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Accountants Behaving Badly: Jail Time for Filing False Tax Returns, and BDO Malawi Given Stiff Fine

Plus, accountants in India got into trouble for fraud, duping investors, and forgery, while an accountant in Australia was charged for allegedly defrauding a business out of $200,000.

Delaware County business owner sentenced to 4+ years in prison for stealing funds from clients, filing false forms with the IRS [Justice Department]
Accountant Myles Hannigan was sentenced on Feb. 14 to 52 months in federal prison, one year of supervised release, and ordered to pay $3,270,566 in restitution for filing false tax information with the IRS on behalf of his clients. After his sentencing, Hannigan, 48, was immediately taken into custody and sent to prison.

He pleaded guilty in July 2019 to obstructing the due administration of the IRS and 17 counts of preparing materially false income tax returns.

Hannigan owned and operated Payroll Professionals Inc. in Media, PA, a third-party payroll processor that assisted clients by issuing payroll checks and forwarding tax payments to federal, state, and local authorities. PPI’s clients were small to medium-sized businesses that counted on Hannigan to prepare and file Form 941, among others, with the IRS.

From January 2012 until December 2016, Hannigan allegedly prepared and submitted Form 941s that falsely reported information to the IRS. In particular, Hannigan reported depositing more money to pay tax debt than he had actually sent to the IRS, causing 35 of PPI’s client companies (that are considered victims in this case) to collectively underpay the IRS $3,270,566.89 for those tax years. These clients gave Hannigan access to all necessary funds to pay the full tax debt, but Hannigan failed to do so, authorities said.

Hannigan hid his behavior from these clients by presenting bogus documents that pretended to be confirmation of payments he had made to the IRS on their behalf, and by re-directing IRS correspondence to his business address.

Palm Beach County tax return preparer sentenced to prison for filing false returns and theft of government funds [Justice Department]
Paul Senat was sentenced to 90 months in prison on Feb. 24 for aiding and assisting in the preparation of false tax returns and theft of government funds.

Paul Senat

From at least 2012 to 2016, Senat was the owner and operator of multiple tax return preparation businesses in Palm Beach, FL, and surrounding areas. Through the businesses, Senat falsified his clients’ returns by reporting fictitious business losses and education credits in order to fraudulently inflate their refunds. Senat also stole a federal tax refund check worth nearly $10,000.

A federal jury in Fort Lauderdale convicted Senat on Nov. 6, 2019. Senat was found to have caused a tax loss of more than $3.5 million.

In addition to his prison term, Senat was ordered to serve three years of supervised release and to pay $9,779 in restitution.

ALSO: According to the Palm Beach Post, Senat was convicted early last year in Palm Beach County Circuit Court of culpable negligence in connection with the April 2017 shooting death of the father of NFL football player Travis Rudolph at a West Palm Beach strip club. Senat was moving an AK-47-style rifle when it discharged, killing 55-year-old Darryl Rudolph, who was in an adjacent room, police said.

Senat was sentenced to two days in jail in connection with Rudolph’s death.

Mississippi tax return preparer sentenced to prison for filing false tax returns [Justice Department]
Shelleen Ivory-Farmer, who managed ABS Tax Services in Macon, MS, was sentenced to 16 months in prison on Feb. 20 for aiding and assisting in the preparation and filing of a false tax return.

From approximately January 2012 through April 2016, Ivory-Farmer falsified clients’ tax returns by claiming false education credits, itemized deductions, and business and farming losses to fraudulently increase client refunds paid by the IRS. The tax loss resulting from the false education credits alone was more than $870,000. The total tax loss caused by Ivory-Farmer was more than $1.1 million, authorities said.

In addition to her prison term, Ivory-Farmer was ordered to serve one year of supervised release and to pay $236,887 in restitution.

ICAM fines MEC’s auditors BDO K4.8m for Malawi poll mess [Nyasa Times]
Bravo Delta Oscar got into some hot water in Malawi:

Institute of Chartered Accountants (ICAM) has found BDO Chartered Accountants (Malawi) guilty of four counts of serious misconduct in its operations as the retained auditor in the Tripartite Elections held on 21 May 2019 and has since been fined with K4.8 million.

In the verdict which Nyasa Times is in possession with, ICAM had been investigating the conduct of BDO Chartered Accountants (Malawi) during the controversial elections following the allegations of professional misconduct that ICAM received from Malawi Congress Party (MCP) and a concerned citizen.

The development comes after Constitutional Court on February 3 2020 annulled the last May results that gave President Peter Mutharika a narrow win, citing widespread irregularities, especially the “massive” use of correction fluid on ballot sheets.

The court ordered a fresh election with 150 days and an investigation into the conduct of the electoral commission by parliament.

The charges for the audit firm were five; three on negligence, one on lack of professional competence and due care and one on misconduct.

For example, BDO was found guilty of misconduct for not having “the capacity to carry out the assignment,” as well as guilty of one of the counts of negligence for “failing to carry out a risk assessment of the assignment the audit firm was engaged to undertake despite being aware that the assignment was sensitive, of significant public interest, and that the stakes were very high.”

Other accountants behaving badly:

  • Accountant booked for ‘fraud’ [Tribune India]
  • Seed Infotech director, his wife and accountant booked under MPID Act [Pune Mirror]
  • Balayya’s accountant held for forging wife’s signature []
  • Accountant charged over alleged $200,000 defrauding of a Lake Macquarie business [Newcastle Herald]
  • Delhi HC denies bail to chartered accountant for committing non-disclosure of documents required under IndAS [Tax Scan]
  • Kamanjab accountant arraigned over assault [The Namibian]