Tax fraud brings record fines

The New York State Department of Taxation and Finance last week slapped civil penalties of $606,000 on the two convicted owners and operators of a now defunct Ridgewood tax preparation business.The fines are the largest penalties the department has ever imposed against paid tax preparers for filing fraudulent tax returns.

Briseida Christopher, 65, of Brooklyn, the owner of Gypsy Travel and Juana DeCastro of Woodhaven, a tax preparer who worked at the Gypsy Travel office pleaded guilty this past summer to felony charges relating to the preparation and filing of false income tax returns.Christopher and DeCastro were indicted in February 2007 and charged with multiple felony counts for filing fraudulent New York State personal income tax returns for clients and for themselves. They were also cited for secretly charging their client’s additional tax preparation fees - sometimes as much as $600 per client - against their refund anticipation loans.To generate false refunds, Christopher and DeCastro inflated their clients’ itemized deductions and reported false business and rental losses.

Christopher was sentenced on February 8 to time served and probation. DeCastro is scheduled to be sentenced in April. She faces a maximum sentence of six months in jail and probation.Both pleaded guilty this past summer to felony charges relating to the preparation and filing of false income tax returns.

US class action against AWB dismissed

The anti-trust suit, on behalf of a group of US farmers, alleged AWB paid bribes to the former Iraqi Government to get a monopoly on wheat sales, thus depressing world wheat prices.
But District Court Judge Gerard Lynch said the Iraq market took just over one per cent of US wheat exports, and simply could not have been a "substantial factor" affecting prices.
He said the claimed drop in US wheat prices could very well have resulted from "wholly unrelated factors".
The US farmers had been claiming US$10 million in damages. AWB says the case was ill-conceived. But there are still two other class actions against it before the US courts.
Meanwhile, in Canberra, AWB has complained to a Senate Inquiry about the new powers the Federal Government plans to give to the wheat exports regulator.
The company is to lose its monopoly on wheat exports, following the Cole Inquiry's revelations about the kickbacks to the Iraqi Government to win contracts.
AWB corporate affairs manager, Robert Hadler, told the Senate inquiry the regulator would have too much power to decide who was fit to export.
"There is a risk that we could eventually have a wheat industry ASIC, and I think we need to guard against that," he said.

Nevada court ruling preserves whistleblowing case

A ruling Thursday by the Nevada Supreme Court preserves a whistleblower's complaint against International Game Technology in a case that started with a claim that IGT filed false tax returns and owed the state up to $50 million in back taxes. The high court's unanimous opinion upholds a decision by Washoe County District Judge Connie Steinheimer that favored Jim McAndrews, who had worked on tax matters at Reno-based IGT and was fired in 2006.
McAndrews got an adverse ruling from the Supreme Court two years ago in the dispute, but followed up with a whistleblower protection complaint based on the state False Claims Act's anti-retaliation provisions.
McAndrews contends that IGT retaliated against him by suspending him with pay and barring him from IGT premises after his first complaint and eventually firing him after he lost his first Supreme Court case.
In its latest ruling, the Supreme Court rejected an argument by IGT attorneys that McAndrews couldn't win his case unless he could show that IGT "pressured him into the fraudulent activity in the first place."
While such a showing of participation is required under one state law, justices said another law section says a former employee can recover damages "simply by alleging and proving that his employer retaliated against him."
The 14-page opinion returns the case to Steinheimer's court for further action.
In the first case that was rejected by the Supreme Court in 2006, McAndrews alleged that IGT and Anchor Coin Co. were involved in a joint venture and since 1997 had filed false sales and use tax returns with the state on sales and leases of slot machines and slot components. Anchor later was acquired and merged into IGT.
In a filing with the Securities and Exchange Commission, IGT has said it was advised that it had "a good faith legal basis" for not paying the taxes, although the company might wind up owing something.
Nevada's 1999 whistleblower law gives people with inside knowledge about such cases a percentage of any amount eventually collected by the state.

US Rep. Wynn to Resign, Join Law Firm

Eight-term U.S. Rep. Albert R. Wynn (D-Md.), who was defeated last month in the Democratic primary, said yesterday he will resign from Congress in June to take a job at a prominent Washington law firm with an active lobbying practice.

His decision to leave before his term ends in January prompted some residents of his district to worry that they will be left without representation for months unless Maryland holds a potentially costly special election to replace him.

Several congressional ethics experts also called it highly unusual to announce a resignation months before it takes effect, a situation that might force Wynn to recuse himself from votes.
Wynn, who for 15 years has represented the 4th Congressional District, which includes most of Prince George's County and part of Montgomery County, said in a statement that it is "time to move into another phase of my life." He indicated he will become a partner in the law firm Dickstein Shapiro. He lost in the primary by more than 20 percentage points to Donna F. Edwards, a Prince George's nonprofit executive.

Wynn would not comment beyond his statement, which did not give a reason for the timing of his resignation.

Ethics experts and watchdog groups characterized Wynn's move as potentially rife with conflicts of interest because he could be confronted with issues related to his new employer's clients while still in office.

"Typically once somebody announces their departure, they start packing their bags," said Kenneth A. Gross, an ethics expert at the law firm Skadden, Arps, Slate, Meagher & Flom. "It's hard to legislate when people are already thinking of you in the private sector."

Under an ethics law enacted last year, lawmakers are required to notify the House Ethics Committee soon after they begin to negotiate for a job outside Congress. A spokesman for the committee declined to comment on whether Wynn had alerted the committee.

Wynn suggested that he was leaving early in part to give Edwards the chance to join Congress early through a special election, allowing her to build seniority and get off to a "fast start in serving the citizens of our community."

However, a special election is not guaranteed. Under Maryland law, Gov. Martin O'Malley (D) can choose whether to hold a special primary and general election or leave the seat empty until January, when the winner of November's general election will be sworn in. Edwards will face Republican Peter James in November in the overwhelmingly Democratic district.

Starbucks sued in Minnesota

Another former Starbucks employee is suing over the way the coffee chain store divides up tips. Starbucks is already planning to appeal a California judge's order that it pay $100 million in tips and interest because supervisors shared in the tips given to baristas.

And on Wednesday another state lawsuit was filed in Massachusetts. Now a Minnesota lawsuit accuses Starbucks of the same thing. It says Starbucks broke a Minnesota law that prohibits employers from requiring employees to share tips. The lawsuit claims that some of those who shared in the tips were supervisors.

Starbucks says its baristas and shift supervisors share tips because they all provide the same customer service. They're all hourly employees. Starbucks says store managers do not get tips. The Minnesota case is in Washington County and seeks class-action status.