IRS Criminal Investigation Counts Down Agency’s Top 10 Cases For 2023
Dec 11, 2023,10:27pm EST
IRS Criminal Investigation is counting down the agency’s top 10 cases for 2023 on its social media accounts.
“Billions of dollars in fraud, victims across the globe and criminals who are all about personal gain. That’s the crux of 2023’s top 10 cases,” said CI Chief Jim Lee. “When I say our team at CI is the best at following the money trail, I mean it. Our investigators took down international tax schemes that preyed on people’s personal information, investigated multi-level marketing schemes involving cryptocurrency and uncovered one of the largest fraud schemes in history centered around renewable fuel credits.”
The cases include the agency’s most prominent and high-profile investigations of the past year. They are:
10.French Man Sentenced In International Tax Scheme
Ayodele Arasokun was sentenced to 34 years in federal prison for orchestrating an international tax scheme involving wire fraud and aggravated identity theft. Arakosun coordinated a scheme to file 1,701 false tax returns and claim $9.1 million in refunds ($2.2 million in refunds were actually issued by the IRS). He then transferred the money to prepaid debit cards and checking accounts that he monitored—the investigation revealed that Arakosun was tracking more than 700 U.S.-based accounts containing more than $50 million.
9.LA Man Sentenced To Prison For Crimes Including $5.5 Million In Covid And Tax Fraud
Edward Kim was sentenced to more than 24 years in federal prison for various crimes including Covid-related fraud.
Kim and his co-conspirators submitted approximately 459 fraudulent unemployment insurance claims using the names, Social Security numbers, dates of birth and other personal identifiable information of California state prison inmates and others. In total, they received approximately $5,458,050 in fraudulently obtained unemployment insurance funds.
Kim also conspired with others to use stolen identities to file false income tax returns to fraudulently claim tax refunds. The tax returns included false information designed to qualify for Covid-relief (specifically, Economic Impact Payments, or EIPs). Together with his co-conspirators, Kim caused at least 297 fraudulent tax returns to be filed with the IRS which sought more than $356,400 in fraudulent EIPs.
Kim pleaded guilty in November 2022 to one count of conspiracy to distribute methamphetamine and fentanyl, one count of distribution of methamphetamine, one count of conspiracy to defraud the government with respect to claims, two counts of mail fraud, and two counts of possession of 15 or more unauthorized access devices.
In addition to his prison sentence, Kim was ordered to pay $5,458,050 in restitution to the California Employment Development Department and $16,800 in restitution to the IRS.
8.Cryptocurrency Founder ‘Bruno Block’ Sentenced To Four Years In Prison
Amir Bruno Elmaani, a/k/a Bruno Block, the founder of the cryptocurrency Oyster Pearl, was sentenced to 48 months in federal prison and ordered to pay restitution in the amount of more than $5.5 million.
In 2017, Elmaani began promoting a new cryptocurrency known as Pearl tokens. Elmaani stated that he planned to develop an online data-storage platform, known as Oyster Protocol, which would allow users to purchase online data storage with Pearl tokens. Elmaani used friends and family as nominees to receive cryptocurrency proceeds and transfer them to his accounts.
Elmaani did not file a tax return and reported he had no income to the IRS in 2018. However, in that same year, Elmaani spent over $10 million on multiple yachts, $1.6 million at a carbon-fiber composite company, hundreds of thousands of dollars at a home improvement store, and over $700,000 for the purchase of two homes.
Elmaani pleaded guilty on April 5, 2023, and admitted that he had secretly minted and sold Pearl cryptocurrency tokens for his own gain, which caused the price of Pearl tokens to plummet. He further admitted that he did not pay income tax on certain cryptocurrency profits, causing a tax loss of over $5.5 million.
7.Silk Road Defendant Sentenced Following Seizure, Forfeiture Of Over $3.4 Billion In Cryptocurrency
James Zhong was sentenced to one year and one day in prison for committing wire fraud when he unlawfully obtained approximately 50,000 bitcoin from Silk Road in September 2012.
Silk Road was an online black market which operated from approximately 2011 until 2013. Silk Road was used by numerous drug dealers and other unlawful vendors to distribute massive quantities of illicit drugs, goods and services and to launder funds passing through it. (In 2015, Silk Road’s founder Ross Ulbricht was convicted by a unanimous jury and sentenced to life in prison.)
Over a period of approximately 10 years, Zhong executed a complex scheme to initially steal 50,000 bitcoin, and conceal his activities by transferring this bitcoin into a variety of separate addresses. This was done in a manner designed to prevent detection, conceal his identity and ownership and obfuscate the bitcoin’s source.
As part of the investigation, the government obtained final orders of forfeiture for, among other items, 51,680.32473733 Bitcoin, valued at over $3.4 billion at the time of seizure and over $1.57 billion today. Zhong was also ordered to forfeit his 80% interest in RE&D Investments LLC, a Memphis-based company with substantial real estate holdings, $661,900 in seized U.S. currency, 25 Casascius coins (physical Bitcoin), and gold and silver bars and coins seized from his home.
6.Massachusetts Father And Sons Sentenced To Prison For Lottery, Tax Fraud Scheme
A father and son were sentenced for orchestrating an elaborate “ten-percenting” scheme involving dozens of convenience stores across Massachusetts. Ali Jaafar and his two sons, Yousef Jaafar and Mohamed Jaafar, unlawfully claimed more than 14,000 winning lottery tickets, laundered over $20 million in proceeds, and then lied on their tax returns. The result was more than $6 million in federal tax loss.
Ali Jaafar was sentenced to five years in prison, and his two sons, Yousef Jaafar and Mohamed Jaafar, were sentenced to 50 months and six months in prison, respectively, for their roles in the scheme. The defendants were also ordered to pay $6 million in restitution and forfeit their profits from the scheme.
5.Leader Of Illegal Copyright Infringement Scheme Sentenced To Prison
Bill Omar Carrasquillo, known on YouTube as Omi in a Hellcat, was sentenced to 66 months’ in prison for crimes arising from a wide-ranging copyright infringement scheme that involved piracy of cable TV, access device fraud, wire fraud, money laundering, and hundreds of thousands of dollars of copyright infringement.
Carrasquillo and his co-defendants used legitimate cable subscriptions from companies like Verizon, DirecTV and ComcastCMCSA +1.3%, and stripped them of copyright protections to stream the content online on servers they controlled. Customers paid a monthly $15 fee to subscribe to the illegal streaming services which showcased sporting events, shows and movies.
Carrasquillo was convicted of one count of conspiracy, one count of violating the Digital Millennium Copyright Act, one count of reproduction of a protected work, three counts of public performance of a protected work, one count of access device fraud, one count of wire fraud, one count of making false statements to a bank, one count of money laundering, one count of making false statements to law enforcement officers, and one count of tax evasion.
In addition to prison, the court ordered Carrasquillo to pay $10.7 million in restitution to the victim cable companies, more than $5 million in restitution to the IRS, and to forfeit over $30 million in illegal proceeds.
4.New Hampshire Man Sentenced For Bitcoin Money Laundering Scheme
Ian Freeman was sentenced to eight years in prison for laundering over $10 million in proceeds from romance scams and other internet fraud.
According to court records, Freeman and his co-conspirators opened and operated accounts at financial institutions in the names of various churches including the Shire Free Church, the Church of the Invisible Hand, the Crypto Church of New Hampshire, and the NH Peace Church. Freeman instructed bitcoin customers, who were often victims of romance and other scams, to lie to the financial institutions and describe their deposits as church donations. From 2016 to 2019, he paid no taxes, and concealed his income from the IRS.
In addition to his prison sentence, Freeman must also pay a fine of $40,000 and restitution to victims.
3.Co-Founder Of Multibillion-Dollar Cryptocurrency Scheme OneCoin Sentenced To 20 Years In Prison
Karl Sebastian Greenwood, who co-founded OneCoin with Ruja Ignatova (a/k/a the “Cryptoqueen”) was sentenced to 20 years in prison.
OneCoin, which began operations in 2014, based in Sofia, Bulgaria, marketed and sold a fraudulent cryptocurrency through a global multi-level-marketing network. As a result of misrepresentations that Greenwood, Ignatova, and others made about OneCoin, millions of victims invested over $4 billion in the fraudulent cryptocurrency.
OneCoin had no actual value. Among other things, OneCoin lied to its members about how its cryptocurrency was valued, claiming that the price of OneCoin was based on market supply and demand, when in fact OneCoin itself arbitrarily set the value of the coin without regard to market forces.
OneCoin also claimed to have a private “blockchain,” or a digital ledger identifying OneCoins and recording historical transactions. In reality, OneCoin lacked a public and verifiable blockchain.
Greenwood used proceeds from the scheme to buy luxury designer clothes, footwear, and watches totaling approximately $2 million, make a downpayment on a Sunseeker yacht, and to purchase real estate properties in various countries, including in Spain, Dubai, and Thailand. He also used investor funds to travel around the world on a private “OneCoin” airplane and posted promotional videos of his travel online.
In addition to prison, Greenwood, a citizen of Sweden and the United Kingdom, was ordered to pay approximately $300 million in forfeiture.
Ignatova was added to the Federal Bureau of Investigation’s Top Ten Most Wanted List in June 2022 and remains at large. If you have any information about Ignatova’s whereabouts, you’re encourage by law enforcement to contact your local FBI office or the nearest American Embassy or Consulate. Tips can be reported anonymously online.
2.Former CFO Of Russian Natural Gas Company Sentenced To Prison For Tax Crimes
Mark Anthony Gyetvay was sentenced to 86 months in federal prison, 36 months of probation, and ordered to pay over $4 million in restitution to the IRS for failing to file a Report of Foreign Bank and Financial Accounts (FBAR), making a false statement to the IRS, and willfully failing to file tax returns.
After working as a certified public accountant (CPA) in the United States and Russia, Gyetvay became the chief financial officer of Novatek, a large Russian natural gas company. Beginning in 2005, Gyetvay opened accounts at a bank in Switzerland to hold large sums of money, which at one point totaled over $93 million.
Gyetvay did not file FBARs, as required, to disclose his control over the Swiss bank accounts and in an unsuccessful attempt to avoid significant financial penalties, Gyetvay made a false filing with the IRS using the Streamlined Foreign Offshore Procedures. Additionally, Gyetvay did not file personal tax returns for 2013 and 2014.
1.Five Individuals Sentenced To Prison For Billion Dollar Biofuel Tax Fraud Scheme
In one of the largest fraud schemes in U.S. history, five individuals were sentenced to prison for their roles in a $1 billion biofuel tax conspiracy. They are Lev Aslan Dermen (a/k/a Levon Termendzhyan), Jacob Kingston, Isaiah Kingston, Rachel Kingston, and Sally Kingston.
From 2010 to 2018, the conspirators were involved in multiple fraudulent schemes, including money laundering, mail fraud, and fraudulently claiming more than $1 billion in refundable renewable fuel tax credits. The basis of the scheme was to create the appearance of biodiesel production and sale to claim tax credits from the IRS. The IRS ultimately paid out more than $511 million in credits to Washakie Renewable Energy (“Washakie”), a Utah biodiesel company owned by Jacob and Isaiah Kingston. The Kingstons distributed the fraud proceeds among themselves and Dermen.
Dermen was found guilty of conspiracy to commit mail fraud, conspiracy to commit money laundering and money laundering. In addition to 40 years in prison, Dermen was ordered to pay $442,615,520 in restitution to the IRS (a money judgment of more than $181 million was also ordered against him).
Jacob Kingston, co-owner and CEO of Washakie, was sentenced to 18 years in prison and ordered to pay $511 million in restitution to the IRS. The court also imposed a $338 million money judgment against him. In July 2019, he pleaded guilty to conspiracy to commit mail fraud, filing false claims with the IRS, money laundering and conspiracy to commit the same, obstruction by concealing and destroying records and conspiracy to commit the same and witness tampering.
Isaiah Kingston, co-owner and CFO of Washakie, was sentenced to 12 years in prison and ordered to pay $511 million in restitution to the IRS. In July 2019, he pleaded guilty to conspiracy to commit mail fraud, aiding and assisting in the filing of false partnership tax returns, money laundering and conspiracy to commit the same and obstruction by concealing and destroying records and conspiracy to commit the same.
Rachel Kingston, the special projects manager at Washakie, was sentenced to seven years for her role in the scheme. In July 2019, she pleaded guilty to conspiracy to commit mail fraud, money laundering and conspiracy to commit the same, and obstruction by concealing and destroying records.
Sally Kingston was sentenced to six years in prison for her role in the scheme. In July 2019, she pleaded guilty to conspiracy to commit mail fraud and conspiracy to commit money laundering.
Money from the fraudulent claims were used to make lavish purchases in the United States, Turkey, and Belize. According to prosecutors, Dermen’s associates in Turkey bought and rebuilt a 150-foot yacht named “Queen Anne” (it was seized by the government in Beirut, Lebanon in 2021, and sold in Cyprus for $10.1 million). Jacob Kingston used $1.8 million of the fraud proceeds to buy a 2010 Bugatti Veyron for Dermen as a gift, and Dermen gifted a chrome Lamborghini and a gold Ferrari to Jacob Kingston. Additionally, some of the laundered money was used to purchase a mansion in Sandy, Utah for Jacob and Sally Kingston, and a mansion in Huntington Beach, California.
Special Agent in Charge Albert Childress of the IRS Phoenix Field Office noted, “This case has been one of unprecedented fraud against the United States and its citizens and is one of the most egregious examples of tax fraud in U.S. history.” He added a warning to others, “Despite your efforts to launder your money, or any attempts to cover your crimes, there is always a trail which our financial investigators can follow, and justice will be done.”
IRS-CI
IRS-CI, the sixth-largest law enforcement agency in the U.S., is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations like tax fraud, narcotics trafficking, money laundering, public corruption, healthcare fraud, and identity theft. While other federal agencies also have investigative jurisdiction for money laundering and some bank secrecy act violations, IRS is the only federal agency that can investigate potential criminal violations of the tax code.
The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.
You can find IRS CI on X (formerly known as Twitter) and LinkedIn.
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