Tax Preparers Charged with Defrauding Clients and IRS

ATLANTA - Frazier Todd, Jr., Roberta Sheffield, and Cozzie Walker, have been arraigned on federal charges of conspiring to defraud their clients and the IRS by intentionally misrepresenting to the IRS that those clients incurred qualified education-related expenses and were entitled to receive a refundable tax credit.

“One of the ways the federal government encourages people to enroll in and complete their college education is by offering a refundable tax credit for certain expenses students incur, such as for tuition and books,” said U.S. Attorney John Horn. “These defendants allegedly exploited that tax credit by convincing thousands of clients—who were often elderly, disabled, unemployed, and low-income—that the refund was a “stimulus” program they were entitled to receive.  The defendants knew that their clients had no qualified education expenses and were not eligible for the refund.”

“IRS Special Agents work year round to investigate and root out dishonest return preparers,” stated Veronica F. Hyman-Pillot, Special Agent in Charge, IRS Criminal Investigation.  “These defendants clearly took advantage of the people in their community as well as other unsuspecting Americans. The indictment of these individuals helps reassure our communities that return preparers who lack integrity and engage in illegal activities will be held accountable for their actions.”

According to U.S. Attorney Horn, the indictment, and other information presented in court: Walker, Sheffield, and Todd, Jr. were principals of Diverse Resources Business and Tax Firm, a Union City tax preparer business, and People Helping the Community, Inc., a fraudulent non-profit organization. Acting through these entities, the defendants operated a scheme to exploit the American Opportunity Tax Credit (“AOTC”), a refundable tax credit for qualified postsecondary education expenses such as tuition and related costs. Students for whom the AOTC is claimed must be enrolled at least part-time in a degree- or certificate-seeking program at an eligible institution, and they must incur actual education-related expenses. Students can qualify for up to a $1,000 refund, even if they are not otherwise required to file taxes.  

The defendants marketed the AOTC as a “stimulus” available to almost anyone, regardless of whether that person incurred education expenses or was even enrolled in school. Some clients did not even know the defendants were filing a tax return on their behalf. To make the scheme appear legitimate, the defendants manufactured a phony curriculum of short videos on topics such as healthy eating, exercise for seniors, and street safety, which they sent to clients after already claiming the AOTC. Even if the clients had paid tuition for these so-called “life enrichment courses,”—which they did not—the defendants knew these courses would not qualify their clients for the AOTC.

The defendants filed tax returns claiming the maximum AOTC refund for every client, representing to the IRS that each client had incurred several thousand dollars in qualified education expenses. Many of the tax returns were fraudulent in other ways too, such as claiming bogus income and business losses. The government estimates that the defendants’ conduct generated over $3.5 million in fraudulent refunds, some of which went to the clients and some of which the defendants retained for themselves. The majority of the defendants’ clients lived in the Atlanta, Georgia and Charlotte, North Carolina areas.

Frazier Todd, Jr., 57, Roberta Sheffield, 42, and Cozzie Walker, 41, all of Atlanta, Ga., are charged with conspiracy to commit wire and mail fraud and fourteen counts of aiding and abetting each other in presenting false and fraudulent claims for payment to the federal government. They were arraigned today before United States Magistrate Judge Russell G. Vineyard, after they were indicted by a federal grand jury on November 9, 2015.

Members of the public are reminded that the indictment only contains charges.  The defendants are presumed innocent of the charges and it will be the government’s burden to prove the defendants’ guilt beyond a reasonable doubt at trial.

Anyone who has information concerning the allegations described in the indictment is encouraged to contact IRS-Criminal Investigation at 404-338-7519.

This case is being investigated by the Internal Revenue Service Criminal Investigation.

Assistant United States Attorney Lynsey M. Barron is prosecuting the case.

For further information please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6016.  The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.