberi also siphoned more

than 90 percent of investments in U.S.

Cares, a company set up to export

humanitarian aid to Iran. In 2013 and

2014, investors deposited approximately $7 million into U.S. Cares. In

addition, the government of Sri Lanka

contracted with Zuberi to rehabilitate

the country’s image in the United States.

Sri Lanka wired $6.5 million to Zuberi,

and Zuberi used more than $5.65

million of that money to the benefit of

himself and his wife. Zuberi failed to

report these funds on his tax return.

Zuberi’s tax evasion over the course

of four years – 2012 through 2015 –

caused tax losses ranging from $3.5

million to as much as $9.5 million.

IRS:CI Annual Report 2021

DETROIT FIELD OFFICE:

A special agent climbs

over barn rafters to

locate records while

conducting a search

warrant.

PHOENIX FIELD OFFICE: Special agents conduct

NEW YORK FIELD OFFICE: Special Agent Michele

entry training to safely clear rooms and buildings.

McCormick receives recognition for 20 years of

service with the federal government.

SOUTHERN AREA

Two Members of Racketeering Enterprise Sentenced

October 13, 2020, Marcus Etienne, aka “Hitler,” and

Mario Robinson were sentenced to 34 and 32 years in

prison, respectively, for their roles in a wide-ranging

criminal conspiracy. Etienne, of St. Martin Parish,

Louisiana, and Robinson, of Opelousas, Louisiana, and

Oakland, California, were involved in an enterprise

based in St. Martin Parish consisting of more than seven

members who conducted a continuing and extensive

narcotics distribution conspiracy. Etienne was the leader

of the enterprise, which began as early as 2009. The

enterprise engaged in narcotics distribution, assault,

robbery, extortion, extortionate collection of extensions

of credit, murder for hire, murder, money laundering,

illegal firearms possession, gambling on dogfighting, and

obstruction of justice. Etienne and Robinson both had a

OAKLAND FIELD OFFICE: Special agents and

professional staff participate in building entry,

active shooter, and weaponless tactics at the

Tactical Village in Sacramento, Calif.

role in the 2016 murder of another enterprise member,

Trince Thibodeaux. Etienne and Robinson participated

in additional activities to promote the enterprise. The

enterprise purchased marijuana in California and shipped

the drugs to Louisiana and Texas. Robinson received

packages containing between one and 10 pounds of

marijuana every one or two months. Robinson and

Etienne used cash proceeds from the narcotics trafficking

to purchase marijuana and other controlled substances

in California. Robinson also purchased money orders in

Louisiana to pay the enterprise’s marijuana suppliers in

California. Both Etienne and Robinson conducted financial

transactions with proceeds of narcotics trafficking

to conceal the nature, source, and ownership of the

enterprise’s profits.

LOS ANGELES FIELD OFFICE: Assistant Special Agent

in Charge Darren Lian discusses recent tax scams

with KAZN AM1300 radio, which serves Mandarin

speakers in California.

Conspirators Sentenced in Connection with Consumer

Fraud Schemes

July 15, 2021, Lori Owen, aka Lori Corrigan, was

sentenced to more than 5 years in prison and was

ordered to pay $620,103 in restitution to the identified

victims and a $265,964 money judgment, which

represented the proceeds of the fraud. Owen participated

in a telemarketing scam—primarily tax impersonation

fraud—that operated from approximately December

2014 through the end of 2016, and which defrauded

more than $1.38 million from victims around the United

States. The conspirators, some of whom were located

overseas, extorted money from victims by falsely

representing to the victims that they had financial

obligations to the IRS, Canadian tax authorities, or other

entities. The conspirators then threatened the victims

with arrest, prosecution, or other legal consequences

for their purported debts and demanded that they pay

the conspirators the “owed” money. Owen worked with

others—including her ex-husband, David Owen, and her

son, Andrew Corrigan—to collect the fraud proceeds on

behalf of the overseas call centers. The conspirators

monitored the victims’ payments to ensure that the

payments were recovered quickly, before any victim or

law enforcement officer could become aware of the fraud

and attempt to stop the transaction. David Owen was

sentenced to more than 10 years in prison, and Andrew

Corrigan was sentenced to 10 years in prison.

Key Drug Suppliers for the Irish Mob Sentenced

March 31, 2021, Jorge Antonio Medina Escarsiga was

sentenced to 32 years in prison. Escarsiga was a leader

of a drug trafficking and money laundering organization

that operated out of the Oklahoma State Prison (OSP)

system. The organization distributed significant quantities

of methamphetamine throughout the country, much

of which was destined for Oklahoma. The methamphetamine originated with Escarsiga and was shipped

from California to Kansas for transport to, and distribution

in, Oklahoma City and elsewhere. Co-conspirators, who

were incarcerated at the OSP in McAlester, Oklahoma,

directed the wire transfer of drug proceeds to Andrew

Pranger, an OSP prison guard. The wire transfers were

conducted by Edmundo Perez and Makenzie Harris.

Pranger was paid for smuggling contraband into the

prison and for providing unlawful services to inmates

within the prison, including the transfer of contraband

between cells. This type of illegal service allowed Irish

Mob members to continue to run their illicit drug activities

while incarcerated.

The remaining Operation Irish Spring defendants were

sentenced as follows:

• Johnny Ross, almost 27 years in prison

• Michael Sanders, 16 years in prison

• Edmundo Perez, 13 years in prison

• Richard Lee Potts, 13 years in prison

• Andrew Pranger, 1½ years in prison

• Alyxsis Claussen, one year in prison

• Makenzie Harris, one year in prison

• Kenesha Moaning, one year in prison

• Chelsea Rouse, 10 years in prison

• Joy Robison, 5 years of probation

IRS:CI Annual Report 2021

Pennsylvania Biofuel Company and

Owners Sentenced on Environmental

and Tax Crime Convictions Arising

out of Renewable Fuels Fraud

October 20, 2020, Ben Wootton, of

Savannah, Georgia, was sentenced to

nearly 6 years in prison, and Race Miner,

of Marco Island, Florida, was sentenced to

5½ years in prison. Both men were ordered

to pay restitution of more than $4 million

to the IRS and more than $5 million to the

Pennsylvania Department of Environmental

Protection. Their company, Keystone Biofuels

Inc., (originally located in Shiremanstown,

Pennsylvania, and later in Camp Hill,

Pennsylvania) was sentenced to five years

of probation and ordered to pay restitution

of more than $4 million to the IRS and

more than $5 million to the Pennsylvania

Department of Environment Protection.

Miner was the founder and chief executive

officer of Keystone. Wootton was president

of Keystone and a former member of the

National Biodiesel Board. Wootton, Miner,

and Keystone falsely represented that they

were able to produce a fuel meeting the

requirements set by the American Society for

Testing and Materials (ASTM) for biodiesel (a

renewable fuel) and adopted by the EPA, and

as such, were entitled to create renewable

fuel credits, known as RINs, based on each

gallon of renewable fuel produced. The fuel

and the RINs have financial value and could

be sold and purchased by participants within

the federal renewable fuels commercial

system.

Wootton and Miner were also convicted of

fraudulently claiming federal tax refunds

based on IRS’s Biofuel Mixture Credit.

The Biodiesel Mixture Credit is a type of

“blender’s credit” for persons or businesses

who mix biodiesel with diesel fuel and use

or sell the mixture as a fuel. Wootton and

Miner caused Keystone to fraudulently claim

tax refunds based on non-qualifying fuel,

and, in at least some instances, non-existent

or non-mixed fuel. In an attempt to hide

their fraud scheme, the men created false

corporate books and records and sham

financial transactions to account for the

nonexistent and non-qualifying fuel and to

create the appearance of legitimacy.

The prosecution of Wootton, Miner and

Keystone is the first prosecution of a case

under the federal renewable fuels program

based on fuel that did not meet the program

renewable fuel quality standards.

NEWARK FIELD OFFICE: Special agents conduct fire arms

training.

WASHINGTON D.C. FIELD OFFICE: Special agents seize a Tesla vehicle during

a Paycheck Protection Program loan fraud investigation.

HOUSTON FIELD OFFICE: Special Agent

Sonia Hurtado (left) attends an outreach

and recruiting event at The University of

Texas Rio Grande Valley.

MIAMI FIELD OFFICE: Supervisory Special Agent John Siddons

announces indictments against the Los 27 gang during a

multiagency news conference in San Juan, Puerto Rico.

BOSTON FIELD OFFICE: Special Agent in Charge Joleen

Simpson announces indictments for embezzlement and

wire fraud during a press conference.

ATLANTA FIELD OFFICE: Special agents clear fallen trees

during cleanup operations following Hurricane Ida.

SEATTLE FIELD OFFICE: Special agents maintain and

improve their skills at a firearms range.

IRS:CI Annual Report 2021

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.

NEW ORLEANS, LA

OXFORD, MS

SAVANNAH, GA

SHREVEPORT, LA

Compounding Pharmacy Mogul Sentenced for

Multimillion-Dollar Health Care Fraud Scheme

January 15, 2021, Wade Ashely Walters, of Hattiesburg,

Mississippi, was sentenced to 18 years in prison and was

ordered to pay more than $287 million in restitution and

forfeit more than $56 million. Walters was a co-owner

of numerous compounding pharmacies and pharmaceutical distributors. Between 2012 and 2016, Walters

orchestrated a scheme to defraud TRICARE, the health

care benefit program serving U.S. military, veterans,

and their respective family members, as well as private

health care benefit programs. As part of the scheme,

Walters distributed compounded medications that were

not medically necessary. Additionally, Walters conspired

with others to launder the proceeds of his fraud scheme

by engaging in monetary transactions in amounts over

$10,000 in proceeds from the fraud scheme, including

transactions relating to his participation in a sham

intellectual property scheme.

Clinton Pharmacist Sentenced for Conspiracy to

Commit Health Care Fraud

February 2, 2021, Marco Bisa Hawkins Moran, of Clinton,

Mississippi, was sentenced to 10 years in prison for

conspiring to commit health care fraud. Moran was also

ordered to pay a monetary judgment exceeding $12

million, restitution exceeding $22 million, and a $20,000

fine. Between 2014 and 2016, Moran, as co-owner of

Medworx Compounding and Custom Care Pharmacy,

participated in a scheme to defraud TRICARE and other

health care benefit programs, including those that

provided coverage to employees of the city of Jackson,

Mississippi. In total, the pharmacies submitted more than

$22 million in fraudulent claims to TRICARE and other

health care benefit programs.

Alabama Salesman Sentenced for Tax Evasion - Used

Offshore Insurance Wrappers and Precious Metals to

Hide Assets from the IRS

October 27, 2020, Ivan Scott “Scott” Butler, of Hoover,

Alabama, was sentenced to 2 years in prison for tax

evasion. Butler was also ordered to pay more than $1

million in restitution to the United States. Butler was an

automobile industry consultant and sold automobile

warranties as an independent salesman. In 1993, Butler

stopped filing tax returns, attended tax defier meetings,

and purchased tax defier materials. Starting in 1998,

Butler used several Nevada nominee corporations to

receive his income and to conceal the income from

the IRS. In or around 1999, Butler moved hundreds of

thousands of dollars to bank accounts in Switzerland and

hid his assets in offshore insurance policies, which were

held in the name of non-U.S. insurance providers, thus

disguising his ownership of the funds. Such accounts,

which generally are used as investment vehicles, are

commonly known as “insurance wrappers.” In 2014,

Butler converted some of his insurance wrappers into

precious metals, which were shipped to Butler and

another individual in the United States. In total, Butler

caused a tax loss to the IRS exceeding $1 million.

Drug-trafficking Pimp Sentenced in Commercial Sex

Conspiracy

May 28, 2021, Anthony Wilson Jackson, of Savannah,

Georgia, was sentenced to more than 30 years in prison.

Jackson previously pleaded guilty to conspiracy to

possess with intent to distribute marijuana, conspiracy

to engage in interstate travel or transportation in aid of

a racketeering business (prostitution), possession of a

machine gun, possession of a machine gun in furtherance

of a drug trafficking crime, possession of a firearm by

a convicted felon, and money laundering conspiracy.

Jackson was the leader of a conspiracy that operated a

commercial sex trafficking business across the country,

and he shipped and distributed large amounts of

marijuana in the Savannah area. Authorities seized drugs

and drug trafficking paraphernalia, multiple firearms and

ammunition, and more than $7,000 in cash. Jackson

threatened to murder women whom he trafficked for sex,

he forced women to bow and pray to him, and he beat his

child so severely with a belt that the child urinated and

defecated on himself. Jackson previously served prison

time for drug trafficking, and while incarcerated he was

punished for engaging in multiple assaults, including one

in which another inmate was seriously injured.

Louisiana Man Sentenced for Embezzling Over $7

Million and Filing False Tax Returns

February 9, 2021, Deepak “Jack” Jagtiani, was sentenced

to more than 5 years in prison. Jagtiani was ordered to

pay more than $7 million in restitution to Dan-Gulf and its

business partner, Caytrans BBC, LLC. Jagtiani was also

ordered to pay more than $1.2 million in restitution to the

IRS for unpaid taxes. From 2007 through 2019, Jagtiani

worked as the comptroller for Dan-Gulf Shipping, Inc.

During that time, Jagtiani paid himself excessive salaries

and benefits. To disguise his scheme, Jagtiani set up a

fake catering business to write off bogus losses. In total,

he claimed enough business losses to offset most of his

income. In truth, neither Jagtiani nor his spouse operated

any catering business. In total, Jagtiani avoided paying

more than $1.2 million in federal income taxes.

IRS:CI Annual Report 2021

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.

Massachusetts Man Sentenced for Aiding Romance

and Lottery Schemes Targeting Elderly

April 13, 2021, Austin Nedved was sentenced to more

than 8 years in prison and was ordered to pay restitution

of $569,750. In December 2020, Nedved ran a business

in which he bought and sold digital currencies, including

bitcoin, for cash. From at least 2017 through 2019,

Nedved aided and abetted romance and lottery schemes

targeting elderly victims. In romance schemes, fraudsters

convince victims to send money abroad to purported love

interests, while in lottery schemes fraudsters convince

victims that they can obtain lottery winnings or sizeable

government grants by forwarding cash for administrative

fees or expenses. Despite knowing or being willfully blind

to the fact that his customers were fraud victims, Nedved

sold bitcoin to them, so they could send money overseas

to the fraudsters. In total, Nedved and his co-conspirators

converted more than $630,000 of fraud and other

criminal proceeds to bitcoin. They then either returned

the bitcoin to the victims of the fraud or forwarded it to

unidentified third parties.

Former Owner of Seafood Processing Plant Sentenced

for Tax Evasion; Sought to Obstruct IRS Collection

Efforts for 10 Years

January 8, 2021, Billie R. Schofield was sentenced to

3 years in prison. Schofield was also ordered to pay

$364,200 in restitution to the IRS and a $5,000 fine. For

more than 10 years, Schofield attempted to evade his

federal income taxes. Schofield partly owned and worked

for Northern Pelagic LLC, a seafood processing business

located in New Bedford, Massachusetts. Despite earning

hundreds of thousands of dollars in income, Schofield

failed to pay taxes owed. Beginning in 2009, he stopped

filing income tax returns. Between 2008 and 2018,

Schofield obstructed IRS efforts to assess and collect

his taxes by filing fraudulent forms, advancing frivolous

tax arguments, creating and using a nominee entity and

bank account, negotiating income checks to cash, and

creating and submitting fraudulent checks to the IRS,

in an attempt to extinguish his tax liabilities. Including

penalties and interest, Schofield caused a tax loss of

more than $350,000 to the United States.

Connecticut Nursing Home Operator Sentenced for

Embezzlement and Tax Offenses

April 20, 2021, Chaim Stern was sentenced to 2½ years

in prison. Stern was also ordered to pay approximately

$2.4 million in restitution to the IRS. Stern was the

principal operator of the Bridgeport Health Care Center

(“BHCC”), Bridgeport Manor, and the Rosegarden

Health and Rehabilitation Center LLC (“Rosegarden”)

in Waterbury, Connecticut, which were privately owned

nursing and rehabilitation facilities. Between approximately 2011 and 2018, Stern stole approximately $4.1

million from the BHCC Pension Plan, over which he

was the trustee. Also, in approximately February 2015,

Stern misapplied $305,608 from BHCC Health Plan.

Additionally, Stern failed to pay millions of dollars in other

health insurance claims that he was obliged to pay on

behalf of his employees, which resulted in debt collection

action against employees by the health care providers.

Finally, from at least January 2017 through March 2018,

Stern failed to and caused BHCC and Rosegarden to fail to

pay over withheld employment taxes. Stern also failed to

pay the employers’ share of the employment taxes. The

total tax loss resulting from Stern’s conduct exceeded $4

million.

Massachusetts Painting Business Owner Sentenced

for $2 Million Income & Payroll Tax Fraud Scheme

May 12, 2021, Durvan C. Lewis, of Nantucket,

Massachusetts, was sentenced to 2 years in prison.

Lewis was also ordered to pay more than $2 million in

restitution to the IRS and a fine of $10,000. Lewis owned

and operated a commercial and residential painting

business known as DCL Painting. From 2014 through

2017, Lewis diverted over $1.5 million of DCL Painting’s

gross receipts to his personal bank account and failed

to report the diverted receipts to his tax preparer. In

addition, from 2012 through September 2019, Lewis paid

over $5 million in wages to DCL Painting’s employees in

cash “under the table.” Lewis failed to report and pay

over to the IRS the employment taxes owed on the cash

wages. In total, Lewis caused a loss to the IRS exceeding

$2 million.

New Hampshire Man Sentenced for Facilitating

Employment Tax Fraud

April 14, 2021, Walter Rodriguez, of Manchester, New

Hampshire, was sentenced to 1½ years in prison.

Rodriguez was also ordered to pay approximately

$416,163 in restitution to the United States. From 2011

to 2013, Rodriguez aided and abetted several drywall

companies that were evading the payment of employment

taxes. Rodriguez found workers for the companies for

construction jobs. The companies then issued checks

in the names of fictitious or fraudulent identities and

provided those checks to Rodriguez. Rodriguez converted

the checks to cash at local check-cashing businesses

and paid the workers off-the-books. In total, Rodriguez

enabled the payment of $1.7 million in unreported wages,

which caused a tax loss of $416,000.

IRS:CI Annual Report 2021

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.

South Carolina Man Sentenced for Narcotics

Conspiracy

Owner of North Carolina Temporary Staffing Firms

Sentenced for Employment Tax Fraud

October 23, 2020, Jermaine Tyrone Southall, aka “Big

Dog,” aka “Cuzzo,” aka “Big Man,” was sentenced to 27

years in prison. Southall was a participant in a violent

narcotics distribution organization that operated in and

around Columbia, South Carolina. Southall conspired

to possess and distribute heroin. This investigation was

part of a collaborative federal and state effort, which

culminated in several arrests and significant seizures.

October 6, 2020, Rebecca Adams was sentenced to

3½ years in prison and was ordered to pay more than

$2 million in restitution. Adams and her daughter,

Elizabeth Wood, operated temporary staffing businesses

in Greensboro, North Carolina, under the names A & R

Staffing Solutions Inc., Wood Executive Services Inc.,

and Adams Staffing Enterprises Inc. Adams and Wood

withheld federal and state taxes from employees’

paychecks, but they did not pay those taxes to the

IRS. In 2015, Wood pleaded guilty to embezzling

employee tax withholdings that were due to the state

and was sentenced to prison. During Wood’s period

of incarceration for the state payroll tax fraud, Adams

continued to withhold taxes from employees’ paychecks,

but she did not pay those taxes over to the IRS. Adams

also did not file a required quarterly payroll tax return

with the IRS. On June 25, 2020, Wood was sentenced

to 1½ years in prison for failing to pay over federal

employment taxes and was ordered to pay approximately

$2,338,766 in restitution to the IRS.

Tennessee Realtor Sentenced for Ponzi Scheme

April 23, 2021, Tammy Lynn Hawk, of Bristol, Tennessee,

was sentenced to 10 years in prison. Hawk was also

ordered to pay restitution of $658,838 to victims and

$71,062 in unpaid taxes to the United States. Hawk

was a well-established real estate agent. Despite the

success she enjoyed as a realtor, she ultimately used her

knowledge, skills, and clientele to devise and operate

a Ponzi-type scheme. Under her scheme, she notified

victim clients of large profits to be made with quick-flip

properties, she took cash from the victims, and she

repaid earlier victims with funds she swindled from

subsequent victims. Hawk defrauded at least 24 people.

By the time her scheme was discovered, 12 victims

remained unpaid and had lost over $500,000. Hawk

took extensive steps to hide and conceal her scheme,

including making false statements, creating sham real

estate contracts, using electronic signing services, and

forgery. Hawk also failed to disclose these matters in

connection with a filed bankruptcy case. Hawk used

proceeds from her offenses to repay earlier victims and to

fund her own lifestyle.

North Carolina Return Preparer Sentenced for

Multi-Year Tax Fraud Scheme

February 8, 2021, Adrienne Williams, of Rocky Mount,

North Carolina, was sentenced to more than 4 years in

prison and was ordered to pay more than $4 million in

restitution to the IRS. Between 2009 and 2017, Williams

owned and operated the return preparation business

Ultimate Tax Service. During that time period, Williams,

and at least two of her employees, prepared false tax

returns for clients. In all, Williams and her co-conspirators sought to defraud the IRS of more than $3.5

million.

North Carolina Woman Sentenced for Conspiring to

Steal Millions From Medicaid

October 20, 2020, Ameera Ali, of Columbus, Ohio, was

sentenced to 7 years in prison for her role in a Medicaid

fraud scheme. Ali filed fraudulent reimbursement claims

with Medicaid on behalf of companies owned and

operated by her co-conspirators. From June 2015 to

December 2017, the leader of the scheme, Jerry Taylor,

and his brother, Tony Taylor, orchestrated a scheme to

defraud Medicaid of more than $9.4 million by submitting

false and fraudulent reimbursement claims for patient

services that were either non-existent or mischaracterized to Medicaid. The brothers submitted the

fraudulent claims through several companies they owned

and/or operated. These entities specialized in providing

outpatient behavioral health services to at-risk youth

throughout North Carolina. Jerry Taylor, of Wingate, North

Carolina, was previously sentenced to 5 years in prison

and was ordered to pay restitution of more than $6.1

million to North Carolina Medicaid and $346,000 to the

IRS. Tony Taylor, of Brooklyn, New York, was sentenced

to 8 years in prison and was ordered to pay restitution

of more than $6 million to North Carolina Medicaid and

more than $1.1 million to the IRS.

IRS:CI Annual Report 2021

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

ROCHESTER, MN

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 in the states of Illinois, Indiana, Minnesota, and Wisconsin

within 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. Our financial investigations span industries and directly

benefit the communities in our region. Tax fraud is our priority, but we also

work closely with our partners to

investigate major financial fraud such

as money laundering from narcotics

trafficking and Covid-19 fraud. The field

office has exceptional partnerships,

both internally working with our civil

counterparts, and externally with

other federal, state, and local law

enforcement agencies.

ROCKFORD, IL

SCHILLER PARK, IL

SOUTH BEND, IN

SPRINGFIELD, IL

Check Cashing Business Owner Sentenced for Role in

Tax Fraud Scheme

October 1, 2020, Marcos Alvarez was sentenced to 2

years in prison and was ordered to pay more than $54

million in restitution to the IRS. Alvarez owned El Punto,

a check cashing service. Alvarez cashed U.S. Treasury

checks for others who participated in a tax fraud scheme.

Alvarez admitted that the scheme entailed obtaining

personal identifying documents from individuals in

Mexico, fraudulently applying for individual tax identification numbers (ITINs) in the names of those Mexican

citizens, and then filing fraudulent tax returns using those

ITINs . Alvarez maintained a record-keeping system

that documented each fraudulently obtained check he

cashed. In total, Alvarez cashed more than $54 million in

fraudulently obtained U.S. Treasury refund checks.

counts of failure to file federal income tax returns. Gupta

was an attorney in Schererville, Indiana, who specialized

in personal injury law. Gupta practiced law through Ray

Gupta and Associates LLC, a limited liability company

that he owned and controlled. From 2007 through 2018,

Raymond Gupta had a legal duty to timely file a federal

tax return, but he failed to so for each year. By the end of

tax year 2018, Gupta owed the IRS nearly $2 million in

taxes, penalties, and interest. The IRS sent Gupta more

than 40 forms, notices, and letters directing him to file

tax returns and pay the balance of taxes, penalties, and

interest owed. Gupta did not voluntarily pay any money to

reduce his IRS debt. The IRS issued levies with financial

institutions holding Raymond Gupta’s funds and seized

some funds. To avoid paying his taxes, Gupta kept large

sums of money outside the banking system and took

other actions to evade the IRS.

Chinese National Sentenced for Laundering Drug

Proceeds on Behalf of Traffickers in Mexico

Illinois Man Sentenced for Illegal Sports Bookmaking

and Tax Offenses

April 27, 2021, Xainbing Gan, a Chinese national, was

sentenced to 14 years in prison for laundering illegal

narcotics proceeds on behalf of drug traffickers in

Mexico. Gan schemed to have approximately $534,206 in

narcotics proceeds picked up in Chicago and transferred

to various bank accounts in China. The money was

ultimately intended for drug traffickers in Mexico.

Gan facilitated the money transfers while residing in

Guadalajara, Mexico.

November 30, 2020, Dominic Poeta, of Highland Park,

Illinois, was sentenced to one year in prison for operating

an illegal sports bookmaking business and filing false

income tax returns. Poeta unlawfully operated a business

that provided sports betting and wagering services, both

domestically and abroad. From 2012 to 2017, Poeta

obtained more than $3.7 million from the operation of his

bookmaking business. Poeta failed to report this income

on the federal and state tax returns he filed for each of

those years, which resulted in a federal and state tax loss

of approximately $1.4 million.

Lawyer Sentenced on Tax Evasion Charges

January 22, 2021, Raymond Gupta was sentenced to

2 years in prison. Gupta was also ordered to pay $1.7

million in restitution and a fine of $15,000. In July 2020,

Gupta pleaded guilty to one count of tax evasion and six

Multiple Individuals Sentenced in Massive

Contracting Fraud and Money Laundering Scheme

(see page 22)

IRS:CI Annual Report 2021

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.

Woman Sentenced for Embezzlement, Identity Theft,

and Tax Fraud

by intentionally failing to report the income from her

fraudulent scheme. The total tax loss was $315,677.

October 26, 2020, Candi Fluhr was sentenced to

nearly 8 years in prison. Fluhr was also ordered to pay

$838,804 in restitution to four victims. Fluhr previously

pleaded guilty to four counts of wire fraud, one count

of aggravated identity theft, one count of theft from an

employee benefit plan, and two counts of filing a false tax

return. As an employee of Meyer Plumbing, Fluhr engaged

in a nearly 2-year scheme to steal over $630,000 from

the company and its employees’ 401(k) plan. After her

embezzlement was discovered and she was fired from

Meyer Plumbing, Fluhr was hired at JLM Services (“JLM”)

in mid-2019. As office manager at JLM, Fluhr had access

to the company’s financial information and she quickly

began to steal again, in much the same manner as she

did at Meyer Plumbing. In total, Fluhr stole $39,749 from

JLM before her scheme was detected. During her time

between work at Meyer Plumbing and JLM, Fluhr created

and presented multiple fraudulent checks to PLS Check

Cashing. One of those checks ultimately resulted in a

loss in excess of $7,741.84 to PLS Check Cashing. Finally,

Fluhr filed false tax returns in 2016 and 2017 by failing

to report a total of $649,044 in embezzled funds, which

caused a total criminal tax loss of $158,270.

Conspirators Sentenced for Operating Illegal

Gambling Operation and Evading Taxes

Kentucky Woman Sentenced for Money Laundering

and Filing False Tax Return

October 1, 2020, Lesley Wade was sentenced to 5 years

in prison. Wade was a long-time employee of the Franklin

County Board of Education (FCBOE), most recently

serving as the FCBOE’s Financial Director. Starting in

February 2011 through about June 2019, Wade wrote

unauthorized checks of FCBOE money to herself, and

then she falsified the necessary FCBOE records and

invoices to cover up her crimes. Wade also served as

Treasurer of Leestown Gospel Church in Frankfort, where

she essentially had plenary control over its financial

management, with little oversight or internal controls.

Wade used her control over the church’s finances to

launder money she had stolen from the FCBOE. She used

the church’s account to deposit funds from the FCBOE

and then wrote checks to herself, in an effort to avoid

detection by making the checks appear legitimate. Her

theft of funds resulted in the FCBOE losing more than

$1.6 million. Wade also willfully filed false individual

income tax returns for the years 2011 through 2018,

December 18, 2020, Clinton Reider was sentenced to 2

years in prison. Reider was also ordered to pay restitution

of $230,714 to the IRS and to forfeit $550,000 to the

U.S. Treasury. Reider was convicted of tax evasion

and conspiracy related to an illegal gambling scheme.

Between 2010 and 2019, Reider operated a bookmaking

operation that used offshore websites in Costa Rica

to control and track bets. Reider collected cash from

customers to settle accounts. He also utilized a network

of co-conspirator bookmakers, including former MLB

Cleveland Indians player Trevor Crowe, to act as

sub-agents to collect funds from customers and remit

a portion of their losses to Reider. Reider funneled the

proceeds from the bookmaking ring into the purchase

and renovations of a lakefront property. On December

22, 2020, Trevor Crowe was sentenced related to his

role in the ring. He was sentenced to 3 years of probation

for filing a fraudulent tax return and was ordered to pay

$85,043 in restitution to the IRS.

Georgia Man Sentenced for Tax Fraud

June 7, 2021, Darryl Brown, of Atlanta, Georgia, was

sentenced to nearly 5 years in prison. Brown was also

ordered to pay restitution of $377,240 to the IRS. From

at least 2011 to 2016, Darryl Brown earned at least

$1 million from his business. However, to evade paying

taxes on this income, Brown did not file tax returns and

took steps to conceal his income. He created nominee

businesses, opened bank accounts and lines of credit

in the names of those businesses, and then used the

accounts to pay for his luxury lifestyle. Brown used cash

to purchase money orders in structured amounts to avoid

triggering reporting requirements to the Department of

Treasury and the IRS. Brown then used the money orders

to pay off the balances on his nominee accounts. In total,

Brown caused a tax loss of more than $250,000.

8 Individuals Sentenced for Laundering $44 Million

in Drug Proceeds to Mexico Through Local Cell Phone

Store Fronts

(see page 22)

IRS:CI Annual Report 2021

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).

Arkansas Businessman Sentenced for Evading $1.3

Million in Income Tax

April 6, 2021, James Brassart, of Bentonville, Arkansas,

was sentenced to 3 years in prison and was ordered

to pay more than $1.3 million in restitution to the IRS.

Brassart filed a 2006 individual income tax return that

reported adjusted gross income exceeding $1.5 million

and taxes due to the IRS of $486,438. Brassart failed

to pay the taxes owed and was assessed penalties

and interest. To evade his tax liabilities, Brassart took

extensive steps to conceal his income and assets. He

used three nominee corporations to conduct business

and purchase assets. Moreover, between 2010 and 2016,

Brassart filed four false bankruptcy petitions to discharge

his tax debt. In those bankruptcies, Brassart made false

statements and filed fraudulent documents. Through his

actions, Brassart caused a total tax loss of approximately

$1.3 million to the IRS.

Former Bank Employee Sentenced for $2.3 Million

Embezzlement and False Federal Income Tax Return

August 3, 2021, Jordan Glen Young, of Oklahoma City,

was sentenced to 2½ years in prison. Young was ordered

to pay $2.3 million in restitution to his former employer,

a trust bank, and $500,822 in restitution to the IRS.

Young worked at an Oklahoma City trust bank as a trust

administrative officer. Young oversaw trust accounts and

distributed funds from those accounts to the beneficiaries, as needed. From December 2015 through March

2020, Young embezzled funds from his former employer

causing a total loss to the trust bank of $2 million. Young

also pleaded guilty to signing a false federal income tax

return. Young failed to report the thousands of dollars of

embezzled income from the trust bank.

14 Defendants Sentenced to 74+ Years in Forest Park

Healthcare Fraud

By March 19, 2021, fourteen defendants had been

sentenced for their participation in the Forest Park

Medical Center bribery scam. Together, the defendants

were sentenced to a combined 74+ years in prison

and were ordered to pay a total of $82.9 million in

restitution. The $200 million scheme was designed to

induce doctors to steer lucrative patients – particularly

those with high-reimbursing, out-of-network private

insurance – to the now defunct hospital. Doctors were

paid a kickback for sending patients to Forest Park. Most

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

were disguised as consulting fees or “marketing money”

and were determined by the percentage of surgeries each

doctor referred to Forest Park. Instead of billing patients

for out-of-network co-payments, Forest Park assured

patients they would pay in-network prices and wrote off

the difference as uncollected “bad debt.” In addition

to the $82.9 million restitution, the government plans

to collect more than $25.5 million in money judgments

against those convicted in the scheme.

Dallas Tax Preparer Sentenced, Ordered to Pay $11.9

Million for Filing Fraudulent Tax Returns

February 26, 2021, Alma Jean Gilbert, was sentenced to

3½ years in prison and was ordered to pay $11.9 million

in restitution. Gilbert owned and operated a tax practice,

In Touch Tax Solutions. Gilbert hired employees to

prepare and file tax returns on behalf of clients. Between

2012 and 2017, Gilbert knowingly prepared and caused

to be filed hundreds of fraudulent tax returns for clients.

The fraudulent returns contained materially false credits

and deductions for the purpose of increasing the refunds

to the clients.

Tax Preparer Sentenced for Preparing False Returns;

Ordered to Pay $14 Million in Restitution

April 20, 2021, Steven Jalloul was sentenced to 6 years

in prison and was ordered to pay $14 million in restitution

for preparing false tax returns. Jalloul prepared and

submitted false income tax returns to the IRS on behalf

of the clients of his business, Royalty Tax and Financial

Services LLC. Jalloul added false or inflated education

expenses to client tax returns to make them eligible for

larger American Opportunity education credits. He also

added false or inflated business income or losses to client

tax returns to maximize the Earned Income Credit.

Key Drug Suppliers for the Irish Mob Sentenced

(see page 24)

IRS:CI Annual Report 2021

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.

Former FBI Employee Sentenced for Receiving Bribes

and Tax Fraud

April 7, 2021, former FBI official James Heslep, of

Gainesville, Virginia, was sentenced to more than

3 years in prison for receiving a bribe by a public

official and filing a false federal income tax return.

Heslep was also ordered to forfeit $128,128 and pay

$15,353 in restitution to the IRS. As a management

and program analyst, Heslep was responsible for

managing construction and services contracts across

the country. Heslep abused his FBI position by receiving

illegal payments and other items from a construction

management company overseeing the construction of an

FBI data center in southeastern Idaho. Heslep received

$120,000 in illegal payments, which he used to pay

for personal expenses, vacations, and jewelry. He also

received tickets for travel and sporting events, among

other items of value. Heslep failed to report these items

on his tax return.

Idaho Falls Man Sentenced for Knowingly and

Fraudulently Concealing Assets in a Bankruptcy

Proceeding

December 22, 2020, Andrew Welch, of Idaho

Falls, Idaho, was sentenced to 5 years in prison for

concealment of assets. Welch was also ordered to pay

a $25,000 fine and to forfeit $25,000. Welch, a former

pharmacist in Ketchum, Idaho, filed a voluntary Chapter 7

bankruptcy petition on April 3, 2014, after the Idaho State

Board of Pharmacy revoked his pharmacist license. In

the bankruptcy petition, signed under penalty of perjury,

Welch fraudulently listed significant debts and almost

no assets. However, Welch had an interest in significant

unreported assets, which he had placed under the control

of close confidants. Welch knowingly and fraudulently

failed to disclose more than $250,000 in cash and

securities held in an investment account in the name of

another individual. Welch also knowingly and fraudulently

failed to disclose his purchase of real property in Idaho

Falls for $123,500 in January 2012. Welch fraudulently

transferred the real property to a second individual, who

did not provide Welch with any value for the real property.

In addition to concealing assets, Welch falsely testified

under oath during the bankruptcy proceedings.

Owner of Montana Construction Company Sentenced

for $1.5 Million Tax Fraud

May 20, 2021, Trennis Baer, of Great Falls, Montana, was

sentenced to more than a year in prison and was ordered

to pay $935,251 in restitution. Baer owned and operated

Baer Construction. From 2010 through 2018, Baer did

not file quarterly employment tax returns, nor did he

pay employment taxes withheld from his employees’

wages to the IRS. Baer did not comply with these legal

requirements, even though, from at least 2013 onwards,

the company’s outside accountant prepared employment

tax returns to be filed and calculated the taxes due. Baer

also willfully failed to file personal income tax returns for

the years 2001 through 2006, 2008, and 2010 through

2018.

Rock Springs CPA Sentenced for Preparing a False

Income Tax Return

June 11, 2021, Paul Edman, a Certified Public Accountant

practicing in Rock Springs, Wyoming, was sentenced to

120 days in prison. Edman willfully counseled several

of his clients, who were local restaurant owners that

suppressed their cash sales. Edman made significant

adjustments to his clients’ personal and business

expenses to reduce their tax bill. The false expenses

totaled nearly $645,000. He also recommended ways

they could deduct expenses that would not stand out

in an audit. Edman willfully provided the advice, in an

effort to defraud the IRS. Ultimately, Edman reduced

the amount of a client’s tax bill by $72,000 and then he

signed and filed the false tax return electronically.

Private Equity CEO Enters into Non-Prosecution

Agreement on International Tax Fraud Scheme

(see page 23)

IRS:CI Annual Report 2021

DETROIT FIELD OFFICE

985 MICHIGAN AVENUE, DETROIT MI, 48226 | DetroitFieldOffice@ci.irs.gov

ANN ARBOR, MI

EAST LANSING, MI

FLINT, MI

GRAND RAPIDS, MI

PONTIAC, MI

TRAVERSE CITY, MI

THE DETROIT FIELD OFFICE area of responsibility encompasses the state

of Michigan and its two judicial districts. With Michigan’s diverse cultures and

proximity to the Canadian international border, Detroit CI special agents are

involved in a variety of criminal investigations including traditional tax, corporate

fraud and money laundering. To address the various priorities affecting Michigan,

agents are embedded on a variety of task forces such as the Joint Terrorism

Task Force (JTTF), Public Corruption, Organized Crime Drug Enforcement Task

Force (OCDETF), Border Enforcement Security Task Force, Third Party Money

Laundering Task Force, Dark Web Task Force, and the Alliance Human Trafficking

and Human Smuggling Task Force.

CEO Sentenced in $150 Million Health Care Fraud,

Opioid Distribution, and Money Laundering Scheme

March 3, 2021, Mashiyat Rashid, of West Bloomfield,

Michigan, was sentenced to 15 years in prison. Rashid

was also ordered to pay over $51 million in restitution

to Medicare, as well as to forfeit to the United States

property traceable to proceeds of the health care fraud

scheme, including over $11.5 million, commercial real

estate, residential real estate, and a Detroit Pistons

season ticket membership. From 2008 to 2016, Rashid

was the CEO of the Tri-County Wellness Group. The

clinics had a policy to offer patients, some of whom were

suffering from legitimate pain and others who were drug

dealers or opioid addicts, prescriptions of Oxycodone 30

mg. The clinic forced patients to submit to unnecessary

back injections, in exchange for their prescriptions. The

clinics intentionally targeted the Medicare program

and recruited patients from homeless shelters and

soup kitchens. Rashid only hired physicians willing to

disregard patient care in the pursuit of money. Rashid

incentivized the physicians to follow the Tri-County

protocol of offering opioid prescriptions and administering unnecessary injections by offering to split the

Medicare reimbursements for these lucrative procedures.

The specific injections used had nothing to do with

the medical needs of the patients but were instead

selected, because they were the highest-paying injection

procedures. Twenty-one other defendants, including 12

physicians, have been convicted for their participation in

this conspiracy.

Michigan Woman Sentenced for Fraud Scheme

Targeting Kalamazoo Manufacturing Business

March 16, 2021, Kris Marie Fratzke, of St. Joseph,

Michigan, was sentenced to 4½ years in prison. Fratzke

was also ordered to pay restitution totaling $930,233,

which included $772,953 to Flare Fittings and $157,280

to the IRS. Between 2013 and 2019, Fratzke was the

chief financial officer of Flare Fittings, a pipe manufacturing company, located in Kalamazoo, Michigan. Fratzke

created a shell company she called Mid America Fittings,

which had the appearance of a real supplier of materials

to Flare Fittings. She then created phony invoices for

the shell company and paid them using her authority

over the finances of Flare Fittings. Additionally, Fratzke

intentionally omitted the proceeds of her fraudulent

conduct from her tax return.

Imposter Nurse Sentenced for Fraud and Tax Evasion

October 28, 2020, Sonja Emery was sentenced to

more than 5 years in prison and was ordered to pay

approximately $2.2 million in restitution to the employer

victims and $697,000 in restitution to the IRS. Emery

used several aliases, including “Sonja Lee Robinson,”

“Sonjalee Emery-Robinson,” and “Sonjalee Emery.”

From 2011 through 2018, Emery falsely represented her

professional status, educational background, and work

experience to secure and maintain highly paid consulting

positions in the health-care industry. She falsely claimed

to be a registered nurse licensed in New York, Georgia,

Connecticut, and California, and she provided employers

with licensure numbers that belonged to other people.

In fact, she never was a registered nurse. Emery also

falsely told employers she had degrees from various

universities, but Emery never attended those schools or

received such degrees. Using these false representations,

Emery secured high-level health-care positions. During

these years, Emery either did not file or filed late tax

returns, despite owing more than $400,000 in taxes. She

sought to avoid detection by providing employers with

different names and false social security numbers, by

falsely instructing employers that she was “exempt” from

taxes, and by supplying an employer with an identification

number that did not belong to her.

Former Owner of Stamp Farms Sentenced for Bank

Fraud Scheme and Conspiracy to Defraud Farm

Benefit Programs

January 19, 2021, Michael David Stamp, of Decatur,

Michigan, was sentenced to 8 years in prison and was

ordered to pay more than $17 million in restitution to

Wells Fargo Bank, the U.S. Department of Agriculture’s

Risk Management Agency, and U.S.D.A.’s Farm Service

Agency. Stamp, who at one point operated the largest

agribusiness in the state of Michigan, engaged in a

scheme to defraud his lender, Wells Fargo Bank, in order

to obtain a $68 million line of credit for his business.

Stamp also engaged in a conspiracy to defraud the

Federal Crop Insurance Corporation.

FCA US LLC Pleads Guilty and Former UAW and FCA

Officials Sentenced

(see page 23)

IRS:CI Annual Report 2021

HOUSTON FIELD OFFICE

8701 S. GESSNER, HOUSTON TX, 77074 | (281) 721-8390 | HoustonFieldOffice@ci.irs.gov

AUSTIN, TX

BROWNSVILLE, TX

CORPUS CHRISTI, TX

EL PASO, TX

LAREDO, TX

MCALLEN, TX

SAN ANTONIO, TX

WACO, TX

THE HOUSTON FIELD OFFICE area of responsibility encompasses the Southern

and Western judicial Districts of Texas. Due to the proximity to the Mexican

international border and having some of the fastest-growing cities and counties

in the United States within its jurisdiction, Houston special agents are able to

work a variety of cases with emphasis in traditional tax-related crimes such as

employment tax, corporate fraud, identity theft, unscrupulous return preparers

and general fraud. The Houston Field Office also provides crucial support to their

respective U.S. Attorney’s priority task forces involving counterterrorism, public

corruption, human trafficking, drugs and complex money laundering violations.

Texas Bounty Hunter Sentenced for Running

International Sex Trafficking Conspiracy

April 26, 2021, Luis de Jesus Rodriguez, aka “Htown

Hunter,” was sentenced to 15 years in prison. Rodriguez

will also be required to register as a sex offender.

Rodriguez was previously convicted of sex trafficking,

conspiracy to commit visa fraud, and international money

laundering. In 2016, Rodriguez, and his international

criminal network, targeted, recruited and exploited young

women in Colombia and the United States by making

false promises of a better life. He portrayed himself as a

bounty hunter to assure the women he was affiliated with

law enforcement and could be trusted. However, once

here, the women had to work at a Houston strip club and

sign debt bondage contracts, and they were ultimately

forced into engaging in commercial sex acts. Rodriguez

also engaged in widespread visa fraud to facilitate the

international transportation of the victims.

Executive Sentenced in $189M Health Care Fraud

Scam

April 22, 2021, Bobby Rouse was sentenced to 10

years in prison. Rouse was an executive at Continuum

Healthcare LLC, which owned Westbury Community

Hospital in Houston, as well as community mental health

centers in the Houston area. Each location operated a

partial hospitalization program (PHP) supposedly for

treating individuals with mental illness. Rouse and other

executives were responsible for day-to-day operations

and together were involved in the implementation of

the various kickback programs. Numerous people were

referred for treatment in exchange for payment. However,

the vast majority did not qualify for PHP services. In total,

Continuum billed Medicare approximately $189 million

for fraudulent PHP services, and Medicaid paid approximately $66 million of those claims.

Company CFO and Ex-Husband Sentenced and

Ordered to Pay Over $20 Million in Restitution for

Embezzlement Scheme

Apr

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.