Nassau DA: Tax preparers cheated on taxes

Five Nassau-based tax preparers face criminal charges for using a variety of tax-evading schemes to cheat Uncle Sam, prosecutors said Thursday.

The charges include using inmates' identities to file fake returns and creating bogus businesses to inflate deductions and create larger refunds, prosecutors added.

"The five people arrested as a result of this investigation should serve as an example to tax preparers and accountants everywhere," Nassau District Attorney Kathleen Rice said in a statement. "Anyone who attempts to defraud honest taxpayers by violating the law will be caught, arrested, and held accountable."

The five preparers, who worked for either Jackson Hewitt or R&G Brenner, were arrested after a yearlong joint investigation by Rice's economic crimes bureau and the New York State Department of Taxation and Finance.

Each faces up to four years in prison if convicted. Assistant District Attorney Diane Peress, chief of the economic crimes bureau, said more preparers may be arrested.

She advised individuals filing returns to resist the temptation to look the other way.

"Sometimes, if it's too good to be true, it's not true," she said, adding that individual taxpayers are ultimately responsible for their returns.

Sherrece Durrant-Gardner, 34, of Hempstead, who prosecutors said worked at a branch of Jackson Hewitt in Roosevelt, was arrested Dec. 15 and charged with first-degree scheme to defraud and first-degree offering a false instrument for filing.

Donna Giordano, 33, of Freeport, and Marchia Purdie, 42, of Hempstead, both of whom worked at the same Roosevelt office, were arrested Wednesday and charged with first-degree offering a false instrument for filing and fourth-degree grand larceny.

"This is a typical case where the district attorney's office is trying to create the image that this is a massive scheme in order to get good press," said William Shanahan of Garden City, who represents Giordano. Attorneys for the other defendants could not be reached.

Brian Kelly, 42, of Lake Grove, and John Ferolito, 54, of Westbury, who worked in R&G Brenner offices in Valley Stream and Elmont, were charged Wednesday with first-degree attempted offering a false instrument for filing and third-degree attempted criminal tax fraud.

All but Purdie, who was held on $1,000 bail, were released on their own recognizance after being arraigned in First District Court in Hempstead.

The Nassau district attorney's office gave the following advice to help taxpayers:

Read your return. Make sure your financial situation is accurately represented.

A paid preparer is required by law to sign the return and fill in the preparer areas of the form. Avoid preparers who will not sign your return.

Never sign a blank return, and never sign in pencil.

If e-filing, make sure preparer is an "authorized IRS e-file provider." All tax preparers must register with the IRS and New York State in order to e-file returns. Check by going to the IRS website.

If your preparer e-files, make sure you are shown a copy of the return and are provided with a hard copy of the return before it is filed.

Avoid a preparer who charges fees based on a percentage of your return.

Some preparers offer immediate payments of refunds for a fee. This is a loan, and there is a fee for such a service.Prosecutors said Durrant-Gardner offered to pay $250 to at least four people and several inmates in an upstate prison in exchange for their names, dates of birth, and social security numbers. Durrant-Gardner used the information to prepare false returns for the 2009 tax year, prosecutors added. Several of the people she prepared returns for - such as the inmates - had no income that tax year.

Her plan was exposed, Peress said, when inmates, who never received the money, reported the fraud to state corrections officials.

The investigation led to two other Jacskon-Hewitt employees, Giordano and Purdie, who Peress said created bogus businesses for clients, allowing them to falsify losses and take larger deductions that either lowered their tax liability or increased their refunds.

State tax officials had independently begun preparing cases against Kelly and Ferolito, Peress said, and notified county officials when they detected criminal offenses.

County prosecutors said the men filed fraudulent returns on behalf of undercover agents from the New York State Department of Taxation and Finance, which routinely conduct random tests of preparers.

"The investigators just went out and they took the bait," said Assistant District Attorney April Montgomery.

Prosecutors said Ferolito and Kelly steered the undercover agents into reporting lower income and higher expenses than their actual amounts for 2006, 2007 and 2008. Prosecutors said the scheme reduced the clients' tax liability by thousands of dollars, a scheme that would have denied the government the tax revenue.