DEPARTMENT OF JUSTICE

UNITED STATES ATTORNEY GRETCHEN C.F. SHAPPERT
WESTERN DISTRICT OF NORTH CAROLINA

FOR IMMEDIATE RELEASE
February 28, 2008

CONTACT: SUELLEN PIERCE
704.338.3120
FAX 704.227.0264

PROFESSIONAL TAX RETURN PREPARER SENTENCED TO 70 MONTHS Charlotte Tax-Prep Business Operator entered Guilty Plea to Conspiracy and Tax Evasion CHARLOTTE, N.C. -- United States Attorney Gretchen C.F. Shappert, and Reginald D. McDaniel, Acting Special Agent in Charge of the Internal Revenue Service-Criminal Investigation Division, announce that Lloyd Anthony Bastfield, 49, a professional tax return preparer for approximately 18 years, has been sentenced to a term of imprisonment for 70 months and ordered to pay restitution of more than $6 million. Bastfield pled guilty in April 2007 to (1) conspiring to defraud the United States by filing false tax returns claiming nearly $6 million in false claims for refund for individuals between 2001 and 2005, and (2) evading over $171,000 in personal income taxes owed by him for the years 2000 through 2004. The sentence was imposed today by US District Judge Robert J. Conrad, Jr., Chief Judge for the Western District of North Carolina.

According to a Bill of Information, Bastfield of Charlotte, operated a tax-preparation business called Tony’s Tax Service. Bastfield admitted that between 2001 and 2005 he prepared and electronically filed over 10,000 fraudulent income tax returns for individual clients which claimed false and fictitious education income tax credits. Nearly 99 per cent of all returns filed by Bastfield claimed a refund and almost all of those claims were based on the improper use of the education credits. The total amount of false claims for refund submitted by Bastfield during this time period was in excess of $5.9 million.

In addition to the false returns prepared by Bastfield for individual clients, Bastfield filed false personal tax returns for himself for the calendar years 2000 through 2004 in which he understated his taxable income and his tax liability. Bastfield evaded more than $171,000 in personal taxes for those years. Based on the advisory US Sentencing Guidelines, Bastfield faced a sentence between 70 and 87 months in prison. During the sentencing hearing, Bastfield’s attorney argued for a downward variance from the sentence because of Bastfield’s almost immediate admission of guilt, following the execution of search warrants on his business in 2007, and his cooperation with the government in resolving the case which involved thousands of individual taxpayers and nearly 10,000 separate false returns.

The government recognized Bastfield’s assistance and acknowledged to the Court that a case of this magnitude would have required a substantial expenditure of government resources and would have taken a year or more to fully investigate. Nevertheless, the government urged the Court to impose a sentence at the low end of the advisory Guidelines range. A sentence of 70 months, the government argued, would take into consideration both the extent of Bastfield’s assistance, as well as the length and breadth of his fraudulent conduct. Judge Conrad rejected the request for a downward variance, noting that Bastfield’s criminal conduct had occurred over a four-year period, involved a huge number of false returns, and resulted in more than $6 million in losses to the United States. According to Judge Conrad, any sentence less than 70 months would fail to provide proper deterrence to either Bastfield or other individuals who are tempted to engage in similar frauds against the United States. In addition, Judge Conrad ordered Bastfield to make full restitution of $6,164,594 and to make an immediate monetary payment of $100,000 which will be applied directly to his personal income tax liability.

US Attorney Gretchen C.F. Shappert said, “A willful failure to pay taxes is not an oversight. It is a crime. Tax fraud is even more serious when it is committed by someone with a professional obligation to see that taxes are filed correctly. As we move toward the current filing season, tax return preparers should be on notice that this office will aggressively pursue those who seek to benefit by cheating the system. Those who fail to meet their obligations as taxpayers can expect real, substantial consequences.” Shappert also noted that those individual clients who improperly received refunds as a result of Bastfield’s conduct will be required to pay back the amount of those refunds to the Internal Revenue Service. At the end of the day, no one gets to keep the illegally obtained refunds and “Bastfield will have 70 months to remember his duty to file honest tax returns,” she said.

According to Justice Department statistics released on April 3, 2007, during fiscal year 2006, the Justice Department’s Tax Division authorized prosecutions of nearly 1,200 defendants for tax crimes, an increase of more than 34 per cent over the number authorized for prosecution in 2001.

The Tax Division’s criminal enforcement priorities include investigating schemes that involve:
• Using trusts or other entities to conceal control over income and assets;
• Shifting assets and income to hidden offshore accounts;
• Making false statements to the IRS in order to claim tax refunds;
• Selling and promoting fraudulent tax avoidance schemes;
• Using frivolous justifications for not filing truthful tax returns;
• Failing to withhold, report and pay payroll and income taxes;
• Failing to report income on individual and corporate returns; and
• Failing to file tax returns.

The U.S. Attorney credits the IRS-CID with leading the investigation that resulted in the filing of these charges. The government is represented in this matter by Assistant U.S. Attorney David A. Brown of the U.S. Attorney’s Criminal Division in Charlotte. Further details about additional recent tax enforcement cases are available on the Tax Division’s Web site http://www.usdoj.gov/tax/, on the IRS’s Web site http://www.irs.gov/, and on the IRS Criminal Division’s Web site http://www.ustreas.gov/irs/ci/.

The Justice Department encourages anyone who has information about suspected tax fraud to report it to the IRS Web site at http://www.irs.gov and click on the links “Contact IRS” and “How Do You Report Suspected Tax Fraud Activity.”
Lloyd Anthony Bastfield, Age 49
Charlotte, North Carolina