D.C. tax employee accused of filing millions in fraudulent returns

Mark Segraves, wtop.com

WASHINGTON – An employee at the D.C. Office of Tax and Revenue is facing charges for helping to file hundreds of bogus federal and local tax returns that netted millions of dollars in fraudulent tax refunds, according to court documents.

Prosecutors charge that Kimberle Davis and at least two co-conspirators filed more than 900 federal tax returns and nearly 300 D.C. tax returns that were fraudulent. Prosecutors have not determined the number of false returns filed in Maryland and Virginia, but acknowledge some were filed there as well.

A filing by the U.S. Attorney’s Office says Davis – a control technician at the D.C. Office of Tax and Revenue (OTR) – also worked at a tax preparation company that was the subject of a federal investigation.

A spokesperson for the District’s Chief Financial Officer tells WTOP the scheme was first uncovered by the CFO’s office.

“We’re the ones who found out about this and reported it to the U.S. attorney a year ago,” David Umansky tells WTOP. “Tax returns prepared by (the tax preparation company) raised suspicions of our criminal investigations unit.

Court records say Davis was an employee of 2FT Fast Facts Tax Service. Umansky says OTR employees are not allowed to have outside employment with tax preparation companies.

The court records – first reported by the Washington City Paper – indicate Davis would use her position in the OTR to monitor the audit status of her clients’ tax returns and to help those clients file bogus tax returns.

It’s not clear from the court documents if the clients knew they were filing false returns, but the records do say “virtually all of 2FTs clients” received fraudulent refunds. The court documents also show how Davis and her co- conspirators defrauded tax offices in D.C., Maryland and Virginia, as well as the Internal Revenue Service.

According to prosecutors, Davis and at least two co-conspirators would reduce their clients’ taxable income by claiming bogus deductions for charitable contributions and work-related expenses.

The overall scheme allegedly netted nearly $14 million in bogus refunds. LaDonna Davis – who is not related to Kimberle Davis – is believed to be one of the co-conspirators. Court records show she pleaded guilty last year to filing more than 3,000 bogus returns.

Kimberle Davis’ role seems to be limited to about $3.8 million in federal returns and nearly $305,000 in D.C. returns.

Davis was placed on paid administrative leave from the Office of Tax and Revenue last June when federal investigators first linked her to the 2FT investigation. Umanksy says now that federal authorities have acted, the Office of the Chief Financial Officer “will take appropriate action” against Davis.

View court documents on Davis below, courtesy of the City Paper:

davis-otr

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(Copyright 2012 by WTOP. All Rights Reserved.)


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