LINDBERGH KIDNAPPER JAILED – RANSOM MONEY FOUND HIDDEN UNDER GARAGE FLOOR IN EAST BRONX • (2019)

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LINDBERGH KIDNAPPER JAILED – RANSOM MONEY FOUND HIDDEN UNDER GARAGE FLOOR IN EAST BRONX •

AL CAPONE CONVICTED OF DODGING TAXES – SENTENCED TO 11 YEARS • DOGGED I.R.S. INQUIRY ON TAX CHEAT’S

SPENDING HABITS LED TO HIS CONVICTION • QUEEN OF MEAN GUILTY OF TAX EVASION • CRIME FAMILY BOSS

FAILED TO FILE FEDERAL INCOME TAX RETURNS • TAX CHEAT SENTENCED TO 6 YEARS FOR DEFYING I.R.S •

“HOLLYWOOD MADAM” SENTENCED ON TAX EVASION CHARGES IN CONNECTION WITH HER HIGH-PROFILE

PROSTITUTION RING • BASEBALL GREAT CONVICTED OF FAILING TO PAY TAXES • “SURVIVOR” WINNER

SENTENCED TO 51 MONTHS IN PRISON • FAMOUS HOLLYWOOD ACTOR GETS 3 YEARS FOR NOT FILING TAX

RETURNS • U.S. INDICTS FORMER ILLINOIS GOVERNOR FOR ALLEGED PUBLIC CORRUPTION DURING TERMS AS

SECRETARY OF STATE AND GOVERNOR • 50 YEAR TERM FOR MINNESOTA MAN IN $3.7 BILLION PONZI FRAUD •

FORMER TULSAN SENTENCED FOR $2 MILLION WIRE FRAUD SCHEME AND $500,000 TAX EVASION CASE •

FORMER ILLINOIS U.S. REPRESENTATIVE SENTENCED TO 30 MONTHS FOR MISUSING CAMPAIGN FUNDS • BEANIE

BABIES CREATOR SENTENCED FOR TAX EVASION • FIFA CORRUPTION CHARGES “WORLD CUP OF FRAUD” IRS

CHIEF SAYS • IRS AGENT DISCOVERS THE IDENTITY OF A SILK ROAD KINGPIN • TAX PREPARERS SENT TO PRISON

FRAUD GOVERNMENT OF MORE THAN $3.8 MILLION • THE IRS IS CLOSING IN ON CASES INVOLVING BITCOIN

INCOME REPORTING • LOUISIANA RETURN PREPARER SENTENCED TO SEVEN YEARS IN PRISON FOR FILING

FRAUDULENT TAX RETURNS • RESTAURANT OWNER SENTENCED FOR MULTIPLE FRAUD SCHEMES • LOS

ANGELES RETURN PREPARER SENTENCED TO PRISON • NORTH CAROLINA RETURN PREPARER SENTENCED FOR

FILING FRAUDULENT RETURNS • CIRCLEVILLE BUSINESSMAN SENTENCED FOR TAX FRAUD • STAPLETON COUPLE

SENTENCED FOR INCOME TAX EVASION AND BANKRUPTCY FRAUD • LAS VEGAS MAN SENTENCED FOR MASSIVE

TAX FRAUD • MAYOR’S EX-CAMPAIGN TREASURER SENTENCED FOR EMBEZZLEMENT • MINNESOTA TEMPORARY

AGENCY OWNER SENTENCED TO PRISON FOR FAILING TO PAY TAXES • REAL ESTATE APPRAISER GETS PRISON

TIME FOR ID THEFT AND TAX FRAUD • KANSAS BUSINESS OWNER SENTENCED FOR MAKING FALSE STATEMENT

ON TAX RETURN • SENTENCE HANDED DOWN IN MULTI-MILLION DOLLAR SCHEME TO DEFRAUD BIBB COUNTY

SCHOOLS AND TAXPAYERS • VIRGINIA PHARMACY OWNER SENTENCED TO PRISON FOR $5 MILLION EMPLOYMENT

TAX FRAUD • ARIZONA WOMAN SENTENCED FOR MONEY LAUNDERING • EXECUTIVE WITH SOUTH CAROLINA TIES

SENTENCED FOR STEALING $25 MILLION LINDBERGH KIDNAPPER JAILED – RANSOM MONEY FOUND HIDDEN

UNDER GARAGE FLOOR IN EAST BRONX • AL CAPONE CONVICTED OF DODGING TAXES – SENTENCED TO 11 YEARS

• DOGGED I.R.S. INQUIRY ON TAX CHEAT’S SPENDING HABITS LED TO HIS CONVICTION • QUEEN OF MEAN GUILTY

OF TAX EVASION • CRIME FAMILY BOSS FAILED TO FILE FEDERAL INCOME TAX RETURNS • TAX CHEAT SENTENCED

TO 6 YEARS FOR DEFYING I.R.S • “HOLLYWOOD MADAM” SENTENCED ON TAX EVASION CHARGES IN

CONNECTION WITH HER HIGH-PROFILE PROSTITUTION RING • BASEBALL GREAT CONVICTED OF FAILING TO PAY

TAXES • “SURVIVOR” WINNER SENTENCED TO 51 MONTHS IN PRISON • FAMOUS HOLLYWOOD ACTOR GETS 3

YEARS FOR NOT FILING TAX RETURNS • U.S. INDICTS FORMER ILLINOIS GOVERNOR FOR ALLEGED PUBLIC

CORRUPTION DURING TERMS AS SECRETARY OF STATE AND GOVERNOR • 50 YEAR TERM FOR MINNESOTA MAN

IN $3.7 BILLION PONZI FRAUD • FORMER TULSAN SENTENCED FOR $2 MILLION WIRE FRAUD SCHEME AND

$500,000 TAX EVASION CASE • FORMER ILLINOIS U.S. REPRESENTATIVE SENTENCED TO 30 MONTHS FOR

MISUSING CAMPAIGN FUNDS • BEANIE BABIES CREATOR SENTENCED FOR TAX EVASION • FIFA CORRUPTION

CHARGES “WORLD CUP OF FRAUD” IRS CHIEF SAYS • IRS AGENT DISCOVERS THE IDENTITY OF A SILK ROAD

KINGPIN • TAX PREPARERS SENT TO PRISON FRAUD GOVERNMENT OF MORE THAN $3.8 MILLION • THE IRS IS

CLOSING IN ON CASES INVOLVING BITCOIN INCOME REPORTING • LOUISIANA RETURN PREPARER SENTENCED TO

SEVEN YEARS IN PRISON FOR FILING FRAUDULENT TAX RETURNS • RESTAURANT OWNER SENTENCED FOR

MULTIPLE FRAUD SCHEMES • LOS ANGELES RETURN PREPARER SENTENCED TO PRISON • NORTH CAROLINA

RETURN PREPARER SENTENCED FOR FILING FRAUDULENT RETURNS • CIRCLEVILLE BUSINESSMAN SENTENCED

FOR TAX FRAUD • STAPLETON COUPLE SENTENCED FOR INCOME TAX EVASION AND BANKRUPTCY FRAUD • LAS

VEGAS MAN SENTENCED FOR MASSIVE TAX FRAUD • MAYOR’S EX-CAMPAIGN TREASURER SENTENCED FOR

EMBEZZLEMENT • MINNESOTA TEMPORARY AGENCY OWNER SENTENCED TO PRISON FOR FAILING TO PAY TAXES

• REAL ESTATE APPRAISER GETS PRISON TIME FOR ID THEFT AND TAX FRAUD • KANSAS BUSINESS OWNER

SENTENCED FOR MAKING FALSE STATEMENT ON TAX RETURN • SENTENCE HANDED DOWN IN MULTI-MILLION

DOLLAR SCHEME TO DEFRAUD BIBB COUNTY SCHOOLS AND TAXPAYERS • VIRGINIA PHARMACY OWNER

SENTENCED TO PRISON FOR $5 MILLION EMPLOYMENT TAX FRAUD • ARIZONA WOMAN SENTENCED FOR MONEY

IRS:CRIMINAL

INVESTIGATION

ANNUAL REPORT 2019

100

YEARS

1919-2019

LINDBERGH KIDNAPPER JAILED – RANSOM MONEY FOUND HIDDEN UNDER GARAGE FLOOR IN EAST

BRONX • AL CAPONE CONVICTED OF DODGING TAXES – SENTENCED TO 11 YEARS • DOGGED I.R.S.

INQUIRY ON TAX CHEAT’S SPENDING HABITS LED TO HIS CONVICTION • QUEEN OF MEAN GUILTY OF

TAX EVASION • CRIME FAMILY BOSS FAILED TO FILE FEDERAL INCOME TAX RETURNS • TAX CHEAT

SENTENCED TO 6 YEARS FOR DEFYING I.R.S • “HOLLYWOOD MADAM” SENTENCED ON TAX EVASION

CHARGES IN CONNECTION WITH HER HIGH-PROFILE PROSTITUTION RING • BASEBALL GREAT

CONVICTED OF FAILING TO PAY TAXES • “SURVIVOR” WINNER SENTENCED TO 51 MONTHS IN PRISON

• FAMOUS HOLLYWOOD ACTOR GETS 3 YEARS FOR NOT FILING TAX RETURNS • U.S. INDICTS FORMER

ILLINOIS GOVERNOR FOR ALLEGED PUBLIC CORRUPTION DURING TERMS AS SECRETARY OF STATE

AND GOVERNOR • 50 YEAR TERM FOR MINNESOTA MAN IN $3.7 BILLION PONZI FRAUD • FORMER

TULSAN SENTENCED FOR $2 MILLION WIRE FRAUD SCHEME AND $500,000 TAX EVASION CASE •

FORMER ILLINOIS U.S. REPRESENTATIVE SENTENCED TO 30 MONTHS FOR MISUSING CAMPAIGN

FUNDS • BEANIE BABIES CREATOR SENTENCED FOR TAX EVASION • FIFA CORRUPTION CHARGES

“WORLD CUP OF FRAUD” IRS CHIEF SAYS • IRS AGENT DISCOVERS THE IDENTITY OF A SILK ROAD

KINGPIN • TAX PREPARERS SENT TO PRISON FRAUD GOVERNMENT OF MORE THAN $3.8 MILLION •

THE IRS IS CLOSING IN ON CASES INVOLVING BITCOIN INCOME REPORTING • LOUISIANA RETURN

PREPARER SENTENCED TO SEVEN YEARS IN PRISON FOR FILING FRAUDULENT TAX RETURNS •

RESTAURANT OWNER SENTENCED FOR MULTIPLE FRAUD SCHEMES • LOS ANGELES RETURN

PREPARER SENTENCED TO PRISON • NORTH CAROLINA RETURN PREPARER SENTENCED FOR FILING

FRAUDULENT RETURNS • CIRCLEVILLE BUSINESSMAN SENTENCED FOR TAX FRAUD • STAPLETON

COUPLE SENTENCED FOR INCOME TAX EVASION AND BANKRUPTCY FRAUD • LAS VEGAS MAN

SENTENCED FOR MASSIVE TAX FRAUD • MAYOR’S EX-CAMPAIGN TREASURER SENTENCED FOR

EMBEZZLEMENT • MINNESOTA TEMPORARY AGENCY OWNER SENTENCED TO PRISON FOR FAILING

TO PAY TAXES • REAL ESTATE APPRAISER GETS PRISON TIME FOR ID THEFT AND TAX FRAUD • KANSAS

BUSINESS OWNER SENTENCED FOR MAKING FALSE STATEMENT ON TAX RETURN • SENTENCE

HANDED DOWN IN MULTI-MILLION DOLLAR SCHEME TO DEFRAUD BIBB COUNTY SCHOOLS AND

TAXPAYERS • VIRGINIA PHARMACY OWNER SENTENCED TO PRISON FOR $5 MILLION EMPLOYMENT

TAX FRAUD • ARIZONA WOMAN SENTENCED FOR MONEY LAUNDERING • EXECUTIVE WITH SOUTH

CAROLINA TIES SENTENCED FOR STEALING $25 MILLION LINDBERGH KIDNAPPER JAILED – RANSOM

MONEY FOUND HIDDEN UNDER GARAGE FLOOR IN EAST BRONX • AL CAPONE CONVICTED OF DODGING

TAXES – SENTENCED TO 11 YEARS • DOGGED I.R.S. INQUIRY ON TAX CHEAT’S SPENDING HABITS LED TO

HIS CONVICTION • QUEEN OF MEAN GUILTY OF TAX EVASION • CRIME FAMILY BOSS FAILED TO FILE

FEDERAL INCOME TAX RETURNS • TAX CHEAT SENTENCED TO 6 YEARS FOR DEFYING I.R.S • “HOLLYWOOD

MADAM” SENTENCED ON TAX EVASION CHARGES IN CONNECTION WITH HER HIGH-PROFILE

PROSTITUTION RING • BASEBALL GREAT CONVICTED OF FAILING TO PAY TAXES • “SURVIVOR” WINNER

SENTENCED TO 51 MONTHS IN PRISON • FAMOUS HOLLYWOOD ACTOR GETS 3 YEARS FOR NOT FILING

TAX RETURNS • U.S. INDICTS FORMER ILLINOIS GOVERNOR FOR ALLEGED PUBLIC CORRUPTION DURING

TERMS AS SECRETARY OF STATE AND GOVERNOR • 50 YEAR TERM FOR MINNESOTA MAN IN $3.7 BILLION

PONZI FRAUD • FORMER TULSAN SENTENCED FOR $2 MILLION WIRE FRAUD SCHEME AND $500,000 TAX

EVASION CASE • FORMER ILLINOIS U.S. REPRESENTATIVE SENTENCED TO 30 MONTHS FOR MISUSING

CAMPAIGN FUNDS • BEANIE BABIES CREATOR SENTENCED FOR TAX EVASION • FIFA CORRUPTION

CHARGES “WORLD CUP OF FRAUD” IRS CHIEF SAYS • IRS AGENT DISCOVERS THE IDENTITY OF A SILK ROAD

KINGPIN • TAX PREPARERS SENT TO PRISON FRAUD GOVERNMENT OF MORE THAN $3.8 MILLION • THE IRS

IS CLOSING IN ON CASES INVOLVING BITCOIN INCOME REPORTING • LOUISIANA RETURN PREPARER

SENTENCED TO SEVEN YEARS IN PRISON FOR FILING FRAUDULENT TAX RETURNS • RESTAURANT OWNER

SENTENCED FOR MULTIPLE FRAUD SCHEMES • LOS ANGELES RETURN PREPARER SENTENCED TO PRISON

• NORTH CAROLINA RETURN PREPARER SENTENCED FOR FILING FRAUDULENT RETURNS • CIRCLEVILLE

BUSINESSMAN SENTENCED FOR TAX FRAUD • STAPLETON COUPLE SENTENCED FOR INCOME TAX

EVASION AND BANKRUPTCY FRAUD • LAS VEGAS MAN SENTENCED FOR MASSIVE TAX FRAUD • MAYOR’S

EX-CAMPAIGN TREASURER SENTENCED FOR EMBEZZLEMENT • MINNESOTA TEMPORARY AGENCY

OWNER SENTENCED TO PRISON FOR FAILING TO PAY TAXES • REAL ESTATE APPRAISER GETS PRISON TIME

TABLE OF CONTENTS

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Message from the Chief

Field Office Map

Message from the Deputy

Atlanta

100 Years of History in IRS:CI

Boston

2019 Snapshot

Charlotte

Organizational Chart

Chicago

Tax Crimes

Cincinnati

Electronic Crimes

Dallas

Non-Tax Crimes

Denver

International Operations

Detroit

Narcotics, Counterterrorism, &

Houston

Transnational Organized Crime

Las Vegas

Specialized Units

100

Los Angeles

Commissioner's Protection Detail

104

Miami

Nationally Coordinated

108

Newark

Investigations Unit

112

New York

Undercover Operations

116

Oakland

Asset Forfeiture

120

Philadelphia

National Forensic Laboratory

124

Phoenix

National CI Training Academy

128

Seattle

Professional Staff

132

St. Louis

Leadership Education

134

Tampa

and Development

138

Washington D.C.

Equity, Diversity & Inclusion

142

Appendix

Communications & Education

Outreach/Community Engagement

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IRS: Criminal Investigation Annual Report 2019

MESSAGE FROM THE CHIEF

enforcement agency. In looking through the

We are working smarter using data analytics

money movement in general. Criminals

INSPIRE THE FUTURE. While the tools

history of this great agency, it is hard not to

to augment good old fashioned police

stay current with the trends and adopt their

of the trade may have changed, criminals

be impressed with those who came before

work and find those cases that have the

methods to match the public’s tendencies.

are still doing the same things they were

us. At times when the country was battling

biggest impact on tax administration. We

The speed at which money moves today is

doing 100 years ago. Skimming money from

corruption and bribery and other financial

are leading the world in our ability to trace

almost instantaneous and the convenience

a business to avoid employment taxes or

crimes, it was IRS-CI who stepped up to

virtual currency in financial investigations

that comes with that opens the door for

pretending to be someone else to file their

solve some of the most notorious crimes of

while still working our bread and butter tax

criminals to exploit the latest technological

taxes—these are all things criminals have

the early 20th Century. As we look ahead to

enforcement mission areas. Our conviction

advancements. Years ago, we had time on

done since our inception. And while it is

develop and deploy the tools that will make

rate is among the highest in federal law

our side and we could allow things to play

true that the threat and evolution of cyber-

us successful in the 21st Century, we must

enforcement and this year we will hire more

out without losing a trace of a criminal or

crimes is real and has impacted all financial

use those lessons learned from the past to

agents than we have in the last five years

their proceeds. Now, money disappears

crimes, I’m proud of what we have done

inform our investigations and investigative

combined. In the past 100 years, many

in the blink of an eye. All that is needed

as an agency to position ourselves to solve

techniques of the future. This is how we

things have changed, but some things have

is a smartphone to move money from

these sophisticated crimes. Today’s cyber

continue to honor the badge and our great

remained constant. Most crimes are still

one location to another, anywhere in the

criminals think we cannot catch them, but as

Honor the Badge, Preserve the Legacy,

history. CI has an unprecedented level of

committed for financial gain and we are still

world. The internet and the dark web have

evidenced by some of the great casework in

our agents have once again proved that there

Master Your Craft, Inspire the Future.

support from the Commissioner and Deputy

the only federal agency that is authorized

facilitated this change and law enforcement

this report, I would say they are wrong. As

is nowhere to hide. We will not stop in our

These are the guiding principles that IRS

Commissioner of the IRS based on our

to investigate and recommend prosecution

has had to make adjustments to keep

I said in a recent press conference, criminals

pursuit.

Criminal Investigation lives by and that 2019

success of the past. It is up to us to continue

on federal income tax cases. We take this

up. CI has made significant investments

used to hide by laundering their money

was defined by.

to earn that respect and trust moving

very seriously and most of these cases

in training our new employees and

through shell companies around the country,

I’m proud of all we have accomplished in

forward.

ultimately end in convictions and jail time.

experienced employees and this investment

but we traced them. They took their money

FY19 and in our 100-year history. I’m proud

We are the backbone of the US tax system

is unmatched within the IRS. We instituted

offshore and hid around the world, but we

to lead this agency and I look forward to

HONOR THE BADGE. I am excited to share

the FY 2019 IRS Criminal Investigation

PRESERVE THE LEGACY. Our cases

just as enforcement is the backbone of any

Master Your Craft training for special agents

found them. They went on the dark web

helping to write the next chapter of investi-

Annual Report. While we use this report

continue to be some of the most complex

effective voluntary compliance tax system.

while introducing new specialized training for

thinking that their actions were anonymous,

gative excellence for IRS-CI.

to highlight our successes during the past

and impactful cases in the world and

our professional staff as well. You can expect

but they weren’t, and we again found them.

year, this particular year had special meaning

regularly appear on the front page of the

MASTER YOUR CRAFT. The evolution

these investments to continue.

They now deal in crypto-currency, again

as we celebrated our 100th year as a law

nation’s largest newspapers and websites.

of financial crime mirrors the evolution of

–Chief, Don Fort

thinking this will make them anonymous, but

HONOR THE BADGE

IRS: Criminal Investigation Annual Report 2019

PRESERVE THE LEGACY

MASTER YOUR CRAFT

IRS: Criminal Investigation Annual Report 2019

MESSAGE FROM THE DEPUTY

in the headlines of some of the most

inventory.

talked-about cases of the year. We

on top of the criminal methodologies is

our counterparts in the United Kingdom,

Investigation Division has worked in all

our bread and butter. We will continue to

Australia, Canada, and the Netherlands.

areas during fiscal year 2019. The case

validated pilot programs and solidified

CI Special Agents are in demand. As the

support cases in this area while looking

We have found ways to better share

summaries in this report touch every field

units designed to better use data to

Chief said, we are the only ones who

to use our limited resources to positively

information through appropriate channels

office, every state and nearly every region

aide in finding and solving the best

can investigate tax crimes, but U.S.

affect tax administration in the most

but have already done more in this area

of the world. Though we spend most of

financial crime cases. We took another

Attorneys want IRS-CI agents in all of

impactful way possible.

in the last year than in the previous 10

our time talking about cases, it should be

step into the center of the world stage

their financial crime cases. The fact of the

years combined. The J5 also focuses

noted that these successes are a result

in solving some of the most complex

matter is, if a case involves money and

In the international arena, we continue

on enablers of international tax evasion

of having the most sophisticated financial

cybercrimes. And we nourished interna-

it’s a crime that rises to the federal level,

to work with our partners to break down

and on the use of crypto-currency to

crime law enforcement personnel the

tional partnerships, broke down barriers

IRS-CI almost always has jurisdiction.

walls and work together in areas of

evade international tax obligations. In

world has ever seen. I look forward to

of information sharing, and showed the

There is no better example to this than

common goals. Perhaps there is no better

just 18-months, we are already seeing

continuing to accomplish great things in

world’s criminal population that there is

in tracing cryptocurrency transactions.

example of these types of partnerships

the benefits to this group both in the

FY 2020 and for the next 100 years!

nowhere that they can hide from us.

Cryptocurrencies are undermining the

than our work with the Joint Chiefs

development of new tools and in the

financial and tax system. Companies pay

of Global Tax Enforcement, or J5. The

numbering of real cases. We expect our

2019 was a watershed year for IRS-CI.

We began bringing on a new wave of

employees in cryptocurrency or receive

J5 formed in June of 2018 following a

first operational results from this group in

We continued to focus on better case

special agents and professional staff this

crypto for goods/services. They do not

call to action from the Organization for

FY20.

selection to ensure we added the

year—117 special agents and 38 profes-

pay taxes and entities shift income to

Economic Cooperation and Development

most egregious tax crimes to our case

sional staff this year. With plans for 10

offshore exchanges with no reporting

(OECD) to do more to battle international

This annual report is a proud reflection of

inventory. We continued to pursue the

more special agent classes in FY20, we

requirements, utilizing exchanges with

tax evasion. The J5 includes IRS-CI and

the tremendous cases that the Criminal

cases that have the biggest impact on

are finally in a position to increase our

little to no AML practices. Understanding

tax administration, finding ourselves

staffing levels and add more cases to our

the advancements in this area and staying

IRS: Criminal Investigation Annual Report 2019

–Deputy Chief, Jim Lee

IRS: Criminal Investigation Annual Report 2019

100 YEARS OF CRIMINAL INVESTIGATION

ORGANIZATION AND FUNCTIONS OF THE INTELLIGENCE UNIT

States Senator. He was assassinated just prior to the time set for

presenting evidence to the federal grand jury relative to his

tremendous income from "political racketeering."

The basic organizational structure of the Intelligence Unit, like the

In 1919, Commissioner Daniel C. Roper decided to create an

Bureau of Internal Revenue, remained essentially unchanged from

The Teapot Dome Scandal of the 1920s shocked Americans by

Intelligence Unit to perform similar functions as the Post Office

1919 through 1951. Jurisdictionally separate organizations, or "units,"

revealing an unprecedented level of greed and corruption within the

Inspectors for the Bureau of Internal Revenue. Commissioner

administered the different types of tax. Under that arrangement, the

federal government. Albert Fall, a former Secretary of the Interior,

Roper with the approval of the Secretary of the Treasury and

Intelligence Unit was a centralized organization. Special agents in

was charged with accepting bribes from oil companies in exchange

the Postmaster General effected transfers from the Post Office

the field worked under the Special Agent in Charge of a geographic

for exclusive rights to drill for oil on federal land. The Teapot Dome

Inspection Service of six experienced Post Office Inspectors to the

area. The Special Agent in Charge, in turn, reported directly to the

investigation resulted in the collection of approximately $6,000,000

Bureau of Internal Revenue on July 1, 1919.

Chief of the Intelligence Unit in Washington, D.C.

in taxes.

Elmer L. Irey was designated as Chief, Intelligence Unit, and

shortly thereafter, W H. Woolf, also connected with the Office of

The files of the Bureau of Internal Revenue detail thousands

the Chief Post Office Inspector, was appointed as Assistant Chief.

of reports of investigations which resulted in convictions of tax

During the negotiations for the transfer of Post Office Inspectors

Charles E. Mitchell, a New York banker, brought a change in the

TYPES OF SPECIAL INVESTIGATIONS

income tax law whereby wealthy taxpayers could no longer escape tax

liability by claiming fictitious losses from alleged sales of securities.

The American Optical Company was convicted in a scheme to

evaders.

to the Bureau of Internal Revenue to create an organization for an

The principal activity of the Intelligence Unit was the investi-

evade income taxes by understating, in its inventory, the accumu-

Intelligence Unit, it was stipulated by the Postmaster General that

gation of income tax fraud cases. These cases involved prominent

lation of gold borings and dust which were melted into gold bricks,

Mr. Roper could have “six men of his own choosing but no more."

individuals in professional, commercial and public life. Large

each weighing one thousand ounces. The income from their sale

was diverted to the individual owners of the business.

This enabled Commissioner Roper to choose Post Office

corporations were investigated with success for the Unit. The Unit

Inspectors who had excellent records as investigators and were

successfully investigated numerous racketeers and public enemies

suited for the work which they would be called upon to perform in

who had amassed fortunes through their illegal activities.

this service. This original group of Post Office Inspectors, selected

The Intelligence Unit conducted numerous investigations

pertaining to estate tax frauds and attempted evasion of miscellaneous taxes such as gasoline, theater ticket and tobacco taxes.

In 1924, the Unit was also assigned the responsibility of investi-

as a nucleus of the newly created Intelligence Unit, became the

gating applications of attorneys and agents to practice before the

first Special Agents in Charge of Divisions in the new organization.

Treasury Department and investigating charges against enrolled

They were able to establish efficient and practical investigative

agents and attorneys.

Investigations involving attempted bribes, extortion,

embezzlement, irregularities on the part of Internal Revenue

THE EARLY YEARS

protocols because of their long experience in conducting thorough

During that 1950's, the Intelligence Unit's principal functions

Al Capone, so called Public Enemy No. 1 and the most notorious

and impartial investigations. An esprit de corps developed in the

continued to be investigating tax fraud, charges against Internal

leader of organized racketeering in the USA, was investigated by the

Intelligence Unit because of their success, with the members of the

Revenue employees and performing background investigations of

Intelligence Unit. His conviction on income tax evasion was the first

Unit feeling an individual pride in its achievements.

applicants for Internal Revenue positions.

decisive blow against organized crime.

The New York income tax evasion drive against racketeers preying

IRS: Criminal Investigation Annual Report 2019

representatives in various schemes to violate the revenue laws were

also common.

During Prohibition, much of the work of the Intelligence Unit

concerned investigations of service employee collusion with

persons engaged in the illicit trafficking of liquor, liquor permit

on legitimate industry likewise was very effective. The tax evasion

frauds and major conspiracies to violate the National Prohibition Act.

investigation of prominent motion picture stars resulted in several

Edward Donegan who was a casual or odd-job laborer became

criminal prosecutions and brought to the Treasury substantial

a millionaire within about four months through bootlegging

amounts in taxes and penalties.

following the implementation of National Prohibition of alcohol in

Dishonest public officials including peace officers, judges, mayors

employees and collusion between employees and taxpayers or their

the U.S. in January 1920. Through the use of an insider within the

of large cities, governors of states, legislators, and members of the

Bureau of Prohibition, he was able to illegally withdraw alcohol

United States Senate also were investigated by the Intelligence Unit.

from warehouses ostensibly for legal purposes himself and sold

Huey Long was one of the best-known public figures investigated

fraudulent permits to other bootleggers. Donegan’s activities were

for tax fraud. Long was Governor of Louisiana and was later a United

discovered after he attempted to bribe Internal Revenue agents who

IRS: Criminal Investigation Annual Report 2019

visited him in connection with another investigation.

The Intelligence Unit, at the direction of the Commis-

enforcement efforts devoted to Racketeer tax returns.

On January 1, 1960, all investigative functions

who diverted the planes to the Amman desert and

involving persons enrolled or applying for enrollment to

blew them up. Sky marshal duties were subsequently

sioner of Internal Revenue and the Secretary of the

second interim report was issued, Internal Revenue

practice before the IRS were transferred to Inspection.

assumed by Customs Security Officers.

Treasury, frequently conducted special investigations

initiated a Special Tax fraud Drive to subject every

This was done to permit Intelligence to concentrate its

which were not related to tax frauds or personnel

known racketeer to a thorough tax investigation. A

efforts on investigating criminal tax violations.

delinquency. This phase of Intelligence Unit activity

master list of nearly 30,000 names was compiled for

was varied in scope but included the Lindbergh baby

this purpose. The director of the drive used the facilities

systems within IRS during the 1960's created new

wide organizational review study group. The group

kidnapping case.

of the Intelligence Unit in the National Office. Racket

tools for Intelligence to ferret out tax fraud. Data was

was concerned about the public being misled by the

squads comprised of special agents, revenue agents

used to detect unreported income and to identify

title, "Intelligence,'' and sought a more proper and

and deputy collectors were formed in offices throughout

fraudulent returns, false claims for refund and failures

understandable title. Although the group had initially

the country and were placed under the overall direction

to file. It also permitted the high-speed analysis of

recommended the title "Criminal Enforcement," "Criminal

THE LATE THIRTIES AND FORTIES

From 1935 to 1943, the Intelligence Unit conducted

In April 1951, shortly after the Kefauver Committee's

The introduction of automatic data processing (ADP)

On July 2, 1978, the Intelligence Division was

renamed the Criminal Investigation Division. This

was based on the recommendations of a Service-

an unprecedented number, nearly 42,000 "miscel-

of the Intelligence Unit's Special Agents in Charge.

voluminous business records to establish

laneous" investigations. These were background

Support for the drive diminished rapidly in mid-1952,

and document tax evasion. For the first

investigations resulting from the Unit's expanded

when Congress did not appropriate the additional

time in modern criminology, data was used

other important enforcement efforts. There were two

responsibility, during that period, to investigate

funds requested, and officials realized that many of

to coordinate information that culminated

major projects initiated against narcotics traffickers.

applicants for practically all Internal Revenue positions,

the cases completed involved smalltime criminals and

in the 1965 indictment of 86 alleged

Jurisdiction over wagering tax enforcement was

as well as applicants for positions of importance in other

petty gamblers. Soon after, the racketeer program

bookmakers in the New York City area.

returned to the Intelligence Division. And significant

Treasury segments.

was integrated with the overall Intelligence effort, with

During World War II, the Intelligence Unit performed

emphasis placed on investigating major racketeers.

In the years following the assassination

Investigation" was eventually adopted.

The 1970's also saw the introduction of a number of

enforcement actions were started against unscrupulous

of President John F. Kennedy in 1963,

tax return preparers, multiple tax refund schemes, and

special agents of the Intelligence Division

promoters of abusive tax shelters.

additional duties in the form of assisting Treasury's

In 1952, following a series of Congres-

Foreign Funds Control Unit in locating and freezing

sional investigations into "tax fixing", there

were called upon to assist the U.S. Secret Service in the

funds and other valuables belonging to Axis-power

was a comprehensive reorganization of

protection of the President and other officials.

aliens living in the United States. This was done to

the Bureau of Internal Revenue. As part

deprive the enemy of resources that might finance

of the reorganization, the Intelligence

espionage and sabotage.

Unit's organizational name was changed

THE EIGHTIES

In February 1980, the Cash Flow Project was

THE SEVENTIES

The Bank Secrecy Act was enacted in 1970 as a result

initiated in the Jacksonville District. Its objective was

to investigate money launderers and corrupt bank

to Intelligence Division. Its criminal

of concern expressed by law enforcement officials over

Officials who violated currency laws by using financial

on tax investigations of individuals who had profited

investigation program was decentralized

the laundering of illegal funds through domestic banks

institutions to launder large sums of currency generated

excessively from the war, black market activities, and

through integrating with other field

and foreign tax havens. Since then, the Act has proven

primarily from narcotics trafficking. Cash Flow was part

the unprecedented amounts of currency in circulation.

revenue programs under District Directors. In addition,

an effective tool for identifying and investigating tax

of Operation Greenback, a coordinated Treasury effort.

To meet this increased work load, the Intelligence

responsibility for conducting character and conduct

evaders and for cutting the flow of money generated by

field ranks were increased to more than 1,200 special

investigations of employees was reassigned to the

illegal activities, especially narcotics trafficking.

agents. This rapid expansion necessitated the transfer

recently created Inspection Service.

After World War II, the Intelligence Unit concentrated

of investigators from other enforcement agencies.

In the early 1950's, hearings of Senator Estes

Kefauver's Committee investigating organized

the type of violation and the method of proof.

a number of special agents were detailed with other

On March 21, 1982, as part of a reorganization of the

federal agents as "sky marshals" on international and

IRS National Office, the Criminal Investigation Division

domestic flights. The detail was ordered by President

was elevated to assistant commissioner level, and the

crime and, later, the beginning of the Strike Force

Richard M. Nixon and prompted by the skyjacking of

office of Assistant Commissioner (Criminal Investi-

concept.

three U.S. commercial aircraft by Palestinian terrorists

gation) was established.

THE SIXTIES

THE FIFTIES

During a six-month period in late 1970 and early 1971,

On May 27, 1980, the Criminal Investigation Division

issued objective prosecution criteria, generally geared to

The 1960's introduced a major drive on organized

crime generated concern about the limited extent of

IRS: Criminal Investigation Annual Report 2019

In 1987, development began on the Automation of

Rossotti vowed to reform and improve the work of the

their counterparts in the law enforcement community

prosecuted some of the worlds most wanted Darkweb

Criminal Investigation (ACI) Project, which provided a

Internal Revenue Service during his Senate confirmation

to follow the money trail to uncover terrorist financing

criminals including Ross Ulbricht aka Dread Pirate

nationwide, integrated computer system to enhance

hearing. As a first step to bringing positive change to

throughout the world. CI personnel assisted at Ground

Roberts who operated the Silk Road Darkweb market

productivity. Among its many planned features were

the IRS, Commissioner Rossotti promised thorough

Zero and associated areas to help uncover evidence

place, Alexandre Cazes aka Alpha02 and Admin who

financial analysis tools for computing taxable income

reviews of each of its major components, including the

from the attack. CI personnel were also assigned

operated AlphaBay, the Largest Online 'Dark Market as

and tax; an investigative report generator; a support

Criminal Investigation Division (CI).

in Iraq and Afghanistan to assist with international

well as investigating numerous other illegal Darkweb

terrorist financing, money laundering and threat finance

sites.

system to prepare documents such as summonses,

As part of The Restructuring and Reform Act of 1998

requests for returns, and letters; and a case and time

(RRA 98), the IRS was redesigned to serve taxpayers

reporting system. Also, in the 1980's, a project was

and tax practitioners more effectively and efficiently.

In May 2003, CI special agents were deployed to

pornography site in the world was taken down. IRS-CI,

undertaken to detect tax evaders through "business

Included in this redesign was a comprehensive review

Iraq to lead the U.S Treasury’s financial “jump teams”

agents became aware of Welcome to Video, the largest

opportunities" newspaper ads. The Tax Haven Offshore

of the Criminal Investigation Division (CI) lead by Judge

to uncover the Saddam regime’s ill-gotten gains from

child sexual exploitation market by volume of content,

Bank Project was also established because of the

William Webster, which made dozens of detailed

the Iraqi people. Saddam’s regime used

because of their work on previous Darkweb market-

increased use of tax haven countries by U.S. taxpayers.

recommendations including major structural and

proxies, fronts and bank accounts around

places. IRS-CI was able to trace bitcoin transactions

operational changes.

the globe to hide assets. This required

on the site to people all over the world who were

painstaking financial investigative work

uploading and downloading this material, as well as find

uncovering hidden and layered assets that

the location of the site administrator. By analyzing the

The Criminal Investigation Division became a founding

partner of a major interagency drug investigation project

known as the Organized Crime Drug Enforcement Task

TWO THOUSAND TO PRESENT

activities.

In October 2019, the largest Darkweb child

Force (OCDETF). OCDETF was designed to disrupt

In July 2000, CI finalized the historic reorganization.

Saddam, his family, and associates had

blockchain and de-anonymizing bitcoin transactions,

major drug trafficking operations and related crimes,

A number of long sought goals, including line authority

nested outside of Iraq. CI special agents

IRS-CI special agents were able to identify hundreds

such as money laundering, tax and weapon violations,

over all CI special agents and employees, referral

played a leading and pivotal role in the U.S

of predators around the world - even though those

and violent crime.

authority to the Department of Justice for

Treasury’s efforts.

users thought that they could remain anonymous. As a

CI investigations and a direct reporting

CI special agents helped uncover a variety of illegal

result of the investigations, Jong Woo Son, 23, a South

relationship to the Commissioner were

activities related to mortgage and financial fraud which

Korean national, was indicted by a federal grand jury in

achieved. Until July 2000, CI personnel

caused the financial crisis in 2008, resulting in multiple

the District of Columbia for operating the site.

implemented a reorganization of CI at the district,

reported most directly to multifunction

convictions of fraudsters who helped to perpetuate the

regional and national levels. CI district operations were

al (i.e., civil and criminal) IRS district

financial crisis.

consolidated and reduced in number to 34. The seven

directors, a relationship mirrored at IRS

CI regional offices were eliminated. In their place, four

headquarters with an Assistant Commis-

investigation in the corruption by officials and associates

Long, Leona Helmsley, Whitey Bulger, Michael “The

SES Directors of Investigations (DI) were established:

sioner for CI reporting to a multifunctional

connected with the Fédération Internationale de

Situation” Sorrentino, Fédération Internationale de

National Training, the National Forensic Laboratory,

executive subordinate to the Commissioner. As a result

Football Association (FIFA), the governing body of

Football Association (FIFA), and the Silk Road. But,

the National Transcription Center, and Criminal Case

of RRA98, all CI resources were placed under the Chief

international soccer. Multiple individuals were indicted

Chief Don Fort says, “Not every case has grabbed

Processing Systems.

of CI, who in turn reported directly to the IRS Commis-

on wire fraud, racketeering, and money laundering.

national attention, most every agent and employee

sioner. Mark Matthews was the first Chief for IRS

IRS-CI Chief Richard Weber vowed to "issue Fifa a

that works or has worked for CI has never risen to

Criminal Investigation following the reorganization.

red card" following the indictment by the US Justice

prominence because of their job with IRS-CI and the

Department for corruption.

cases they worked. In fact, we usually stay behind the

THE NINETIES

In October 1993, the Assistant Commissioner (CI)

The National Office was also reorganized. The Division

of National Operations was created, with three offices:

Narcotics/ Money Laundering, Tax Crimes, and Special

Throughout the 21st Century, IRS-CI has continued

Investigative Techniques. The Review Division and the

to support its proud heritage of being the worlds finest

Finance Division were enlarged and made separate.

financial investigators.

Later, a Division of Policy and Information was formed.

Following the September 11, 2001, terrorist attacks

During the fall of 1997, IRS Commissioner Charles O.

on the United States, CI personnel work diligently with

IRS: Criminal Investigation Annual Report 2019

In 2015, IRS-CI was the co-lead agency in the

IRS-CI has kept pace with the ever changing cyber

In July 2019, IRS-CI celebrated their 100 Year

Anniversary. Over the past century, IRS-CI has worked

high profile cases including those involving Huey

scenes doing what we do best – work hard and work

world by developing a cybercrimes investigative

every day to protect the integrity of the US financial

program that has successfully investigated and

system.” t

IRS: Criminal Investigation Annual Report 2019

2019 SNAPSHOT

FOR MANY YEARS while practicing on the outside, I admired the investigative abilities

and professionalism of every special agent and the overall strength of the entire CI

organization. Since coming onboard as Commissioner, my admiration and respect have

increased exponentially. CI is the backbone for the entire IRS organization – fair, impartial,

diligent and, where appropriate, tenacious! The FY19 Annual Report summarizes various

CI activities throughout the year but vastly understates the importance of CI to the overall

IRS Mission. CI supports the efforts of compliant taxpayers by visibly demonstrating

the risks of noncompliance thereby helping otherwise honest taxpayers stay honest and

compliant. The best of the best!

TAX FRAUD IDENTIFIED

OTHER

FINANCIAL CRIMES

CONVICTION RATE

$1.8B $4.4B 91.2% 1726

PROCEEDS IDENTIFIED

WARRANTS EXECUTED

1.24

DIGITAL DATA SEIZED

PETABYTES

– CHARLES P. RETTIG , Commissioner, Internal Revenue Service

IRS: Criminal Investigation Annual Report 2019

2019 SNAPSHOT

INTERNATIONAL

CYBER CRIMES

GENERAL TAX FRAUD

28%

PUBLIC CORRUPTION

ABUSIVE TAX SCHEMES

IRS:CRIMINAL INVESTIGATION

U.S. ATTORNEY'S OFFICE

15%

CORPORATE FRAUD

SPECIAL AGENTS

2019

2,009

0.5%

EMPLOYMENT TAX

GENERAL FRAUD

IDENTITY THEFT

TAX

REFUND FRAUD

75.1

11.9

NON-TAX

2018

BSA DATA

12%

MONEY LAUNDERING

PROFESSIONAL STAFF

NARCOTICS

11.3

OCDETF

Organized Crime Drug

Enforcement Task Force

IRS:CIVIL

26%

OTHER FEDERAL AGENCIES

DIRECT INVESTIGATIVE TIME SPENT*

PERCENTAGES

2,019

728

2019

7.7%

PUBLIC

STATE/LOCAL GOV'T

INVESTIGATION SOURCES

2018

789

IRS:CI STAFFING

*1.4% Uncategorized

IRS: Criminal Investigation Annual Report 2019

2019 SNAPSHOT

Office

of the Chief

Chief of Staff

Chief

Deputy Chief

Review & Program

Evaluation

International

Operations

Operations,

Policy,

& Support

Strategy

Refund &

Cyber Crimes

Technology

Operations

& Investigative

Services

Field

Operations

East

National

Forensic

Laboratory

Finance

Systems &

Analysis

Business

Systems

Development

Cybersecurity

Electronic

Crimes

Field

Operations

West

Financial

Crimes

Human

Resources

Operations,

Scheme

Development,

and Support

Narcotics

Counterterrorism,

& Transnational

Organized Crime

Special

Investigative

Techniques

National CI

Training

Academy

Cyber Crimes

Warrants &

Forfeiture

Treasury

Liaison

FinCEN

Liaison

TEOAF

Liaison

IRS: Criminal Investigation Annual Report 2019

Applied

Analytics

Communications

& Education

Program

Management,

Acquisition,

& Contracts

Equity, Diversity

& Inclusion

Midstates Area

Field Offices

Northern Area

Field Offices

Southern Area

Field Offices

Western Area

Field Offices

Chicago

Boston

Atlanta

Denver

Dallas

Cincinnati

Charlotte

Las Vegas

Detroit

Newark

Miami

Los Angeles

Houston

New York

Tampa

Oakland

St. Louis

Philadelphia

Washington, DC

Phoenix

NCIU

Seattle

Technical

Operations

Center

User

Support

IRS: Criminal Investigation Annual Report 2019

TAX CRIMES

1500 942

INVESTIGATIONS INITIATED

PROSECUTIONS RECOMMENDED

848

SENTENCED

GENERAL TAX FRAUD

ABUSIVE TAX SCHEMES

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

CI focuses on the investigation of promoters and clients who willfully

enforcement efforts and directly influence the American public’s

participate in domestic and offshore tax schemes in violation of the

confidence and compliance with the tax laws. The integrity of our

tax laws. Participants in these abusive schemes create structures

tax system depends heavily on taxpayers’ willingness to self-assess

such as trusts, foreign corporations, and partnerships to make it

taxes owed and voluntary file tax returns. CI investigations help

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

assure law-abiding taxpayers that individuals who deliberately under-

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

report or omit income from their tax returns are held accountable

ownership and control remains with a U.S. taxpayer.

for their actions. Common practices involved in general tax fraud

investigations include keeping two sets of books, making false

entries in books and records, claiming personal expenses as business

REFUND FRAUD PROGRAM

expenses, claiming false deductions or credits against taxes owed,

CRIMINAL INVESTIGATION’S (CI) primary resource

sources, such as money obtained through embezzlement, bribery,

and hiding or transferring assets. CI special agents use their financial

The Refund Fraud Program consists of three parts–identity theft

commitment is to develop and investigate tax crimes, both legal

and frauds. The individuals can be legitimate business owners but

investigative expertise to uncover and quantify the seriousness of

investigations, the Questionable Refund Program (QRP), and the

and illegal source. Prosecution of these cases supports the overall

obtain their income through illegal means. These investigations

these schemes. They also work closely with DOJ prosecutors to

Abusive Return Preparer Program (RPP) for both Individual Master

IRS compliance goals and enhances voluntary compliance with the

focused on methods through which individuals seek to “launder”

gather the necessary evidence to bring these cases to a successful

File (IMF) and Business Master File (BMF). These programs cover

tax laws. CI works some of these investigations with our federal,

their ill-gotten income by making it appear the income is from a

conclusion.

criminals who file fraudulent tax returns to steal government

state and local law enforcement partners and also coordinates

legitimate source. Frequent money laundering techniques include

funds. This type of theft erodes voluntary compliance and taxpayer

with foreign tax and law enforecement agencies.

the manipulation of currency reporting requirements, layering

confidence in the integrity of the tax system. It also results in the

of transactions and international movement of funds. In these

loss of vital funds needed to support government programs, many of

The Illegal Source Financial Crimes Program encompasses tax

types of investigations, CI Special Agents work together with our

which impact the most vulnerable Americans.

and tax-related, money laundering and currency violations. These

federal, state and local law enforcement partners, as well as with

investigations focus on individuals deriving income from illegal

foreign tax and law enforcement agencies.

IRS: Criminal Investigation Annual Report 2019

TAX CRIMES

CYBER CRIMES

The Questionable Refund Program identifies

credits. The preparers’ clients may or may

Employment taxes include federal income

fraudulent claims for tax refunds. Generally,

not know their returns were falsified.

tax withholding, Social Security taxes, and

these schemes involve individuals filing

multiple fraudulent tax returns using the

personally identifiable information of

federal unemployment taxes.

EMPLOYMENT TAX FRAUD

individuals who knowingly or unknowingly

IDENTITY THEFT

CYBER CRIMES

same period, data loss incidents reported

with their IRS civil counterparts to aid

to the IRS has drastically increased. These

taxpayer and revenue protection efforts. The

Since 2015, CI has been building a

data loss incidents include data intrusions,

IRS also uses this information to develop

cybercrimes program to address the

business email compromise, phishing

internal defenses that help identify and

exponential growth of cybercrime impacting

schemes, and bank account takeovers

prevent further losses associated with

the tax, financial, and economic systems

victimizing private sector entities involved

fraudulent claims.

are used to facilitate the scheme. A

Employment tax fraud takes many forms.

of the United States. A Cyber Crime Unit

in the tax eco-system and the IRS. These

significant number of these investigations

Some of the most common forms include

Identity theft refund fraud occurs when

(CCU) with locations in our Los Angeles

thefts target detailed financial data, prior year

CI’s cybercrime investigative efforts focus

include cases also considered identity

employee leasing, paying employees in cash,

someone uses the personally identifiable

and Washington, D.C. Field Offices was

tax returns, and payroll records that criminals

on subjects using the internet as an essential

theft investigations (stolen identity refund

filing false payroll tax returns, and failing

information (PII) of another individual–for

part of the initial launch of the program and

use to generate SIRF claims that mirror a

means to commit the crime, remain

fraud-SIRF).

to file payroll tax returns (“pyramiding”).

example name, Social Security number,

a headquarters Cyber Crimes office and

victim’s actual tax return. During these types

anonymous, elude law enforcement, and

Pyramiding is when a business withholds

address–without permission, to commit

cybercrimes coordinators in each of our 21

of cybercrime investigations, special agents

conceal financial transactions, ownership of

In contrast, Abusive Return Preparer

taxes from its employees, but intentionally

fraud or other crimes. These cases are

Field Offices followed. CCU investigations

use their close working partnerships with

assets, or other evidence. As with all types

Program investigations involve the orches-

fails to forward them to the IRS. After a

commonly referred to as stolen identify

involve the internet and internet based

other law enforcement agencies and their

of crimes within CI’s area of responsibility,

trated preparation and filing of false income

liability accrues, the individual starts a

refund fraud (SIRF) investigations. The

technologies that enable criminals to engage

capabilities as law enforcement officers

special agents working cybercrimes investi-

tax returns by corrupt return preparers.

new business and begins to accrue a new

scam usually occurs when an identity thief

in illegal activity with anonymity and without

to gather valuable information about SIRF,

gations use the same “follow the money”

These preparers often claim inflated personal

liability. Some employers withhold taxes

uses a legitimate taxpayer’s identity to file

a defined physical presence. The CCU

refund fraud crimes, and information that

strategy that made CI’s involvement in

or business expenses, false deductions,

from their employees’ paychecks and use

a fraudulent tax return and claim a refund.

focuses its efforts on multijurisdictional

affects the integrity of IRS online systems.

complex investigations a mainstay since the

excessive exemptions, and unallowable tax

the funds for their personal expenses.

Generally, the identity thief will use a stolen

investigations posing the most significant

They share criminal intelligence in real-time

creation of the agency in 1919.

SSN and other personally identifiable

threats to the U.S. tax and financial systems.

information (PII) to file a fraudulent tax return

These crimes typically involve the use of

and attempt to get a refund early in the filing

crypto currencies to facilitate the criminal

season before the legitimate taxpayer, files

activity.

their tax return.

Field office special agents and professional

staff working cybercrime investigations are

focused primarily on cyber enabled investigations that involve theft and fraud and are

increased in scale by the use of computers,

computer networks, or other forms of

technology. Over the past several years, CI

has seen an increasing growth in the number

of criminals using the cyber environment to

facilitate stolen identity refund fraud (SIRF)

and other refund fraud schemes. During this

IRS: Criminal Investigation Annual Report 2019

CYBER CRIMES

South Korean National and hundreds of

others charged worldwide in the takedown

of the largest darknet child pornography

website, which was funded by bitcoin

On March 5, 2018, agents from the IRS-CI,

CYBER CRIMES

which are currently being analyzed by the

than one million bitcoin addresses, signifying

National Center for Missing and Exploited

that the website had capacity for at least one

Children (NCMEC), contained over 250,000

million users.

unique videos, and 45 percent of the videos

The xDedic Marketplace, a website

involved in the illicit sale of compromised

computer credentials and personally

identifiable information, Shut Down!

unlicensed Money Service Business (MSB)

money transmitting business, laundering

and exchanged at least 25 million dollars

of monetary instruments, and failure to

for drug dealers, credit card fraudsters,

maintain an effective anti-money laundering

and other illicit activities. Kalra owned

program. Kalra also exchanged bitcoin for

and operated a Bitcoin Kiosk (aka Bitcoin

U.S. dollars and at the time of his arrest,

currently analyzed contain new images that

The agencies have shared data from

have not been previously known to exist.

the seized server with law enforcement

On January 24, 2019, seizure orders were

ATM) that would exchange large amounts

attempted to exchange over $400,000

HSI, National Crime Agency in the United

around the world to assist in identifying

executed against the domain names of the

of money with no Know Your Customer

with undercover agents representing the

Kingdom, and Korean National Police in

Welcome To Video offered these videos

and prosecuting customers of the site. This

xDedic Marketplace, effectively ceasing the

requirements or Anti-AML program. This

proceeds to be from drug sales. Digital

South Korea arrested Jong Woo Son, 23,

for sale using the cryptocurrency bitcoin.

has resulted in leads sent to 38 countries

website’s operation. The xDedic Marketplace

is believed to be the first federal criminal

assets, cash, a Bitcoin Kiosk, and money in

a South Korean national, for his operation

Typically, sites of this kind give users a forum

and yielded arrests of 337 subjects around

operated across a widely distributed

case charging an unlicensed money

bank and crypto currency accounts taken

of Welcome To Video. The server that

to trade in these depictions. This Darknet

the world. The operation has resulted in

network and utilized bitcoin in order to

remitting business that used a Bitcoin

at the time of his arrest resulted in approxi-

he used to operate this Darknet market,

website is among the first of its kind to

searches of residences and businesses of

hide the locations of its underlying servers

kiosk. Kalra plead guilty to distribution of

mately 1.2 million dollars in seizures. t

that exclusively advertised child sexual

monetize child exploitation videos using

approximately 92 individuals in the United

and the identities of its administrators,

methamphetamine, operating an unlicensed

exploitation videos available for download

bitcoin. In fact, the site itself boasted over

States. Notably, the operation is responsible

buyers, and sellers. Buyers could search

by members of the site, was also seized.

one million downloads of child exploitation

for the rescue of at least 23 minor victims

for compromised computer credentials

The operation resulted in the seizure of

videos by users. Each user received a unique

residing in the United States, Spain and the

on xDedic by desired criteria, such as

approximately eight terabytes of child sexual

bitcoin address when the user created an

United Kingdom, who were being actively

price, geographic location, and operating

exploitation videos, the largest child sexual

account on the website. An analysis of the

abused by the users of the site.

system. Based on evidence obtained during

exploitation site of its kind. The images,

server revealed that the website had more

the investigation, authorities believe the

website facilitated more than $68 million

in fraud. The victims span the globe and all

industries, including local, state, and federal

government infrastructure, hospitals, 911

and emergency services, call centers, major

metropolitan transit authorities, accounting

and law firms, pension funds, and universities.

California man pleads guilty to federal

narcotics, money laundering charges for

running unlicensed bitcoin exchange and

ATM

Kunal Kalra – Kalra, AKA “shecklemayne,”

“coinman,” or “Kumar,” operated an

IRS: Criminal Investigation Annual Report 2019

ELECTRONIC CRIMES

the defendants created false paperwork

EVERY INVESTIGATION CRIMINAL INVESTIGATION conducts

In FY 2019, eCrimes personnel participated in over 400 search

involves digital and multimedia evidence. This includes many

warrants or other digital forensic operations performed at over

• Digital currency identification (bitcoin wallets, etc.)

• Internet activity and

history analysis

(including production records, blending

tickets, and bills of lading), used temporary

sources, such as: Personal computers, Mobile devices (phones,

525 locations; seized 1.24 petabytes of data from over 2,530

• Dark web activity

tablets, etc.), Small and large business computers/servers, Server

computers, laptops, external devices and 705 mobile devices.

Electronic Crimes continues as the premier source for digital

• Targeted searches

• Data conversion from

proprietary formats

“toll processing” agreements, and engaged

farms, Cloud storage, and the Dark net. The proper collection and

• Encryption and password

recovery

analysis of digital evidence requires specialized skills and training,

and multimedia evidence in IRS-CI. The eCrimes unit is one

it appear that biodiesel and related products

the premier digital forensics units in all of U.S law enforcement.

• Taint reviews and

segregation

• Website preservations

allowing this evidence to be admissible in court proceedings.

• Deduplication of large data

sets (such as email)

• Recovery of hidden and

deleted data

• Recovery & repair of

damaged disk drives

eCrimes also runs a state of the art forensics lab in Woodbridge,

CI Electronic Crimes’ primary function is the forensic acquisition,

VA, where some of the most complex digital evidence extraction

analysis and testimony of the digital and multimedia evidence

and analysis is performed.

• Extraction of data from proprietary financial software

(tax preparation, accounting, payroll, point of sale systems, custom database, etc.)

“burner phones,” backdated records and

in fraudulent financial transactions to make

had been bought and sold, all to support the

filing of the false claims.

In total, the IRS mailed $511,842,773 in U.S.

related to ongoing criminal investigations. Electronic Crimes

Treasury checks to Washakie Renewable

(eCrimes) has a presence in 60 CI posts-of-duty across the United

Energy. Jacob Kingston, Isaiah Kingston,

States via 73 SA-CIS, five computer investigative forensic analysts

E-CRIMES MEDIA

(CIFA), senior analysts supporting the SA-CISs in the, forensic

intelligence regarding use of cryptocurrencies

the defendants variously with aiding in the

and Lev Dermen were also charged with

to commit crimes.

preparation and filing of false claims and false

conducting $148,005,592 in international

tax returns, conspiracy to commit money

money laundering transactions designed

assistant contractors, and one administrative support employee.

LOS ANGELES FIELD OFFICE: In Westwood, CA Kunal Kalra

The SA-CISs, Senior Analysts and CIFAs receive advanced

25, known as “Kumar,” “shecklemayne” and “coinman agreed to

LAS VEGAS FIELD OFFICE: On January

laundering offenses, money laundering,

to conceal the location and ownership

training in the proper procedures of collecting, acquiring, analyzing

plead guilty to federal criminal charges for owning and operating an

17, 2019, a second superseding indictment

conspiracy to commit obstruction of justice

of their fraud proceeds. The indictment

and testifying on digital and multimedia evidence. Additionally,

unlicensed money transmitting business. He exchanged up to $25

was returned charging Jacob Kingston, Isaiah

offenses, destroying and concealing records

further charged that they conducted money

they provide support in drafting search warrants, court orders

million in cash and virtual currency for individuals, including Darknet

Kingston, Lev Aslan Dermen (also known as

subject to federal search warrants, and

laundering transactions when purchasing

and subpoenas. They travel across the country to participate on

drug dealers and other criminals, some of whom used his bitcoin

Levon Termendzhyan), Rachel Kingston, and

witness tampering.

luxury assets, including personal residences

search warrants and conduct the digital and multimedia evidence

ATM kiosk.

Sally Kingston with conspiracy to commit

costing $3.5 million and $3.1 million, and a

mail fraud by filing $1.1 billion in fraudulent

According to the plea agreement, the

From May 2015 through October 2017, Kalra operated a virtual

claims for refundable renewable fuel tax

defendants filed 39 false claims with the

To ensure the highest of digital forensics standards in U.S. law

currency exchange business where he exchanged U.S. dollars

credits with the IRS and laundering over $3.1

IRS seeking $1,166,792,650 in refundable

This case required SA-CISs to seize and

enforcement, the Treasury Computer Forensic Training Program

for Bitcoin and vice versa. Kalra charged commissions for

billion. The 46-count indictment also charged

fuel tax credits. Aligned with the scheme,

analyze hundreds of terabytes of data

(TCFTP) was created as a joint-agency training program. The

exchanging dollars for Bitcoin, and he only dealt with high-volume

obtained pursuant to nine simultaneous

TCFTP initiative was formalized in 1997, with its origins reaching

customers willing to exchange at least $5,000 per transaction.

search warrants. In addition, dozens of

back to 1989, as a means of coordinating resources and leveraging

Kalra established bank accounts in the names of others, including

phones containing relevant text message

assets for law enforcement agencies in the Department of the

false businesses, which allowed him, to conceal his illicit business

threads, virtual machines, enterprise level

Treasury. Today, the participating agencies of the TCFTP include

activities. Karla also operated a Bitcoin ATM.

e-mail message archivers and accounting

seizures.

CI, Homeland Security Investigations (HSI) and U.S. Secret

TYPES OF FORENSIC ANALYSIS THE SA-CISS AND CIFAS PERFORM INCLUDE:

$1.8 million Bugatti Veyron automobile.

systems were also seized, processed

Service (USSS). All digital forensics training is standardized

A key element to the success of the case was the technical

and analyzed. Many of the electronic

across the 3 agencies; therefore a Special Agent – Computer

expertise and ability of the IRS Criminal Investigation Special

devices contained key evidence that was

Investigative Specialist (SA-CIS) with CI and USSS can work in

Agents to seize, image and analyze the Bitcoin ATM that was

instrumental in gaining plea agreements

tandem on the same investigation and ensure the work is done

instrumental in executing this crime. IRS-CI special agents

ranging from 15-to-30 years in prison for the

in a uniform fashion. TCFTP receives funding support from the

developed procedures enabling the forensic seizure and processing

defendants. t

Treasury Executive Office of Asset Forfeiture (TEOAF) who funds

of log files and cryptocurrencies that allowed investigators to

the TCFTP through the Treasury Forfeiture Fund.

“follow the virtual money trail,” which led to other valuable

IRS: Criminal Investigation Annual Report 2019

NON–TAX CRIMES

985

INVESTIGATIONS INITIATED

951

PROSECUTIONS RECOMMENDED

MONEY LAUNDERING

878

SENTENCED

The trail can also reveal the crooks who made money through crime.

CI special agents are experts at uncovering money trails. They take

Money laundering, as defined in the National Money Laundering

part in a wide variety of investigations, financial task forces, and

Strategy, is criminal finance. When criminals or criminal organizations

narcotics task forces including Organized Crime Drug Enforcement

seek to disguise the illicit nature of their money by introducing it

Task Force (OCDETF) and the High Intensity Drug Trafficking Area

into the stream of legitimate commerce and finance, they launder

(HIDTA).

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

BANK SECRECY ACT PROGRAM

other assets.

The Bank Secrecy Act (BSA) mandates the disclosure of foreign bank

SPECIAL AGENTS IN the IRS Criminal Investigation (CI) Illegal

Frequent money laundering techniques include:

Source Financial Crimes Program investigates tax and tax related

• Manipulating currency reporting requirements,

• Layering transactions,

• Using Black Market Peso, and

• Moving funds internationally.

crimes, money laundering, and currency violations. The investigations focus on individuals getting income from illegal sources,

In contrast, criminals today can press a computer button to move

accounts, the reporting of certain currency transactions conducted

large amounts of criminally derived funds into or through the United

with a financial institution, and the reporting of the transportation

States and foreign financial institutions. They launder money through

of currency across United States borders. Through the analysis of

a wide variety of enterprises, such as banks and money transmitters

BSA data, CI has identified significant, complex money laundering

to stock brokerage houses, casinos, and Bitcoin exchanges. The

schemes and other financial crimes. CI is one of the largest law

flow of illegal funds around the world is estimated to be hundreds of

enforcement consumers of BSA data.

billions of dollars.

The CI BSA program has grown substantially since its start in early

such as embezzlement, bribery, and fraud. They also focus on

The law enforcement community recognizes CI’s special agents

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

2000. The primary objective of the program is to analyze BSA

money-laundering schemes where individuals “launder” their

as the premier experts in money laundering investigations.

financial system, it leaves behind a trail of transactions. Uncovered

information to identify significant financial criminal activity. Although

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

trails identify who willingly enables and finances crime. These people

FinCEN is the agency tasked with administering the BSA, they have

legitimate sources.

often view crime with deliberate blindness, negligence, or disregard.

no criminal enforcement authority. All criminal enforcement of BSA

IRS: Criminal Investigation Annual Report 2019

NON–TAX CRIMES

PUBLIC CORRUPTION

CORPORATE FRAUD

L.A. County Public Official and Contractor

Who Paid Him Bribes Agree to Plead Guilty

to Federal Bribery and Tax Charges.

is delegated by the U.S Treasury Secretary

Each of the SAR RTs and FCTFs operate

to IRS-CI. Other federal agencies can

in slightly different fashion, based on

investigate criminal violations of the BSA,

direction and oversight from their respective

CI investigates elected and appointed

The Corporate Fraud Program concentrates

but CI is the only federal agency that actively

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

individuals who violate the public’s trust.

on violations committed by publicly-traded

reviews all BSA data for leads and possible

CI special agents identify leads in their

These individuals are from all levels of

or private corporations and their senior

In a plea agreement filed on April 25, 2019,

requested by Contreras for, among other

criminal violations. CI uses various data

respective areas, they meet with partici-

government including local, county,

executives. Some specific criminal acts

Los Angeles County’s Internal Services

things, work that did not occur and materials

analytics tools to actively analyze BSA data

pating law enforcement agencies to discuss

state, federal, and foreign officials. Public

involving corporate fraud include falsifying,

Department employee, Mohammad R.

that were not used on county projects.

and identify leads for possible investigation.

and disseminate the leads for action. It

corruption investigations include criminal

fabricating, or destroying company records.

Tirmazi, 50, of Alta Loma, California, pled

Tirmazi also admited that he did not report,

CI leads SAR Review Teams (SAR RTs)

should be noted that all of the major federal

offenses, such as bribery, extortion,

Fraudsters use the false information to

guilty to accepting bribes and subscribing

or force Contreras to correct, violations of

and Financial Crimes Task Forces (FCTF) in

agencies use BSA data to supplement their

embezzlement, kickbacks, tax fraud, and

complete tax returns, financial statements,

to a false 2016 tax return in which he failed

the County’s Building and Safety Code or

all 93 judicial districts across the country.

investigations, but only CI regularly triage’s

money laundering.

and reports for regulatory agencies or

to report $192,800 in income, including

the National Electrical Code that Tirmazi

The FCTF and SAR-RT focus on specific

BSA data for leads and possible criminal

investors. Corporate Fraud can also include

approximately $137,400 in bribe payments

discovered during inspections of Tel-Pro’s

geographic areas and involve collaboration

violations. CI’s financial investigative focus

Corruption by public officials results in

executives who entitle themselves to

from contractor, Enrique Contreras, of

work. Some of those violations related to

between CI and federal, state, and local

allows them to leverage BSA data better

the loss of many taxpayer dollars. Public

unauthorized compensation, or who receive

Palmdale. Contreras also agreed to plead

asbestos removal and Tel-Pro’s failure to

law enforcement agencies for identifying

than any other U.S law enforcement agency.

officials that violate the public trust are

unapproved payments and bonuses,

guilty to paying bribes and subscribing to

properly install cables. In his plea agreement,

and investigating financial crimes, including

As a result, 12% of all CI investigations

often prosecuted to the full extent of the

corporate funds, or bogus loans to pay for

a false 2015 tax return in which he failed

Tirmazi admitted he generally considered

BSA violations, money laundering, narcotics

initiated in fiscal year 2019 were the direct

law, with large fines and increased jail

personal expenses.

to report $281,422 in income. According

Tel-Pro’s work to be “shoddy,” but he

trafficking, and terrorist financing.

result of BSA data. CI currently has upwards

time for offenders. In addition, the United

to court documents, from 2014 to 2016,

overlooked its poor work because of the

of 175 special agents and investigative

States is often a desirable destination for

Tirmazi accepted a total of nearly $300,000

bribes he received from Contreras. t

CI strengthens the BSA program area by

analysts working on SAR RTs and FCTF

the monies of corrupt foreign officials. This

maintaining excellent working relationships

around the country.

type of corruption undermines democratic

with anti-money laundering officials within

institutions and threatens national security.

GENERAL FRAUD

of Tel-Pro Voice & Data, Inc, a low voltage

electrical wiring company, that performed

work for the county. In exchange for the

bribes, Tirmazi approved change orders

in bribe payments from Contreras, the owner

CI special agents also investigate healthcare

the financial industry. During the past year,

and financial institution fraud. When CI

CI participated in numerous local, regional,

brings income tax and money laundering

national, and international anti-money

charges to a criminal case, it enhances

laundering forums and conferences

prosecutors’ effectiveness to combat

presenting on various topics including CI’s

these and other types of fraud. CI special

role in investigating financial crimes, case

agents work with federal, state, and local

studies, and typologies. CI also continues

law enforcement partners, as well as with

to partner with the Financial Crimes

foreign tax and law enforcement agencies,

Enforcement Network (FinCEN) and other

to follow and uncover a trail of illicit money in

federal law enforcement agencies to provide

these investigations.

feedback and outreach to the financial

industry.

IRS: Criminal Investigation Annual Report 2019

INTERNATIONAL OPERATIONS

THE HAGUE

OTTAWA

LONDON

FRANKFURT

THE GLOBAL FIGHT

against tax and economic

crimes transcends borders

and requires innovative

DUBAI

approaches. IRS-CI’s Office

of International Operations

MEXICO CITY

(IO) works collaboratively

in support of agency goals,

objectives, and activities.

IO enhances IRS’s international strategy by combating

HONG KONG

BARBADOS

PANAMA CITY

BOGOTA

offshore tax, money

laundering, transnational

organized crime, terrorism

financing and other financial

crimes. It unites our

domestic, foreign tax, and

law enforcement agency

SYDNEY

partners. IO also works

with other organizations to

leverage bi- and multilateral

agreements and resources.

IRS: Criminal Investigation Annual Report 2019

NARCOTICS, COUNTERTERRORISM, &

TRANSNATIONAL ORGANIZED CRIME

INTERNATIONAL OPERATIONS

Through collaboration, the operation

the ability to develop leads for domestic

for Economic Cooperation and Development

vigorously confronts crime, such as interna-

and international investigations that have

(OECD) and the U.S. Department of State

IRS-CI NARCOTICS AND COUNTERTERRORISM (NCT)

In 2019, NCT partnered with the Organization for Economic

tional tax compliance, narcotics trafficking

an international nexus. The vigilance of

sponsors the training.

program supports these programs:

Cooperation and Development (OECD) Task Force on Tax Crimes

and terrorism, that threatens the national

IRS-CI special agent attachés serves to

and economic security of the United States.

uncover emerging schemes perpetrated

In FY 2019, IO had several significant

• President’s Strategy to Transnational Organized Crime

Financing Awareness Handbook for tax examiners and tax

IRS-CI also partners with criminal tax

by promoters, professional enablers, and

accomplishments:

• The U.S. National Drug Control Strategy

auditors. The purpose of this handbook is to raise awareness on

authorities from the J5 countries, Australia,

financial institutions. These entities facilitate

• The National Money Laundering Strategy

money laundering and terrorist financing techniques.

Canada, The Netherlands, and the United

tax evasion of federal tax obligations by U.S.

• Expanded its global footprint by opening a

Kingdom. Our alliances have enabled

taxpayers.

new post in Dubai in August 2019.

our forces to multiply because we share

and Other Crimes to update their Money Laundering and Terrorist

• The U.S. Government’s National Counterterrorism Strategy

One of the largest drug rings ever prosecuted in Buffalo, NY

• Hosted international delegations from The

IRS-CI contributions include reducing or eliminating the profits and

tried to hide their drug proceeds as income from sea cucumbers.

information and collaborate on international

IO also educates foreign governments

Netherlands, Dominican Republic, Mexico,

financial gains of individuals, entities, and transnational criminal

While on the witness stand, IRS Special Agent David Turri painted

criminal investigations to fight crime on an

and agencies on crime detection, investi-

Iceland, Philippines, Taiwan, Turkey, China,

organizations whose crimes involve financing terrorism, narcotics

the picture of an organization so big, it shipped its cocaine and

international scale.

gative techniques, case studies, emerging

Balkans, Israel, Kenya, and New Zealand.

trafficking, and money laundering. Our special agents investigate

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

trends, and best practices. Special agents

These meetings allowed CI to build closer

criminal violations of the Internal Revenue Code, Bank Secrecy

tractor trailers. Another witness said that in 2013, the organization

Internationally, IO has special agent attachés

train foreign governments through collab-

collaborative relationships, share information

Act and Federal Money Laundering statutes. In addition, we use

shipped 100 kilograms of cocaine to a house on Niagara Falls

strategically stationed in 11 foreign countries

orative efforts with the International Law

including newly-developing trends and

our unique financial-investigation skills to trace profits from illegal

Boulevard in the Town of Tonawanda, New York.

(Canada, Mexico, Colombia, Panama,

Enforcement Academies (ILEA) in Budapest,

investigative techniques.

activities to individuals or criminal organizations to dismantle or

Barbados, The Netherlands–Europol,

Hungary; Bangkok, Thailand; San Salvador,

• Developed cooperation between the

disrupt schemes and prosecute criminals.

England, Germany, China, Australia, and

El Salvador; and Gaborone, Botswana. In

J5 countries that enhanced more than 50

Dubai). Attachés continuously build and

addition, IO conducts training at the Interna-

investigations. Through this initiative, we

NCT assigns CI personnel to the White House Office of National

the organization took in $19 million during a 2-year period ending in

maintain strong alliances with foreign

tional Academy for Tax Crime Investigation

exchanged more data in the last year than in

Drug Control Policy to support its related strategy and the National

2015. He added that the drug ring laundered its money by setting

governments, and law enforcement and

at Guardia di Finanza Economic and Financial

the previous 10 years combined. t

Money Laundering Strategy. Other personnel have assignment to

up front companies in California, such as seafood wholesalers with

industry partners. These alliances give CI

Police School in Ostia, Italy. The Organization

multi-agency task forces. Here are some examples:

names like Triton Foods. They relied on sales records to falsely

During his testimony, Turri took the jury through a series of false

bank deposit records and purchase orders to demonstrate how

show the distribution of large amounts of sea cucumbers in Buffalo.

• Organized Crime Drug Enforcement Task Force (OCDETF)

• OCDETF Fusion Center (OFC)

Indicted with multiple other defendants, the courts accused

• High Intensity Drug Trafficking Area (HIDTA)

Herman Aguirre of being a leader of the organization and, with

• High Intensity Financial Crimes Area (HIFCA)

co-defendant Jose Ruben Gil, a link to the Sinaloa cartel. Gil, who

• Drug Enforcement Administration Special Operations Division (SOD)

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

• El Paso Intelligence Center

and testified against Aguirre. t

IRS-CI focuses its narcotics investigations on high-priority

OCDETF investigations because its contributions can have the

greatest effect on dismantling large criminal organizations.

IRS: Criminal Investigation Annual Report 2019

SPECIALIZED UNITS

GLOBAL ILLICIT FINANCIAL TEAM (GIFT)

SPECIALIZED UNITS

and other Iranian entities subject to U.S. economic sanctions.

UniCredit Bank Austria (BA), another financial institution in the

UniCredit Group, headquartered in Vienna, Austria, agreed to

(DANY) has also agreed to amend its DPA

sanctions. The charges in the indictment

Washington, D.C., field office. Since the

GIFT IS AN IRS-CI LEAD TASK FORCE to investigate organi-

forfeit $20 million and entered into a non-prosecution agreement

with SCB and extend it for two additional

as to Elyassi are merely allegations, and

agreement began, the group has initiated

zations that illicitly move money used to support international

to resolve an investigation into its violations of IEEPA. UniCredit

years, with an additional financial penalty

Elyassi is presumed innocent until proven

over 180 investigations with great success.

crime organizations. These investigations are conducted with

SpA, the parent of both UCB AG and BA, has agreed to ensure

of $292,210,160. SCB has also entered

guilty beyond a reasonable doubt in a court

The average jail sentence in these types of

various partner agencies, including Homeland Security Investi-

that UCB AG and BA’s obligations are fulfilled.

into separate settlement agreements with

of law.

cases ranges from 6 months to 4 years.

gations (HSI) and the Defense Criminal Investigative Service

numerous U.S and foreign regulators where

(DCIS). An IRS-CI supervisory special agent (SSA) oversees the

Over the course of almost 10 years, UCB AG knowingly and

they agreed to pay additional penalties

task force, which includes special agents and professional staff

willfully moved at least $393 million through the U.S. financial

totaling more than $477 million. The

from CI and partner agencies. The SSA reports to the special

system on behalf of sanctioned entities, most of which was

Justice Department has agreed to credit

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

for an entity the U.S. Government specifically prohibited from

a portion of these related payments and,

is a major conduit of IRS–CI’s money laundering strategy and

accessing the U.S. financial system. UCB AG engaged in this

after crediting, will collect $52,210,160 of

a focal point for the newly formed CI money laundering cadre.

criminal conduct through a scheme, formalized in its own bank

the fine, in addition to SCB’s $240 million

Reminiscent of Eliot Ness and Elmer Irey’s

further covered in subsequent CI Annual

The cadre consists of special agents from all 21 field offices who

polices and designed to conceal from U.S. regulators and banks

forfeiture.

“T-Men,” IRS-CI continues its partnership

Reports.

coordinate activities and allocate resources to effectively execute

the involvement of sanctioned entities in certain transactions.

CI’s money laundering strategy.

UCB AG routed illegal payments through U.S. financial

In connection with the conspiracy, a

Bureau (TTB) to combat illicit tobacco and

institutions for the benefit of the sanctioned entities in ways that

former employee of SCB’s branch in Dubai,

alcohol trade. The TTB was created in

concealed the involvement of the sanctioned entities, including

United Arab Emirates (UAE), referred to

January 2003, when the Bureau of Alcohol,

through the use of companies that UCB AG knew would appear

as Person A, pleaded guilty in the District

Tobacco, Firearms and Explosives or ATF,

unconnected to the sanctioned entity despite being controlled by

of Columbia for conspiring to defraud the

was extensively reorganized under the

As the Swiss Bank Program winded down

the sanctioned entity.

United States and to violate IEEPA. A

provisions of the Homeland Security Act of

in 2017, CI ramped up an International Tax

two-count criminal indictment also charged

2002 and realigned to the Department of

Group (ITG) to continue their focus on this

Mahmoud Reza Elyassi, an Iranian national

Justice. The act called for the tax collection

type of work. An SSA leads this group

and former customer of SCB Dubai, with

functions to remain with the Department

of special agents, investigative analysts,

participating in the conspiracy. Elyassi and

of the Treasury, thereby creating TTB. TTB

and professional staff, which report to a

his co-conspirators registered numerous

regulates and collects taxes on trade and

special agent-in-charge in the Washington,

Standard Chartered Bank (SCB), a global financial institution

supposed general trading companies in the

imports of alcohol, tobacco, firearms, and

D.C., field office. The ITG focus’ on investi-

headquartered in London, England, has agreed to forfeiture

UAE, and used those companies as fronts

ammunition within the United States. In

gations concerning international financial

of $240 million, a fine of $480 million, and to the amendment

for a money exchange business located in

2009, TTB entered into an inter-agency

entities, ultra-high net worth individuals,

UniCredit Bank AG (UCB AG), a financial institution

and extension of its deferred prosecution agreement (DPA)

Iran. Between November 2007 and August

agreement with CI to provide special agents

and tax fraud promotors. Additionally, ITG

headquartered in Munich, operating under the name HypoVer-

with the Justice Department for an additional two years for

2011, Elyassi used a business account at

to enforce TTB’s criminal provisions. These

remains involved in CI’s J5 tax enforcement

einsbank, and part of the UniCredit Group has agreed to

conspiring to violate the International Emergency Economic

SCB’s Dubai branch to cause U.S. dollar

special agents are strategically dispersed

efforts with the governments of the

enter a guilty plea to conspiring to violate the International

Powers Act (IEEPA). This criminal conspiracy, lasting from 2007

transactions to be sent and received

across the country and overseen by an SSA.

United Kingdom, Canada, Australia, and

Emergency Economic Powers Act (IEEPA) and to defraud the

through 2011, resulted in SCB processing approximately 9,500

through the U.S. financial system for the

This group’s sole focus is combating the

the Netherlands. During FY2019, the

United States by processing hundreds of millions of dollars of

financial transactions worth approximately $240 million through

benefit of individuals and entities ordinarily

illicit tobacco and alcohol trade. The TTB

ITG spearheaded an effort to train 40 CI

transactions through the U.S. financial system on behalf of an

U.S. financial institutions for the benefit of Iranian entities.

resident in Iran in violation of U.S. economic

reports to the special agent-in-charge in the

Special Agents from across the country

entity designated as a weapons of mass destruction proliferator

Additionally, The New York County District Attorney’s Office

GIFT investigations include:

• Illegal money transfer businesses

• International real estate fraud

• Financial institutions concealing and

disguising illegal transactions

• Identity theft

• Public corruption and extortion

• Government contract fraud

• Sale of contraband goods

UniCredit Group Banks agree to pay over $1.3 billion for

violating sanctions

IRS: Criminal Investigation Annual Report 2019

Standard Chartered Bank admits to illegally processing

transactions in violation of Iranian sanctions and agrees to pay

more than $1 billion

ALCOHOL AND TOBACCO

TAX AND TRADE BUREAU

(TTB)

Recent investigative efforts include the

indictment of various individuals for willfully

attempting to evade or defeat Federal

Tobacco Excise Tax and other related

violations. These investigations will be

with the Alcohol and Tobacco Tax and Trade

INTERNATIONAL TAX

GROUP (ITG)

IRS: Criminal Investigation Annual Report 2019

COMMISSIONER'S

PROTECTION DETAIL

SPECIALIZED UNITS

concerning international tax investigative

The internal controls failures allowed

pay a penalty of $10,680,554.64 to the

techniques and related issues that threaten

Walmart foreign subsidiaries in Mexico,

United States. In addition to paying a

the integrity and fairness of the tax system.

India, Brazil and China to hire third party

penalty, LLB-Switzerland has agreed

Investigations this group initiates are

intermediaries (TPIs) without establishing

to cooperate in any related criminal or

long-term and require agents to use all

sufficient controls to prevent those TPIs

civil proceedings in return for the DOJ’s

law enforcement tools at the CI’s disposal.

from making improper payments to

agreement not to prosecute the company

Recent investigations include the following:

government officials in order to obtain

for tax-related criminal offenses committed

store permits and licenses. In a number of

by LLB-Switzerland.

Walmart agrees to pay $137 million to

resolve foreign corrupt practices act case

instances, these control deficiencies were

reported to senior Walmart employees and

LLB-Switzerland and some of its

executives. The internal control failures

employees, including members of the

Walmart Inc. and a wholly owned Brazil-

allowed the foreign subsidiaries in these

bank’s management, conspired with a

Based Subsidiary, WMT Brasilia S.a.r.l.

countries to generate additional profits.

Swiss asset manager and U.S. clients to

(WMT Brasilia), have agreed to pay a

combined criminal penalty of $137 million

to resolve the government’s investigation

into violations of the Foreign Corrupt

conceal those U.S. clients’ assets and

LLB Verwaltung (Switzerland) AG's

assistance to U.S. taxpayers to commit tax

evasion results in 10.6 million penalty

Practices Act (FCPA). WMT Brasilia pleaded

income from the Internal Revenue Service

(IRS) through various means, including

using Swiss bank secrecy protections and

nominee companies set up in tax haven

guilty in connection with the resolution.

LLB Verwaltung (Switzerland) AG, formerly

jurisdictions. At its peak, LLB-Switzerland

Walmart also entered into a three-year

known as “Liechtensteinische Landesbank

had approximately one hundred U.S. clients

non-prosecution agreement and agreed to

(Schweiz) AG” (LLB-Switzerland), a

holding nearly $200 million in assets. The

retain an independent corporate compliance

Swiss-based private bank, reached

majority of those accounts were in the

monitor for two years. The $137 million

a resolution with the United States

names of nominee entities. t

penalty includes forfeiture of $3.6 million

Department of Justice (DOJ), and will

THE COMMISSIONER’S PROTECTION DETAIL (CPD) is a

U.S. Treasury, and other venues in Washington, D.C., as well as

specially trained cadre of IRS-CI Special Agents, who provide

around the globe. In a typical year, the CPD protects the Commis-

personal security and protection of the IRS Commissioner. Since

sioner on approximately 500 protective movements, 20 domestic

According to Walmart’s admissions,

1999, this dedicated team has been charged with protecting the

trips, and 2-3 international visits.

from 2000 until 2011, Walmart personnel

Commissioner during official business operations. CPD agents

failed to implement sufficient controls

provide protection of the Commissioner within the National Capital

CPD agents are trained in protective service operations with

to guard against improper payments to

Region and while in travel status, foreign and domestically.

an emphasis on operational planning, motorcade operations,

and a fine of $724,898 from WMT Brasilia.

protective intelligence, and preventing and responding to attacks.

government officials in certain Walmart

foreign subsidiaries. Even though senior

As the leader of the IRS, the Commissioner frequently attends

Protective operations are a team effort and require detailed

Walmart personnel knew of these issues,

meetings, conferences, publicized hearings and speaking

advanced preparations aimed at identifying and mitigating

Walmart did not begin to change its internal

engagements in locations such as the White House, U.S. Capitol,

potential risks, threats, and vulnerabilities. t

accounting controls until 2011.

IRS: Criminal Investigation Annual Report 2019

NATIONALLY COORDINATED

INVESTIGATIONS UNIT

NATIONALLY COORDINATED INVESTIGATIONS UNIT

The NCIU has focused its current case

In FY 2019, the NCIU referred a total of 106

unit has used the NCIU FATCA data model to

development efforts on several national

cases to all 21 CI field offices, ensuring

open and refer 69 investigations to LB&I.

initiatives that CI’s Executive Steering

maximum geographic and program area

Committee identified as priorities. The

coverage. The average criminal deficiency for

In the virtual currency space, the NCIU leads

unit’s current priorities are: virtual currency,

NCIU referrals is approximately $4.6 million,

CI’s effort to develop criminal investigations

international tax, significant money

which is noticeably higher than the average

from Coinbase john doe summons data. The

laundering, employment tax, the Department

deficiency in traditional tax investigations (at

unit works closely and collaboratively with

of Homeland Security’s National Targeting

approximately $2.9 million).

LB&I to provide continuous feedback, and

Center, and the Whistleblower Program. The

to share the knowledge and insight it gains

NCIU successfully developed data models

The NCIU works with multiple internal and

from analyzing the Coinbase data. NCIU is

for multiple initiatives that lead to significant,

external stakeholders to advance its mission

also working with other CI sections such

impactful investigations in the field. More

of data-driven case development. The

as Refund, Cyber Crimes, and Operations

importantly, the unit demonstrated the

NCIU is working with multiple CI sections

Policy & Support, to create a national virtual

power of data analytics and its benefit for

and field offices. Also, it has substantially

currency case development guide for field

law enforcement through the significant

increased its partnerships within the IRS

agents.

number of referrals it made, and through

by participating in, and sometimes leading,

quantitative and qualitative controls.

cross-BOD working groups. It is also

In addition to its joint enforcement efforts

promoting data analytics to the various

and bilateral investigative referrals, the NCIU

BODs and their executive leadership.

facilitated and managed multiple detail

To further expand CI’s data-driven analytics

in FY 2019, the NCIU has successfully

opportunities where IRS employees from

developed and launched new data models

In order to lead service-wide enforcement

different BODs were detailed to CI to learn

for the following three national initiatives:

efforts in international tax compliance, the

about the data-driven case development

NCIU joined, and has become an integral

methodology.

International – Foreign Account Tax

member of the LB&I Joint International Tax

Compliance Act (FATCA)

Shelter Information Center (JITSIC) group.

The NCIU will continue increasing its

The NCIU uses its insight and expertise

footprint and impact by hiring additional

IN FISCAL YEAR (FY) 2017, we launched the Nationally

team-based approach. The NCIU is proactively addressing key

International – U.S. Citizens Living

to analyze FATCA data and develop cases

personnel and launching initiatives that

Coordinated Investigations Unit (NCIU) as a proof of concept.

issues in non-compliance and emerging threats by building

Abroad (USCLA)

from that data. NCIU is also collaborating

enhance CI’s ability to effectively enforce the

The NCIU addresses historically persistent challenges to Criminal

strategic partnerships with internal and external stakeholders. In

with LB&I to craft and facilitate a holistic

nation’s criminal tax law and related financial

Investigation’s (CI) core mission, which is to identify, select, and

addition to innovative, national case development, the NCIU offers

approach for combating non-compliance in

crimes. t

develop cases. The NCIU focuses its case development efforts on

continuous support to CI field offices by offering initiative-specific

national initiatives and is at the forefront of the data-driven pilot for

training and investigative research. The NCIU also works closely

the entire agency.

with multiple IRS business operating divisions (BODs) to facilitate

Virtual Currency

the international tax space. In FY 2019, the

a collaborative, service-wide approach to enforcement, and to

The NCIU is modernizing IRS criminal investigative tools to

promote data analytics throughout the entire IRS.

make them more reliant on data analytics with a centrally led,

IRS: Criminal Investigation Annual Report 2019

UNDERCOVER OPERATIONS

SIGNIFICANT CASE

were primarily immigrants with little

undercover IRS Criminal Investigation

knowledge of the tax system and limited

agents went to Pastars posing as clients for

On August 23, 2019, a court sentenced a

language skills. “That population is most

tax preparation. Both were very clear that

Lina Pastars of Federal Way, Washington to

vulnerable,” Martinez said. “They were left

they had no employee business expenses,

one year in prison for 8 counts of aiding and

to flounder by themselves when the IRS

and their employers reimbursed all their

assisting the preparation of false income tax

came knocking at their door.”

expenses. Nevertheless, Pastars claimed

returns. Pastars operated a tax preparation

thousands of dollars in unreimbursed

business out of her home and collected

According to testimony at trial and records

expenses so that the returns showed a

higher fees from customers by falsely

filed in the case, the investigation began

refund. Pastars increased the fee that she

inflating their deductions, so that her clients

in 2015, when the IRS audited one of her

charged each undercover agent saying, “If

received a larger refund.

clients whose 2012 tax return claimed more

I do deduction I charge more.” Undercover

than $30,000 in unreimbursed business

audio and video of these exchanges were

At the sentencing hearing in U.S. District

expenses. The client claimed Pastars

admitted into evidence and played for the

Court in Seattle, Chief U.S. District Judge

had claimed the deductions without their

jury. t

Ricardo S. Martinez said Pastars’s clients

knowledge. In March and April 2015,

CI’S UNDERCOVER PROGRAM HISTORY

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

Office retained review, approval, funding and training authority,

In 1929, Michael Malone successfully infiltrated Al Capone’s

and districts were responsible for the initiation and daily

Chicago gang for nearly two years. Because of his work, the

management of the operation. This organization continues today.

government successfully prosecuted Capone and his top

enforcer, Frank Nitti, for tax crimes.

In the 1980s, UCO focused on offshore banking schemes and

illegal tax shelters. The estimated revenue loss from these

In 1963, the Undercover Operation (UCO) was centralized

shelters was about $120 billion by 1985. With the advent of

into the National Office. UCO focused on illegal gambling and

money laundering laws, undercover agents became proficient at

organized crime, and most operations lasted longer than one

conducting investigations into the laundered illegal proceeds of

year.

narcotics traffickers.

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

Today, CI uses undercover operations in investigations on

CRIMINAL INVESTIGATION (CI) has a long history of using

and leadership teams initiate and manage day-to-day operations in

persistent allegations concerning the movement of casino

unscrupulous tax return preparers, offshore tax schemes, money

undercover techniques to investigate crime. These techniques are

their respective field offices.

receipts by couriers to offshore tax havens. UCO infiltrated

launderers, dark web marketplace operators, and those who

organized crime organizations that used fall guys to operate

seek to conceal the movement of money for illegal purposes,

casinos.

including tax evasion. t

well-documented, and they play a significant role to bring criminals

to justice. Special Investigative Techniques (SIT) oversees CI's

CI has a cadre of active undercover agents and some go “shopping” for

undercover activities and reviews, approves, funds, and trains

return preparer schemes. In FY 2019, agents conducted approximately

personnel who carry out undercover operations. Special agents

420 undercover operations and shopped more than 90 return preparers.

IRS: Criminal Investigation Annual Report 2019

WARRANTS & FORFEITURES

IRS CRIMINAL INVESTIGATION Asset

4,500-square-foot house and property in

businesses were set up on American Indian

Forfeiture program uses seizure and

March 2019 after Tucker’s wife abandoned

tribal lands in name only as an attempt to

forfeiture authority as an investigative tool to

the home. She left behind furnishings, an art

extend loans with rates higher than what

disrupt and dismantle criminal enterprises.

collection and exercise equipment.

some states allow. The businesses actually

The program seeks to deprive criminals of

operated largely out of an office building in

property used in, or acquired through, illegal

Viewers of the Netflix series, “Dirty Money”

activities. CI takes a leading role in these

may recognize Tucker’s Leawood residence,

investigations because of their financial

because portions of the documentary were

Tucker is serving a 16-year, 8-month federal

expertise and resources.

filmed there. Tucker was convicted in 2017

prison sentence. The forfeiture order grants

on multiple charges related to $2 billion

the government the authority to seize

IRS-CI is one of the largest contributors to

payday loan businesses that authorities

Tucker’s proceeds and property he acquired

the Treasury Forfeiture Fund (TFF), which

said extended unethical consumer loans

from illegal proceeds he made through his

the Treasury Executive Office for Asset

under terms that deceived borrowers. The

businesses. t

Overland Park, Kansas

Forfeiture manages. These funds are used to

reimburse victims of criminal activity and to

pay for law enforcement related expenses,

such as training, equipment, and the cost

of conducting significant investigations. In

addition, CI shares a portion of forfeited

funds with federal, state and local law

enforcement agencies. In FY19, IRS-CI

seized over 500 assets worth an estimated

value of $901.8 million and forfeited approximately $502.7 million in ill-gotten proceeds.

More than 1,000 people visited the

Leawood, Kansas, Hallbrook neighborhood

last month to buy $85,626 worth of

imprisoned payday loan businessman

Scott Tucker’s abandoned possessions at

an estate sale, according to a recent court

filing. People bought Tucker’s professional

racing memorabilia, furniture, exercise

equipment and other property. IRS-CI

special agents took possession of Tucker’s

IRS: Criminal Investigation Annual Report 2019

NATIONAL FORENSIC LABORATORY

NATIONAL FORENSIC LABORATORY REQUESTS

SCIENTIFIC SERVICES

132

CASES

TRIAL GRAPHICS

AND DESIGN

115

CASES

DATA

PROCESSING CENTER

130

CASES

FOR MORE THAN 40 years, scientists and

that include electronics (audio, video, and

primarily for CI Special Agents preparing for

technical experts at the National Forensic

image intelligibility), latent prints (finger and

trial, Trial Graphics and Design also assist

Laboratory (NFL) have reported the results

palm print development and comparison),

in the creation of high-level presentations

of forensic testing and technical services to

polygraph, questioned documents, and ink

and other special projects. Furthermore,

investigators for use in exploring potential

chemistry. The Trial Graphics and Design

the Data Processing Center is responsible

criminal violations of the Internal Revenue

section is responsible for breaking down

for taking information, either hard copy or

Code and related financial crimes. Results

complicated cases into succinct effective

electronic, and compiling it into a database

of the NFL’s work are used by CI Special

visuals that help show, rather than tell,

that is delivered to the customer and can be

Agents, or other customers of the laboratory

all the elements of extremely complex

used to more efficiently manage and analyze

to analyze elements of, help build, or

investigations. Although these services are

case-related data. t

strengthen an investigation. Often, support

provided by the NFL doesn’t end with

delivery of a scientific report or product.

Whether it be a visual information specialist

providing and adjusting graphics before or at

trial, or a forensic scientist testifying to their

findings, an important function of the NFL

is to support judicial proceedings where and

when required. Although the NFL has just 60

employees, the laboratory’s work is critical

in ensuring the efficient processing of crucial

evidence in CI investigations.

The NFL consists of three sections, each

offering specific scientific or technical

services. For instance, the Scientific

Services section offers forensic disciplines

IRS: Criminal Investigation Annual Report 2019

NATIONAL CI TRAINING ACADEMY

TRAINING AND NCITA

New special agents complete six months

In addition to SAIT, the NCITA provides

Budapest, Hungary; Bangkok, Thailand;

of training including the 11-week Criminal

advance training to special agents in the

San Salvador, El Salvador; and Gaborone,

Investigator Training Program (CITP) run

use of force, firearms instruction, building

Botswana. CI also partners with the Guardia

by FLETC. The CITP covers basic criminal

entry and defense tactics. The NCITA also

di Finanza Economic and Financial Police

investigation skills, federal criminal law,

provides leadership development programs

School’s International Academy for Tax

courtroom procedures, enforcement operations,

for all levels, from pre-management

Crime Investigation in Ostia, Italy. The

interviewing skills, and firearms training

through senior management, to ensure the

Organization for Economic Cooperation and

common to all federal law enforcement agents.

identification and development of future

Development (OECD) sponsors this training.

leaders. Each year, the NCITA develops

Following the CITP, new special agent

continuing professional education courses

IRS-CI special agents receive refresher

trainees take the NCITA Special Agent

for special agents and professional staff with

training regularly. They attend quarterly

Investigative Techniques (SAIT) course.

an emphasis on emerging trends such as

firearms, defensive tactics and semi-annual

The SAIT program trains recruits in tax law,

cybercrime and crypto currencies.

building entry training. Through frequent use

evidence gathering, interviewing, report

IRS CRIMINAL INVESTIGATION (CI) special agents are the

and ethical behavior throughout the CI workforce. The NCITA’s

best trained and finest financial investigators in the world. They

primary focus is training new special agents in the fundamentals

begin their training at the National Criminal Investigation Training

of financial investigations. Agents learn to recognize the elements

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

of tax offenses, and methods of proof unique to federal tax

Enforcement Training Center (FLETC) in Brunswick, Georgia and

investigations. They acquire all the knowledge, skills, and abilities

is dedicated to fostering the highest levels of professionalism

required to be federal law enforcement's finest financial investigators.

IRS: Criminal Investigation Annual Report 2019

of force training, they maintain their skills and

writing, methods of proving unreported

The NCITA also provides foreign

abilities, so they always use good judgement

income, and money laundering violations. It

governments and agencies training in

and the appropriate degree of force

also provides physical fitness conditioning

crime detection, investigative techniques,

necessary to safely carry out enforcement

and use of force training.

case studies, developing trends, and best

activities. These activities include issuing

practices. CI trains foreign governments

search warrants, arrests, surveillance, armed

in partnership with the International

escorts, dignitary protection, undercover

Law Enforcement Academies located in

activities and seizures. t

IRS: Criminal Investigation Annual Report 2019

HISTORY OF THE CONSOLIDATED FEDERAL LAW ENFORCEMENT TRAINING CENTER (CFLETC)

Special Agent Basic Training #1

Special Agent Basic Training #1905

BEFORE 1970, THE quality of training received

by federal law enforcement officers and

FY 2019 HIGHLIGHTS:

agents varied greatly from agency to agency.

• A total of 34 classroom trainings:

Standardized training was an unexplored concept,

• 8 course development trainings held at

NCITA

and inadequate facilities and duplication of effort

were prevalent as each agency independently

• 19 slot classes held at NCITA

trained its own personnel.

• 6 special agent basic trainings (SABT)

held for approximately 160 new students.

For the first time in IRS-CI history, 2

of the SABT classes were held at the

Charleston FLETC.

Studies conducted in the late 1960s revealed an urgent need for

Enforcement Training Center (FLETC) relocated from Washington,

high-quality, cost-effective training by a cadre of professional

DC to Glynco, and began training in September. Glynco is the

instructors using modern training facilities and standardized course

headquarters site and main campus for the FLETC, which has

content. Congress responded by authorizing funds for planning

grown to include facilities in Artesia, New Mexico, Charleston,

and constructing the Consolidated Federal Law Enforcement

South Carolina, Cheltenham, Maryland, and Gabarone, Botswana.

• 4 Naloxone Train the Trainer classes held

in Cheltenham, Maryland

as a bureau of the Department of the Treasury (Treasury Order

On September 30, 1970, IRS-CI signed a Memo of Understanding

#217) and began training operations in temporary facilities in

with FLETC to conduct Special Agent Basic Training (SABT) on the

Washington, DC.

FLETC base. IRS-CI has conducted training at FLETC for almost 50

• 8 Master Your Craft training classes

conducted in Brunswick FLETC,

Charleston FLETC and Woodbridge, VA.

Training Center (CFLETC). In 1970, the CFLETC was established

years.

In May 1975, after an extensive review of existing facilities, the

former Glynco Naval Air Station near Brunswick, Georgia, was

For more information on the FLETC, including its history,

selected. In Summer 1975, the newly renamed Federal Law

please visit www.fletc.gov. t

IRS: Criminal Investigation Annual Report 2019

• NCITA conducted its first ever Basic

Investigative Analyst Training (BIAT) and

Advanced Investigative Analyst Training

(AIAT) in FY 2019.

IRS: Criminal Investigation Annual Report 2019

PROFESSIONAL STAFF

IRS-CI EMPLOYS 728 professional staff serving in many

Additionally, CI is on course to onboard by the end of FY 2019 20

administrative and investigative capacities. Our budget analysts,

student volunteers as investigative analysts in the field, and one

management and program analysts, administrative officers,

student volunteer who will work in communications at HQ. CI

executive secretaries and computer support professionals all work

student volunteers assist special agents and other personnel to

tirelessly behind the scenes to support the mission of IRS-CI. Our

plan and complete work assignments on time, collect and analyze

staff also actively participates in the Chief’s Advisory Council to

information, prepare documents, communicate information clearly

provide CI leadership with crucial insight on relevant issues from

and concisely during formal or informal meetings, contribute to

around the country.

team efforts, and use various tools and technologies to prepare

LEADERSHIP EDUCATION

AND DEVELOPMENT

and share documents. CI also recruited 2 Pathways Presidential

Our 296 investigative staff has a tremendous effect on case

Management Fellows. This is a highly selective program for

development and support. These compliance support assistants,

individuals with a recent graduate degree. CI Presidential

tax fraud investigative analysts, and investigative analysts assist

Management Fellows perform research and analyst work,

special agents with public records research, interviews, bank

while enrolled in a rigorous training curriculum that focuses on

record scheduling and analysis, and specialized tax and law

accelerating their development.

enforcement data source research.

Professional staff positions are critical to advancing the law

During 2019, 176 staff in several CI job series received compre-

enforcement efforts of CI. These staff take assignments in applied

hensive training at the Federal Law Enforcement Training Center

analytics, field offices, such as the Nationally Coordinated Investi-

in Glynco, Georgia. They learned about various investigative data

gative Unit (NCIU), Refund Crimes, and International Operations.

sources and case development tools.

They use analytical software to develop sophisticated leads

and support complex cases for the special agents in the field.

Various field offices throughout the country and Technology

Investigative analysts attend training alongside special agents and

Operations & Investigative Services (TOIS) leveraged Operation

other professionals to stay current with investigative techniques,

IN FY 2019, IRS Criminal Investigation (CI) developed the

Reinvention and relevance in the 21st century require CI to

Warfighter, an umbrella program that enabled CI to recruit 6

report writing and analytic tools. They also support investigations

Leadership Education and Development (LEAD) unit to provide

emphasize continuous learning so CI’s current and future leaders

interns, who are disabled veterans, from the Department of

relating to national threats, the opioid crisis, terrorist financing, and

the framework for developing exceptional leaders with a distinct

embrace learning for its personal and professional value. This

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

other emerging threats through work with the High Intensity Drug

skillset. These skills are uniquely geared to fulfill CI’s organizational

produces a culture of growth and competitiveness, making

interns volunteered to take challenging assignments involving

Trafficking Areas, Joint Terrorism Task Force and other federal law

commitment to be the worldwide leader in tax and financial

CI’s leaders more efficient, collaborative, mobile and mission

extraction and analysis of critical information from investigative

enforcement task forces. t

criminal investigations.

oriented. All these factors are key to enhancing employee

data sources. Through this program, CI provided training and

engagement. As the goals and investigative work of CI become

work experience to those who served our country and have now

LEAD provides the mechanism to identify and select leaders early

increasingly complex, the skillset of the leadership team must

returned to the federal and civilian workforce. Additionally, through

in their careers and progressively develop them for executive

adapt continuously to meet future challenges. LEAD is designed

the Veteran Recruitment Act Hiring Authority, CI hired 12 veterans

leadership positions. LEAD promotes a people-first leadership

to provide employees with pathways and opportunities to gain the

who accepted assignment in field offices and TOIS. This veteran

approach and an ongoing learning environment to encourage

experience and perspective they’ll need to become tomorrow’s

hiring accounted for 13 percent of CI’s overall hiring.

diversity, excellence and achievement. LEAD does this using

leaders. In FY 2019, LEAD hosted multiple courses and seminars

Strategy, Human Resources, and our National Criminal Investigator

for future leaders, front line managers and senior leadership. t

Training Academy.

IRS: Criminal Investigation Annual Report 2019

EQUITY, DIVERSITY

& INCLUSION OFFICE

EQUITY, DIVERSITY & INCLUSION OFFICE

Additionally, the EDI staff prepares CI’s

Other responsibilities include monitoring the

the business environment is about more

Management Directive 715 (MD 715) report.

organization's effort to enhance diversity

than one’s gender, race and ethnicity. It

They also monitor and evaluate the organiza-

initiatives and analyzing trends in the

also includes religious and political beliefs,

tion's compliance with the directive and other

following areas:

education, socioeconomic backgrounds, sexual

policies established by the Equal Employment

Opportunity Commission (EEOC). The directive

helps identify program limitations and uncover

potential discrimination of equal opportunities

for all employees. It also provides EEO plans to

remove barriers and respond to problems. The

EDI staff develops action plans to eliminate

• EEO complaints

• Disciplinary actions

• Promotions

• Awards

• Separations

• Employee development and training

• Recruitment and hiring initiatives and

practices

• Retention

orientation, cultures and disabilities. CI and its

senior leadership team are stellar advocates for

a workplace where our practices, policies, and

procedures unequivocally support and promote

a diverse and inclusive workplace, which fills

our workplace environment with dynamic and

engaging interactions.

barriers and correct program deficiencies

to ensure compliance with the following 6

CI continues to strive to be an employer

essential elements of a model EEO program

of choice with our ongoing commitment

as defined by MD 715:

to workplace equality, encouragement

• Demonstrated commitment from agency

leadership

• Integration of EEO into the agency’s

strategic mission

• Management and program accountability

• Proactive prevention of unlawful discrimination

• Efficiency in dispute resolution and

complaint processing

• Responsiveness and legal compliance

THE MISSION OF the Criminal Investigation (CI) Equity, Diversity,

EDI is responsible for identifying, examining, and addressing

and Inclusion Office (EDI) is to identify, examine, and address

the organization's employment policies, practices, guidelines

the organization’s employment practices, policies, guidelines,

and procedures to direct the organization to effective affirmative

and procedures to ensure that all employees and applicants

programs. They work to ensure that employment practices and

for employment achieve equal opportunity in every facet of

decisions are made with the highest level of integrity and fairness

the CI’s programs, activities, and services. EDI’s goal is to

for every employee. EDI also advises CI’s senior leadership

provide excellent customer service, advice, and education to

on strategies for effectively capitalizing on the strengths of

management, employees, and stakeholders to ensure compliance

all employees while embracing their differences and unique

with appropriate federal Equal Employment Opportunity (EEO)

perspectives to create an environment that engages and supports

laws and regulations that prohibit discrimination on the basis of

all employees.

of work-life balance and flexibility in the

workplace, and support of employees at all

levels of the organization. We recognize the

importance of creating a diverse and inclusive

workforce where our employees thrive at any

grade level or occupational series. t

Awareness of the depths of diversity in

age, color, disability, equal pay, national origin, pregnancy, race,

religion, retaliation, sex (gender), and sexual harassment.

IRS: Criminal Investigation Annual Report 2019

COMMUNICATIONS & EDUCATION

CRIMINAL INVESTIGATION (CI) serves the American public by

needs. CI communicators face unique challenges when engaging

investigating potential criminal violations of the Internal Revenue

external audiences due to the sensitive nature of CI’s work with

Code and related financial crimes in a way that encourages

grand juries, taxpayer information, law enforcement material and

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

relationships with U.S. Attorneys’ Offices around the country.

the most effective ways to encourage compliance is publicizing CI

C&E works through these challenges to support CI’s mission.

activities that enforce the laws within its jurisdiction.

Their work directly contributes to the deterrent effect on financial

OUTREACH/COMMUNITY ENGAGEMENT

crimes and promotes voluntary compliance and confidence in our

The Communications and Education Office (C&E) directly

tax system. t

supports CI’s mission by raising the level of awareness of all

stakeholders—internally and externally—about the important work

that CI does to protect the financial interests of the United States.

IRS-CI RESPONDERS DEPLOYED TO SUPPORT FEMA

5 strength. Predictions varied over the lengthy time that Dorian

In the past 24 months, IRS-CI Special Agents have been

lingered off the eastern coast threatening to make land fall first

Public information officers (PIOs) in each field office and

answering FEMA’s call for help when facing down Mother Nature.

over Puerto Rico and then the states of Florida, Georgia, and both

communication specialists at headquarters support CI’s communi-

Agents responded numerous times to enter harm’s way deploying

Carolinas. Our coworkers flew and drove to Florida over Labor

cation functions. PIOs are case-working special agents who

alongside fellow FLEO’s as part of the Emergency Support

Day weekend as Dorian devastated the Bahamas. We now know

are also trained to carry out media outreach efforts for cases

Function #13. When catastrophe strikes the President has the

that Hurricane Dorian slowed and turned north off-shore greatly

their field offices work. Headquarters communicators manage

authority to approve sending Federal support to states under

decreasing what was previously predicted to be heavy damage. All

websites, write speeches and talking points and support the

assault by natural disasters including hurricanes, tropical storms,

17 agents demobilized and have safely returned home. A special

field in their outreach activities. All CI communicators work to

flooding and the like. With the 2019 hurricane season is in full

thanks is owed to all our ESF #13 responders and their families

balance media outreach with training and education opportunities

swing, 17 Special Agents volunteered on extremely short notice

for their outstanding dedication, commitment, and unfaltering

to ensure they can react swiftly to unplanned communication

to deploy in advance of Hurricane Dorian which reached Category

representation of Criminal Investigation. t

IRS: Criminal Investigation Annual Report 2019

The first public information officers group meeting.

IRS: Criminal Investigation Annual Report 2019

OUTREACH/COMMUNITY ENGAGEMENT

IRS: Criminal Investigation Annual Report 2019

FIELD OFFICE MAP

NORTHERN AREA

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

WESTERN AREA

MIDSTATES AREA

BOSTON

SEATTLE

CINCINNATI

NEW YORK

NEWARK

PHILADELPHIA

DETROIT

CHICAGO

WASHINGTON, D.C.

Guam

DENVER

ST. LOUIS

OAKLAND

CHARLOTTE

LAS VEGAS

ATLANTA

PHOENIX

DALLAS

HOUSTON

LOS ANGELES

Puerto Rico

TAMPA

U.S. Virgin Islands

MIAMI

SOUTHERN AREA

IRS: Criminal Investigation Annual Report 2019

ATLANTA FIELD OFFICE

ATLANTA FIELD OFFICE CASE FILES

401 W. PEACHTREE STREET NW, ATLANTA, GA 30308 | 470.639.2228

GEORGIA

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

NEW ORLEANS, LA

OXFORD, MS

SAVANNAH, GA

SHREVEPORT, LA

Tax Preparers Sentenced to Federal Prison

for Conspiring to Defraud the Government

of More Than $3.8 Million

misrepresenting to the IRS that their clients

credit, and unreimbursed employee

were qualified to receive certain tax credits

business expenses. Racine requested

and deductions on their federal tax returns.

refunds on 99 percent of the returns, a

Racine owned JSR Westend Tax Services,

rate significantly higher than the average

On November 8, 2018, in Atlanta, Georgia,

located in Atlanta, Georgia and JSR Tax

over the same years. Racine and Merlien

Joseph Racine and Arnouse Merlien of

Services, located in Greenacres, Florida,

engaged in this scheme to increase the

Boynton Beach, Florida were sentenced

and Merlien was the office manager of JSR

amount of money they could charge their

THE ATLANTA FIELD OFFICE covers the states of Georgia, Alabama, Mississippi and Louisiana and

to 3 years in prison, 3 years of supervised

Tax Services. The investigation revealed

clients for preparing their returns. The fraud

consists of eleven judicial districts. We work a wide variety of criminal investigations across the four

release, and ordered to pay the IRS

that Racine filed fraudulent returns involving

perpetrated by Racine and Merlien resulted

state region which includes, legal and illegal source income tax fraud, payroll tax fraud, stolen identity

$3,854,915 in restitution, for conspiracy to

multiple credits and deductions, including

in losses to the U.S. Government in excess

theft / tax refund fraud, public corruption, terrorism, general fraud, money laundering and narcotics

violate federal income tax laws by purposely

the fuel tax credit, refundable education

of $3.8 million.

cases. With the recent merger of two field officers (the Atlanta Field Office with the former New

ALABAMA

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.

MISSISSIPPI

SIGNIFICANT CASES

use his office to oppose Environmental Protection

Former State Legislator Sentenced to More Than

2½ Years in Prison for Accepting Bribes

Agency Actions in north Birmingham. Over the past

two years, they bribed former Alabama Representative, Oliver Robinson, with a $375,000 contract

LOUISIANA

On October 24, 2018, Drummond Coal Company

paid to him through his non-profit, Oliver Robinson

executive, David Lynn Roberson, and Balch &

Foundation. They were convicted on July 23, 2018,

Bingham partner, Joel Iverson Gilbert, received

of bribery, honest services wire fraud, conspiracy

federal prison sentences of 2 ½ years in prison

and money laundering conspiracy. Oliver Robinson

for Roberson, and 5 years for Gilbert. They were

was sentenced on September 27, 2018, to almost 3

involved in a scheme to bribe a state legislator to

years in prison for his role in the scheme.

IRS: Criminal Investigation Annual Report 2019

IRS: Criminal Investigation Annual Report 2018

IRS: Criminal Investigation Annual Report 2019

ATLANTA FIELD OFFICE CASE FILES

Judge Sentences Final Defendant in

Air Force Base Fraud Case; Individuals,

Businesses Ordered to Pay Back Millions

maintenance operations, and part of his

official duties was to prepare a Performance

Work Statement (PWS) when RAFB

was soliciting bidders for new contracts.

On February 22, 2019, Mark Cundiff, the

Sometime in 2004 or 2005, Williams

defendant at the center of a scheme to

requested that Cundiff provide inside help

award millions of dollars in military contracts

with winning contracts. In exchange for

in exchange for illegal kickbacks at Robins

cash payments, Cundiff wrote each PWS so

Air Force Base, was sentenced to 3 years

that the contract requirements could only be

in prison, 2 years supervised release, and

met by Williams. Starting in 2011, Reynolds

ordered to pay $110,050 in restitution to the

submitted fake invoices to Williams’

IRS and $270,000 to the U.S. Treasury. Two

company, UST, to funnel payments to

co-defendants and businesses previously

Cundiff from Williams. Reynolds was hired

entered guilty pleas and were sentenced

by UST to provide engineering support for

On April 30, 2019, Teresa Chism of

Chism falsified her clients' returns in

in this case. Co-defendant Raymond F.

$40,000 a month, but no work was involved

Durant, Mississippi, was sentenced to 5

different ways to increase their tax

Williams of Canton, OH, was sentenced

in this sub-contract beyond a few small

years in prison and 3 years supervised

refunds, including reporting false wages,

to 5 years in prison, 3 years supervised

items. In all, Cundiff would receive amounts

release. She was ordered to pay $135,134

self-employment income and expenses,

release and to pay $870,000 in restitution

of between $2,000 and $8,000 dollars in

in restitution for preparing and filing a

and education credits. In total, Chism

to the U.S. Department of Defense. In

kickbacks monthly from when the scheme

fraudulent claim for a tax refund. From

prepared more than 550 false income

addition, US Technology Corporation (UST)

began until November 2013. Cundiff retired

2005 through 2015, Chism operated tax

tax returns, seeking over $3.5 million in

and US Technology Aerospace Engineering

from RAFB in January 2014. During the

return preparation businesses in

fraudulent tax refunds. t

Corporation (USTAE), owned by Williams,

conspiracy, Williams directed payments

were ordered to pay $1,500,000 in

from UST in the amount of $870,000 to pay

fines plus $870,000 in restitution each.

bribes to Cundiff, and to reward Reynolds

Co-defendant John Christopher Reynolds,

and others for serving as intermediaries in

of Macon, was sentenced to 1 year and a

the payment of bribes to Cundiff. Williams

day. Cundiff was responsible for technical

received benefits from Cundiff’s efforts

engineering support to military aircraft

amounting to at least $14,450,000.

IRS: Criminal Investigation Annual Report 2019

Mississippi Tax Return Preparer

Sentenced to Prison for Filing False Tax

Returns

Mississippi under the names Mo' Money,

MoneyCo USA, and Lady T Taxes.

“The men and women who work for IRS Criminal Investigation are

some of the most tenacious and impressive criminal investigators

in federal law enforcement. These special agents bring tremendous

value to complex investigations, innovative ways of looking at and

thinking about cases, and a commanding presence which achieves

justice at trial. From global healthcare fraud to public corruption at

the highest levels to money laundering by drug kingpins to straightforward tax fraud, IRS-CI agents are critical partners in helping the

U.S. Attorney’s Office deliver justice.”

–Mike Hurst, U.S. Attorney, Southern District of Mississippi

IRS: Criminal Investigation Annual Report 2019

BOSTON FIELD OFFICE

BOSTON FIELD OFFICE CASE FILES

15 NEW SUDBURY STREET, BOSTON MA, 02203 | 617.316.2080

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

SIGNIFICANT CASES

Connecticut Tax Preparer Sentenced to

More Than 4 Years for Preparing False Tax

Returns

MASSACHUSETTS

taxes, interest and penalties for tax years

over $1.3 million in tax. In 2011, Adams sold

2002, 2006, 2007, 2008, 2009, 2011, and

his partnership interest in another online floral

2012, which total $4,872,172. Interest and

business and received $4,708,419 wired into

penalties will continue to accrue until his tax

his personal bank account as part of the net

obligation is paid. In October 2017, Adams

proceeds owed to him as a result of the sale.

pleaded guilty to two counts of tax evasion,

Although he knew that he owed substantial

On August 13, 2019, Rolando Russell, of

three counts of making and subscribing a

taxes on these business sales, Adams took

THE BOSTON FIELD OFFICE covers the six New England states, each with one judicial district:

Bridgeport, Connecticut was sentenced to

false tax return and one count of attempting

numerous steps to conceal the income and

Massachusetts, Connecticut, Rhode Island, New Hampshire, Vermont and Maine. The field office's

more than four years in prison and one year

to interfere with the administration of the

avoid paying the tax due including filing false

relationship with the U.S. Attorney’s Office and our law enforcement partners is one of the best in the

of supervised release. Russell was also

IRS laws. According to court documents,

tax returns, bouncing checks to the IRS

country. IRS-CI special agents are vital members of several task forces including Organized Crime Drug

ordered to pay restitution of $1,501,000. In

Adams engaged in a more than 20-year

and claiming he lacked the cash to make

Enforcement Task Force (OCDETF), JTTF, cybercrimes, securities fraud and health care fraud.

April 2019, Russell pleaded guilty to two

effort to inhibit the IRS’s efforts to collect

payments.

counts of aiding and assisting in the filing

back taxes from him. In the early 1980s, and

of a false tax return. According to court

then continuing from 1996 onward, Adams

documents, Russell prepared approxi-

was substantially delinquent in filing his tax

mately 1,820 federal tax returns for the

returns and paying amounts owed to the

2013 through 2016 tax years through a tax

IRS. As part of this tax fraud scheme, Adams

On January 28, 2019, Scott J. Wolas,

return preparation practice he operated in

engaged the services of a certified public

formerly of Quincy, Massachusetts, was

Bridgeport. The returns claimed over $11.2

accountant to prepare his personal tax returns

sentenced to nearly seven years in prison

million in refunds, of which the IRS issued

but he gave the accountant false information

and three years of supervised release.

approximately $10 million. Many of the tax

and then blamed the accountant for making

Wolas was also ordered to pay $1,949,813

returns he prepared included false Schedule

errors on his returns. In 2002, Adams sold

to the victims of his fraud scheme,

C forms, false unreimbursed employee

an online floral business, for which he owed

$318,266 to the IRS and $69,768 to Social

MAINE

VERMONT

Former Quincy Man Sentenced for $1.9

Million Real Estate Fraud Scheme

expenses and false charitable contributions.

Russell’s false filings resulted in at least $1.5

NEW HAMPSHIRE

million in losses to the IRS.

CONNECTICUT

Connecticut Man Who Failed to Pay $4.8

Million in Income Taxes Sentenced to 7 ½

Years in Prison

RHODE ISLAND

On November 27, 2018, David Adams, of Old

Saybrook, Connecticut, was sentenced to 7 ½

years in prison and three years of supervised

release. Adams was also ordered to pay back

IRS: Criminal Investigation Annual Report 2019

IRS: Criminal Investigation Annual Report 2018

IRS: Criminal Investigation Annual Report 2019

BOSTON FIELD OFFICE CASE FILES

Hedge Fund Manager Sentenced for

Operating Multi-Million Dollar Ponzi

Scheme

Former State Senator,

Businessman Sentenced for

Bank Fraud, Tax Crimes

On March 21, 2019, Raymond K. Montoya,

On April 12, 2019, James

of Allston, Massachusetts, was sentenced

E. Doyle, a Former Rhode

to more than 14 ½ years in prison and three

Island state senator and

years of supervised release. Restitution will

businessman of Pawtucket,

be determined at a later date. In October

Rhode Island, was

2018, Montoya pleaded guilty to three

sentenced to two years in

counts of wire fraud, five counts of mail

prison. Doyle pleaded guilty

fraud, and two counts of conducting an

in September 2018, to thirty-one counts

unlawful monetary transaction. According to

of bank fraud and one count each of filing

court documents, between 2009 and June

a false tax return and failing to file a tax

Photos courtesy of Greg Saulmon, The Republican

Massachusetts Woman Sentenced to

More than Three Years for Orchestrating

Fraudulent Investment Scheme

Teixeira represented herself as a solicitor

of high-yield investment funds with

connections to investment groups raising

2017, Montoya ran a pooled investment

return. According to court documents,

Security and Medicare. In June 2018, Wolas

investors and promised each of them a

hedge fund in Boston called RMA Strategic

Doyle engaged in a $74 million dollar

On August 7, 2019, Jessica M. Teixeira,

real estate developments, who solicited

pleaded guilty to seven counts of wire fraud,

significant return on their investments. He

Opportunity Fund, LLC. Montoya falsely

check-kiting scheme in which he wrote

41, was sentenced in Concord, New

financing through private investors rather

one count of aggravated identity theft,

further promised to pay out at least 125%

told his investors—including his family,

tens of thousands of worthless checks,

Hampshire to nearly three and half years in

than banks. In fact, Teixeira's claims about

misuse of a Social Security number and tax

of the profits related to the single-family

friends, and acquaintances who resided in

and failed to report more than $1 million

prison and was ordered to pay restitution

being connected to high-level investment

evasion. According to court documents,

home construction. However, Wolas

Massachusetts, Ohio, and California—that

dollars in income and pay taxes to the IRS.

of $296,250 to her victims. On March 13,

groups were false. The investment contracts

Wolas had been a fugitive for more than 20

used the money mostly for personal

the fund was earning substantial returns,

Doyle was the owner of Doyle Respiratory,

2019, Teixeira pleaded guilty to wire fraud

and notes she sold were worthless and

years prior to his arrest in April 2017. From

expenses unrelated to development of

when in fact, by 2014, the RMA Fund was

LLC and Doyle Sleep Solutions, LLC, when

and money laundering related to a fraudulent

they generated no returns. Teixeira simply

at least 2009 through 2016, Wolas, using

the real estate projects. A week before

sustaining substantial losses. The investors

he engaged in the criminal conduct. Doyle

investment scheme. According to court

converted the invested funds to her own

the name Eugene Grathwohl, operated a

Wolas was scheduled to close on the

transferred millions of dollars of their

executed $74 million dollars in worthless

documents, between December 2015 and

personal use and benefit, without returning

real estate business known as Increasing

Beachcomber property, he left Quincy and

personal savings and 401(k) retirement plans

bank transactions through check-kiting

November 2017, Teixeira defrauded two

any of the invested funds. In total, Teixeira

Fortune Inc. and worked as a licensed real

ceased all contact with his then-girlfriend,

to Montoya and the RMA Fund. Montoya

schemes at bank accounts he controlled

New Hampshire investors by selling them

obtained approximately $296,250 from the

estate agent for Century 21 in Quincy. From

his co-workers, and his investors. Law

told the investors that he would invest their

at three banks. Doyle executed the

a series of securities that she claimed were

two investors. t

2014 through 2016, he solicited investments

enforcement then discovered that Grathwohl

money in stocks and bonds, but he actually

schemes through the use of checks, cash

guaranteed to generate high rates of return.

for the development of the Beachcomber

was actually Wolas, a former lawyer who

invested only a portion of their money,

withdrawals, ATM electronic transfers and

Bar property on Quincy Shore Drive and for

had been a fugitive since 1997 after being

while diverting the rest—totaling millions

ACH transfer payments. For tax years 2013

the construction of a single-family home on

charged with fraud and grand larceny in New

of dollars—to business and personal bank

thru 2016, Doyle and his wife failed to report

the adjacent property. He collected more

York. The real Eugene Grathwohl resided in

accounts. Montoya used the diverted money

to the IRS more than $1 million dollars in

than $1.9 million from at least 24

Florida and was known to Wolas.

for personal expenses such as luxury vehicles

income and failed to pay $305,426 in taxes

and the mortgage on his son’s residence.

due the IRS.

IRS: Criminal Investigation Annual Report 2019

funds associated with domestic and foreign

“The 100 year anniversary of IRS-CI marked a very special occasion to not

only reflect upon the agency’s prior successes, but also to look forward to

how IRS-CI will meet the challenges of the future.”

– Kristina O’Connell, Special Agent in Charge, Boston Field Office

IRS: Criminal Investigation Annual Report 2019

CHARLOTTE FIELD OFFICE

CHARLOTTE FIELD OFFICE CASE FILES

10715 DAVID TAYLOR DRIVE, CHARLOTTE NC, 28262 | 705.548.4241

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

SIGNIFICANT CASES

“Sovereign Citizen” Sentenced to Federal

Prison for Fraud Scheme

NORTH CAROLINA

SOUTH CAROLINA

business based in Columbia. Between 2013

Dickson Attorney Sentenced to Federal

Prison for Stealing Over $1.36 Million From

Trust Funds of Clients

and 2015, he targeted individuals, some

of them elderly, who were experiencing

On April 22, 2019, in Nashville, Tennessee,

On May 16, 2019, Ronald Allen Wright, of

financial difficulties, especially those going

Jackie Lynn Garton, of Dickson, Tennessee,

Columbia, SC, was sentenced to 10 years in

through foreclosure on their homes. He used

was sentenced to more than 7 ½ years in

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

federal prison after a jury found him guilty

churches and other faith-based organi-

prison for stealing more than $1.36 million

South Carolina, which has a single judicial district, and Tennessee, which has three districts. We work

of tax fraud and conspiracy to commit wire

zations to contact them. Wright claimed

from his client’s trust funds. Garton, a

a diverse mix of cases throughout the two states, including general tax fraud, refund fraud, terrorist

fraud. His conviction comes from the false

he knew a method that would allow them

practicing attorney in Dickson, pleaded

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

and meritless “sovereign citizen” ideology.

to make financial claims against their birth

guilty to wire fraud, tax fraud and aggravated

tax fraud. The field office has excellent partnerships both internally and externally. Charlotte is the

Individuals that espouse this ideology

certificates. He said that this could then be

identity theft. According to court documents,

second largest banking center in the United States after New York City. Our office works closely with

argue that they are not subject to the laws

used to satisfy the customer’s debts and

Garton served as the trustee for several

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

of the United States of America and that

attempted to fraudulently discharge nearly

estates, including one for the daughter of

Financial Crimes Task Force, and OCEDTF.

debts can be discharged by accessing

$15 million of consumer debt. Despite

a Tennessee State Trooper who was killed

secret government bank accounts. Wright

Wright’s claimed belief in this payment

in the line of duty in 2005. Beginning in

also argued that being a sovereign citizen

system, he did not accept this form of

2009, Garton withdrew funds under false

exempted him from paying income taxes.

payment at Money Solutions and charged

pretenses without the clients’ knowledge.

According to court records, Wright owned

individuals over $140,000 of actual currency

Garton converted the funds into cashier’s

“Money Solutions,” a financial services

to participate in his bogus scheme.

checks and used the money to enrich his

TENNESSEE

IRS: Criminal Investigation Annual Report 2019

IRS: Criminal Investigation Annual Report 2018

IRS: Criminal Investigation Annual Report 2019

CHARLOTTE FIELD OFFICE CASE FILES

lifestyle. Garton admitted that he stole

Brantley pleaded guilty to two counts of

and authored numerous books on faith and

theaters. He concealed his extravagant

company, was sentenced to 5 years in

not provided, resulting in approximately $4

more than $1.36 million from his clients. In

willful failure to collect or pay over tax,

finances, including “Please Don’t Repo My

purchases by making them under the names

prison and 3 years of supervised release.

million in wrongful payments to DCMBHS.

conjunction with the preparation of his 2016

one count of wire fraud, and one count of

Car,” and “Breaking the Spirit of Debt.”

of companies he owned. The purchases

She was ordered to pay restitution in the

During the relevant period, Haydn Thomas

taxes, Garton under reported his income

unlawful employment of unauthorized aliens.

He operated two for-profit companies:

included three BMWs, two Ferraris, a

amount of $3,950,656 to NC Fund for

worked as an office manager for an oral

to the IRS, claiming his total income was

Brantley employed at least 150 unauthorized

Legacy Media and Coontz Investments

Maserati, a Land Rover and a Regal 2500

Medical Assistance and $391,747 to the

surgeon and provided Farrington with the

$95,875, while he received at least $367,223

aliens at Southeastern Provision, to reduce

and Insurance. He failed to make payments

boat. In 2012, Rock Wealth Ministries

IRS. Farrington, a resident of Cypress,

names and Medicaid identification numbers

that included funds he stole from his clients.

the company's expenses, including its taxes,

and falsified tax returns to avoid paying

purchased a $1.5 million condominium as a

Texas, pleaded guilty to one count of health

of dental patients to submit the false claims

Garton failed to report the stolen income

unemployment insurance premiums, and

taxes he owed. Coontz also engaged in a

residence for Coontz.

care fraud conspiracy and one count of tax

to Medicaid. In addition, Farrington earned

from 2009 through 2016 and intended to

workers' compensation premiums.

check-cashing scheme involving payments

evasion for the 2014 tax year. According to

more than $1.1 million from DCMBHS and

court documents, Farrington owned Durham

evaded income taxes on this money, by

County Mental Health and Behavioral

transferring funds to various business bank

Health Services LLC (DCMBHS) in Durham,

accounts. She paid personal expenses from

defraud the IRS of more than $350,000.

Southeastern Provision Owner Sentenced

on Employment Tax Charges

for travel reimbursements, speaking

Federal Judge Sentences Minister to

Prison for Tax Crimes

engagements, which he overcharged

churches to boost his income, and for

North Carolina Mental Health Company

Owner Sentenced to Prison on Health Care

Fraud and Tax Evasion Charges

North Carolina. From 2011 through 2015,

the business bank accounts while failing

On January 29, 2019, in Charlotte, N.C.,

addition to concealing this income, Coontz

On March 1, 2019, Catinia Denise Farrington,

Farrington submitted thousands of false

to file tax returns. The resulting tax loss is

On July 31, 2019, James Brantley was

William Todd Coontz was sentenced, to 5

also concealed money he gave to his family

owner of a North Carolina mental health

claims to Medicaid for services that were

approximately $391,747. t

sentenced to 18 months in prison and

years in prison, one-year supervised release,

and used for meals and entertainment.

ordered to pay $1,296,183 in restitution

and ordered to pay $755,669 in restitution

His business expenses included payments

to the IRS relating to his employment

for failure to pay taxes and aiding and

totaling more than $227,700 for clothing

of unauthorized aliens at Southeastern

assisting in the filing of false tax returns.

purchases, and more than $140,000

Provision Slaughterhouse in Bean Station,

Coontz was the minister of Rock Wealth

for meals and entertainment expenses,

Tennessee. On September 12, 2018,

International Ministries from 2010 to 2014

including more than 400 charges at movie

IRS: Criminal Investigation Annual Report 2019

the sale of books and other products. In

“IRS-CI and my Office share an important mission: to protect the integrity of our country’s tax system and to

bring violators to justice. Federal prosecutors rely upon IRC-CI agents’ exceptional skillset, their financial

investigative expertise, and their commitment to investigations from beginning to end to successfully prosecute

federal cases involving violations of the U.S. Internal Revenue Code and related financial crimes.”

– Andrew Murray, U.S. Attorney, Western District of North Carolina

IRS: Criminal Investigation Annual Report 2019

CHICAGO FIELD OFFICE

CHICAGO FIELD OFFICE CASE FILES

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

ILLINOIS

INDIANA

FORT WAYNE, IN

GREEN BAY, WI

INDIANAPOLIS, IN

MADISON, WI

MATTESON, IL

MERRILLVILLE, IN

MILWAUKEE,WI

MINNEAPOLIS, MN

ORLAND PARK, IL

PEORIA, IL

ROCHESTER, MN

ROCKFORD, IL

SCHILLER PARK, IL

SOUTH BEND, IN

SPRINGFIELD, IL

SIGNIFICANT CASES

Minnesota Tax Return Preparer Sentenced

to More Than 10 Years for Leading a

Multimillion Dollar Fraud Scheme against

the IRS

Wisconsin Man Sentenced for Wire Fraud

and Tax Fraud Conspiracy

million from at least 40 different victims.

Golant engaged in a long-term fraud scheme

using his business of purchasing luxury

On August 5, 2019, Albert Golant was

vehicles in the United States and selling

sentenced to more than 10 years in prison

them at a substantial profit to foreign buyers

and 3 years of supervised release for wire

overseas. Golant fraudulently obtained funds

fraud and conspiracy to commit tax fraud.

by claiming that he would use the funds

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

On January 28, 2019, Kenneth Mwase

According to court documents, while on

to purchase specific luxury vehicles; but

of agents and professional staff. We cover a large geographical area working in the states of Illinois, Indiana,

was sentenced to more than 10 years in

supervised release for a prior conviction,

he never did and did not return the money.

Minnesota, and Wisconsin with seven judicial districts. We investigate a wide variety of cases and have

prison and 3 years of supervised release.

Golant orchestrated a sophisticated Ponzi

Golant also pretended to sell the same luxury

excellent relationships with the U.S. Attorney’s Offices. Our agents participate in numerous task forces

According to court documents, Mwase was

scheme through which he obtained over $30

vehicle to multiple clients. Golant accepted

including HIDTA, OCDETF, JTTF, cybercrimes, and political corruption. We work complex and diverse

a tax return preparer who managed and

investigations such as tax evasion, corporate fraud, employment tax fraud, public corruption, cybercrimes,

directed Primetime Tax Services Inc., a tax

health care fraud, and drug trafficking. The field office has exceptional partnerships, both internally working

preparation business with three storefronts

with our civil counterparts, and externally with other federal, state, and local law enforcement agencies.

in the Minneapolis area. In April 2014,

Mwase was indicted on 70 counts, along

with codefendants Ishmael Kosh, Amadou

Sangaray, Francis Saygbay and David

Mwangi. Together with his co-defendants,

Mwase prepared and filed over 2,000

fraudulent individual income tax returns

with the IRS for tax years 2006, 2007, and

2008. They also prepared approximately

1,700 fraudulent state of Minnesota income

MINNESOTA

tax returns. In total, they caused a tax loss

of over $2.5 million dollars. In November

2014, Mwase pleaded guilty to one count

of conspiracy to defraud the United States

and one count of aggravated identity theft.

Shortly before his sentencing on August 18,

2016, Mwase fled to South Africa, using a

fake identity and a fraudulent passport. He

WISCONSIN

was found and arrested in South Africa in

May 2018. Mwase also pleaded guilty to one

count of failure to appear at sentencing.

IRS: Criminal Investigation Annual Report 2019

IRS: Criminal Investigation Annual Report 2018

IRS: Criminal Investigation Annual Report 2019

CHICAGO FIELD OFFICE CASE FILES

Recycling Executive Sentenced to 3

Years for Scheming to Re-Sell Potentially

Hazardous Waste and Send it to Landfills

money for vehicles he knew had already

been sold and exported. He used the funds

mentally sound manner. Instead, from 2005

to 2016, Brundage caused thousands of tons

Indiana Man Sentenced to 2 ½ Years for

Tax Evasion

of e-waste and other potentially hazardous

materials to be sent to landfills, stockpiled, or

On September 5, 2019, Scott C. Cole, of

to support his lavish lifestyle and maintain

On April 12, 2019, Brian Brundage, of

re-sold at a profit to companies who shipped

Brownsburg, Indiana, was sentenced to 2

his wealthy image. Golant used the funds to

Schererville, Indiana, was sentenced to

the materials overseas. Brundage concealed

½ years in prison. Cole pleaded guilty to tax

attempt to sustain his luxury vehicle export

three years in prison and was ordered to

the income he earned from re-selling the

evasion. According to court documents, Cole

businesses. He used client funds to pay off

pay more than $1.2 million in restitution

electronic waste and from paying himself

attempted to evade and defeat tax payments

prior loans, using one client’s funds to pay

to his victims. Brundage pleaded guilty to

funds that he falsely recorded as Intercon

by opening bank accounts under sham

debts due to his other clients. In the end,

wire fraud and tax evasion. According to

business expenses in order to evade

company names and directing payment for

Golant’s scheme left at least 22 victims with

court documents, Brundage, a recycling

$743,984 in federal taxes. Brundage used

services he rendered to the same artificial

a net loss of approximately $17.7 million and

executive, owned Intercon Solutions Inc.

the money he claimed as business expenses

companies. He used third-party business

the United States with a tax loss of approxi-

consecutive to the life sentence. Guzman

organization responsible for importing and

and EnviroGreen Processing LLC, which

for his own personal benefit, including

accounts to pay personal expenses, dealt

mately $5.4 million.

Loera was also ordered to pay $12.6 billion

distributing more than a million kilograms

claimed to recycle electronic waste on behalf

paying wages to a nanny and housekeeper,

extensively in cash, and filed false 1040 tax

in forfeiture. On February 12, 2019, Guzman

of cocaine, marijuana, methamphetamine,

of corporate and governmental clients.

purchasing jewelry, and paying a casino in

returns understating his taxable income.

Loera was convicted of all 10 counts of

and heroin in the United States. Once the

Brundage told clients that materials would

Hammond, Ind.

Cole owes the IRS $2,410,443. t

which he was accused, including narcotics

narcotics were in the United States, they

be disassembled and recycled in an environ-

trafficking, using a firearm in furtherance

were sold to wholesale distributors in New

Joaquin “El Chapo” Guzman, Sinaloa Cartel

Leader, Sentenced to Life in Prison Plus 30

Years

of his drug crimes, and participating in a

York, Miami, Atlanta, Chicago, Arizona, Los

On July 17, 2019, Joaquin Archivaldo

money laundering conspiracy. According

Angeles, and elsewhere. Guzman Loera then

Guzman Loera, known by various aliases,

to court documents, Guzman Loera was

laundered billions of dollars of drug proceeds

including “El Chapo” and “El Rápido,” was

a principal leader of the Sinaloa Cartel, a

using various methods, including bulk cash

sentenced to life in prison plus 30 years

Mexico-based international drug trafficking

smuggling from the United States to Mexico,

U.S.-based insurance companies, reloadable

debit cards, and numerous shell companies,

including a juice company and a fish flour

company. Guzman Loera and his organization

relied on violence to maintain their power

throughout the region and beyond. Guzman

Loera and his organization also relied on a

vast network of corrupt government officials

and employees to protect and further the

interests of the Sinaloa Cartel.

IRS: Criminal Investigation Annual Report 2019

“IRS criminal enforcement investigators have been at the forefront of fighting crime in Chicago since they first

opened an office 100 years ago from the investigation of Al Capone to judicial corruption in Operation Greylord to

the prosecutions of former Illinois governors Otto Kerner, George Ryan and Rod Blagojevich, IRS-CI has been at

the forefront of our collective efforts to root out public corruption. Our office’s most significant organized crime,

drug trafficking, and gang investigations have also benefited significantly from the investigative work of the IRS.”

– John R. Lausch, Jr., U.S. Attorney, Northern District of Illinois

IRS: Criminal Investigation Annual Report 2019

CINCINNATI FIE

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