Accountants Behaving Badly


Every year, "true crime" fans look forward to the IRS Criminal Investigation Unit's annual report, which details their efforts to combat the cheats who don't pay their share of taxes. This year's edition is no exception, with dozens of entertaining stories about clever scammers who just … weren't … clever … enough.  

You would think accountants would be the last group of people to try and game the system. That guy with the green bow tie in the H&R Block commercials? He wouldn't even bend the rules, let alone break them. But the Criminal Investigation report reveals that accountants are actually some of the worst scofflaws. In fact, there's an entire criminal program targeting crooked tax preparers, and it launched 1,063 investigations last year! Here are four outrageous stories you might enjoy:  

  • Haydee Guerra Neff operated a tax-prep business out of her home in Casa Grande, Arizona - a sleepy desert town about halfway between Phoenix and Tucson. She prepared perfectly legitimate returns for her clients to sign. But, once the returns were signed, she proceeded to slip in fake education credits, mortgage interest deductions, and residential energy credits before she filed them. She then used Form 8888 to send the legitimate part of the refunds to her clients, while keeping the rest for herself. (She must have missed class the day her criminal mastermind program covered "paper trails.") Now, she owes the IRS $435,280 in restitution. But it's going be tough finding new clients among the cellmates she joined at her California prison camp.
  • Steven Boitano was a partner in a CPA firm in San Jose, preparing tax returns for both the firm’s customers, as well as for his own personal clientele. He did well for himself, earning $275,000 per year. But for a guy who made so much money preparing taxes, he sure didn't like paying them. He refused to file tax returns year after year, and when he finally showed up at the IRS office, returns in hand, they turned out to be nothing more than fraudulent, with Boitano falsely claiming he had already made $121,000 in tax payments. His lies cost him $181,910 in restitution and 41 months in jail.
  • John Hoang, once a CPA and attorney, is now a convicted felon who operated a tax-prep business in Woodbridge, Virginia. His "eureka" idea was to make up fake losses from fake technology licensing businesses for his clients, which defrauded the government out of $1.5 million. He earned $6 million for himself while running his scam. Of course, he didn't bother sharing any of it with the IRS. Now he's enjoying government hospitality in a federal prison camp, where he'll be lucky to license dial-up internet technology for 20 minutes every other Thursday.
  • Paul Daugerdas was another attorney/CPA with big ambitions. Meek high-school chemistry teachers like Breaking Bad's Walter White may dream about putting on a rubber apron and goggles with the intention of running their own meth labs, but true hustlers like Daugerdas put on a worsted wool suit and open tax shelter labs. Daugerdas cooked up schemes to create false tax losses with names like SOS (for "short options strategy"), HOMER ("hedge option monetization of economic remainder") and COBRA ("currency options bring alternative rewards"). When clients screwed up the details implementing his ridiculously complex schemes, he helpfully backdated documents and authored false opinion letters describing when transactions had supposedly occurred. He shaved $7 billion off his clients' tax bills. He made $95 million for himself along the way — but naturally used his own scheme to pay less than $8,000 on that income. It took some time for the IRS to shut Daugerdas down — but when they did, he wound up with 15 years in prison and $536 million in fines and restitution.