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Post date: January 26 2015

A.G. Schneiderman And Tax Commissioner Mattox Announce Arrest Of Unregistered Tax Preparer On Felony Tax Charges

Defendant Charged With Tax Fraud, Filing A False Personal Income Tax Return, And Trying To Steal Tax Refund

Schneiderman: Tax Preparers Who Engage In Fraud Will Be Held Accountable

ALBANY—Attorney General Eric T. Schneiderman and New York State Department of Taxation and Finance Commissioner Thomas H. Mattox today announced the arrest of Raul Kelley, 48, on three felony charges stemming from his business as a tax preparer. A complaint filed with Albany City Court charged Kelley with the following crimes: Criminal Tax Fraud in the Fourth Degree, a class E felony, in violation of New York State Tax Law § 1803; Offering a False Instrument for Filing in the First Degree, a class E felony, in violation of Penal Law § 175.35; and Attempted Grand Larceny in the Third Degree, a class E felony, in violation of Penal Law §§ 110/155.35.

According to the complaint, the investigation revealed that Kelley had been hired to prepare a personal income tax return for two taxpayers and file it with the State of New York, despite not being registered with the State as a tax preparer.  The complaint accuses Kelley of grossly inflating the taxpayers’ job expenses for 2012 from $1,500 to $97,120 against wages of $98,212. This resulted in the return showing a refund of $4,432, to which the taxpayers were not entitled. In contrast, the complaint further alleges that had job expenses of only $1,500 been claimed, the return should have reported that the taxpayers owed the State $1,434. 

“New Yorkers should take every precaution to ensure their tax preparers are legitimate and registered with the State,” said Attorney General Schneiderman. “We will do everything in our power to punish those who rip off New Yorkers, whether it’s an illegal tax preparer or an individual filing false insurance claims. Tax preparers who engage in fraud will be held accountable.”

“With the income tax season underway, this case stands as a prime example of why New York State recently became only the fourth state in the nation to regulate the tax preparer industry, focusing on ethical and educational standards;” said Commissioner Mattox. “Seven million, or 70%, of New York taxpayers hire tax preparers to complete their returns, which is why we will continue to work with the Attorney General and all levels of law enforcement to protect consumers from fraud and unscrupulous practices.”

Commissioner Mattox encouraged taxpayers to ensure that tax preparers are registered with New York State by using the Tax Department’s searchable online database of 40,000 tax preparers. Certified public accountants, attorneys and enrolled agents have other professional requirements and are, therefore, not required to be registered.

The Honorable Rachel Kretser arraigned Kelley on the complaint today and set bail in the amount of $7,500 bond/$3,000 cash. The case was adjourned until tomorrow for conference.

The charges against Raul Kelley are merely accusations and he is presumed innocent until and unless proven guilty. If convicted, the defendant faces a maximum sentence of one and one-third to four years of incarceration.

The Attorney General thanks the New York State Department of Taxation and Finance for its valuable assistance in this case. The case is being investigated by New York State Department of Taxation and Finance’s Fraud Analysis and Selection Team, as well as Supervising Investigator Danielle Wallin and Associate Attorney Michelle Demeri of the Criminal Investigations Division, and by OAG Investigators Michael Leahy and Mark Spencer. The Investigations Bureau is led by Chief Dominick Zarrella.

The case is being prosecuted by Assistant Attorney General Nancy Snyder of the Criminal Enforcement and Financial Crimes Bureau. The Bureau is led by Bureau Chief Gary Fishman and Deputy Chiefs Stephanie Swenton and Meryl Lutsky. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan. 

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