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United States of America v. Cubby Wayne Williams
Case Number: 2:19-cr-00280-PA
Judge: Percy Anderson
Court: United States District Court for the Central District of California (Los Angeles County)
Plaintiff's Attorney: James C. Hughes and Ranee A. Katzenstein
Call 888-354-4529 if you need help finding a tax fraud criminal defense lawyer in Los Angeles, California
Los Angles, CA - Inglewood-based Tax Preparer Convicted in Scheme that Sought More than $5 Million in Fraudulent Refunds
A tax preparer and ex-California Franchise Tax Board employee was found guilty by a jury of federal criminal charges accusing him of defrauding the IRS out of millions of dollars by declaring bogus withholdings used to fraudulently claim substantial tax refunds.
Cubby Wayne Williams, 64, of Alhambra, was found guilty of 22 counts of assisting in the preparation of false tax returns for his clients and four counts of subscribing to false tax returns for himself.
At sentencing Williams will face a statutory maximum sentence of 78 years in federal prison.
Williams, who owns and operates the Inglewood-based tax services company Williams Financial Network, filed tax returns claiming that his clients had accrued Original Issue Discount (OID) interest income, according to the evidence presented at his four-day trial. OID is a form of interest that accrues over the life of a bond or other debt instrument, but is not payable as it accrues. Financial institutions use IRS Forms 1099-OID to report this accrued, but unpaid, income, and any tax withholdings on it.
Williams fraudulently claimed OID withholdings on 22 tax returns for his clients for the tax years 2013 through 2016, and sought hundreds of thousands in bogus tax refunds. Williams took a cut of many of these refunds often by directing the IRS to deposit a portion into a bank account under Williams’s control.
When his clients complained that their returns had fallen under IRS scrutiny, had been corrected and that they now owed money to the IRS, Williams told them the IRS had made a mistake and they were still entitled to their tax refunds. When the same clients informed Williams they were being audited, he assured them he would represent them before the IRS and resolve any issues, but he ultimately did little other than to submit further fraudulent documentation to the IRS.
According to prosecutors, Williams’ scheme included many false returns in addition to the returns charged in the indictment, through which Williams attempted to fraudulently obtain more than $5 million in tax refunds and, in fact, obtained nearly $3 million for himself and his clients.
This case was investigated by IRS Criminal Investigation.
26:7206(2): AIDING AND ASSISTING IN THE PREPARATION OF A FRAUD AND FALSE STATEMENTS
26:7206(1): SUBSCRIPTION TO A FALSE TAX RETURN
Outcome: Defendant was found guilty.