Paragraph 1: A sweeping indictment has been unsealed against seven individuals, all current or former New York residents, accusing them of orchestrating a massive scheme to fraudulently obtain over $600 million in COVID-19 related tax credits. The alleged mastermind, Keith Williams, operated Credit Reset, a purported credit repair business, which served as the headquarters for the operation. The other defendants named are Jamari Lewis, Morais Dicks, Janine Davis, Tiffany Williams, James Hames Jr., and Ewendra Mathurin. The indictment alleges they collectively filed over 8,000 false employment tax returns with the IRS, exploiting programs like the Employee Retention Credit (ERC) and the Sick and Family Leave Credit (SFLC). It’s important to note that an indictment is merely an accusation, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Paragraph 2: The government contends that the defendants fabricated information on the tax returns, claiming credits for non-existent employees, inactive businesses, and wages that did not qualify for the programs. They allegedly claimed SFLC beyond permissible wage limits, double-dipped by claiming both sick and family leave credits for the same wages, and improperly claimed both ERC and SFLC for identical wages. Many of the businesses listed on the returns were reportedly shell companies, inactive entities, or businesses without employees or physical locations. Furthermore, many failed to file the required W-2 forms, raising further red flags.
Paragraph 3: The scheme’s profitability, according to the government, stemmed from a two-pronged approach. The defendants received direct payments from the U.S. Treasury in the form of tax refund checks and also charged their clients fees based on a percentage of the fraudulently obtained refunds. They further expanded their operation by recruiting others into the scheme, offering them a cut of the illicitly acquired funds. While the defendants attempted to obtain over $600 million, the IRS disbursed approximately $45 million to them and their clients. The indictment alleges the defendants were aware of the illegality of their actions and actively attempted to conceal their scheme.
Paragraph 4: To avoid detection, the defendants allegedly employed several tactics, including omitting their names as paid preparers on tax returns and using Virtual Private Networks (VPNs) to mask their IP addresses while filing the returns. Communication within the group was conducted through text messages, phone calls, and a WhatsApp group. Evidence presented in the indictment includes text messages allegedly from Keith Williams to James Hames, instructing him on what false information to provide to the IRS when inquiring about refund statuses. The scheme also involved providing or facilitating the purchase of Employer Identification Numbers (EINs) for clients who lacked them, often associated with shell companies or defunct businesses. When the IRS and Social Security Administration (SSA) began to investigate discrepancies in the filed returns, the defendants allegedly responded with fabricated information.
Paragraph 5: The indictment also implicates several of the defendants in a separate fraudulent scheme involving Paycheck Protection Program (PPP) loan applications. They are accused of submitting falsified supporting documents, including fabricated tax forms, to secure these loans. The charges against the defendants are extensive, totaling 45 counts, and include conspiracy to defraud the United States, wire fraud, and aiding and assisting in preparing false tax returns. Keith Williams, Lewis, Mathurin, Davis, Tiffany Williams, and Dicks face additional charges of wire fraud related to the fraudulent PPP loan applications. The IRS-Criminal Investigation (CI) has noted the brazen nature of the alleged crimes, citing Lewis, an aspiring rapper known as “Mr. Chaketah,” who posted a song online boasting about defrauding the government.
Paragraph 6: The ramifications for the defendants, if convicted, are severe. They could face significant prison sentences, with the conspiracy charge carrying a maximum penalty of five years, each wire fraud charge related to the ERC scheme carrying a maximum of 20 years, each wire fraud charge related to the PPP fraud carrying a maximum of 30 years, and each charge of aiding and assisting in preparing false returns carrying a maximum penalty of three years. The IRS-CI and the United States Postal Inspection Service (USPIS) are jointly investigating the case. Attorneys for some of the defendants have issued statements denying the allegations and asserting their clients’ innocence. The case hinges on the complexities of the various COVID-19 relief programs, including the ERC, SFLC, and PPP, which were designed to provide financial assistance to businesses and individuals struggling during the pandemic. The government alleges these programs were exploited for personal gain, while the defense maintains their clients’ innocence and intends to vigorously challenge the charges.
