oversight

Guilty Pleas in $130,000 Tax and Student Loan Fraud Case. Buffalo, N.Y., November 9, 2009

Published by the Department of Education, Office of Inspector General on 2009-11-09.

Below is a raw (and likely hideous) rendition of the original report.

OIG Investigative Reports, Guilty Pleas in $130,000 Tax and Student Loan Fraud Case
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United States Attorney
Western District of New York
FOR IMMEDIATE RELEASE
NOVEMBER 9, 2009
www.usdoj.gov/usao/nyw
CONTACT: Peggy Kelly McFarland
PHONE: (716) 843-5877
FAX: (716) 551-3051
GUILTY PLEAS IN $130,000 TAX AND STUDENT LOAN FRAUD CASE
BUFFALO, N.Y.-- Raymonda Shallowhorn, 36, of Buffalo, New York, pled
guilty in U.S. District Court today to two felony counts of student loan fraud and
making false claims for income tax refunds, U.S. Attorney Kathleen M.
Mehltretter of the Western District of New York announced. The maximum
penalty for each charge is five years in prison and a $250,000 fine. The restitution
amount payable to the IRS and the Department of Education will exceed $130,000.
The guilty pleas were entered before Chief U.S. District Judge Richard J. Arcara.
Assistant U.S. Attorney Paul J. Campana said investigators from the Internal
Revenue Service Criminal Investigation Division and the U.S. Department of
Education uncovered the fraudulent tax refund and student loan application scheme
that Shallowhorn perpetrated from 2002-2008. The prosecutor said Ms.
Shallowhorn submitted more than fifteen federal income tax return, making false
claims of more than $86,000 in tax refunds. Shallowhorn caused the tax returns to
be filed in the names of several different persons, sometimes with their knowledge
and sometimes without. All the tax returns were false. Shallowhorn received an
additional $45,000 in proceeds from fraudulent student loans. The student loans
were applied for by Shallowhorn on behalf of at least five different persons. The
loan applications were made over the Internet for correspondence courses that were
attended by neither Shallowhorn nor the nominal applicants.
The tax returns prepared by Shallowhorn or with her assistance would
feature one or more types of false claims. On some returns, the person in whose
name the return was filed would claim income from a child care business when
Shallowhorn knew that person never operated such a business. On other returns,
the tax filer would file a false W-2 supplied by Shallowhorn and claim to have
worked at a job, when in fact the person had not worked. On both kinds of
returns, there would be false claims for the Earned Income Credit. The Earned
Income Credit is a refundable credit an eligible taxpayer can receive regardless of
whether any tax is owed or has been paid. The Earned Income Credit, however,
can lawfully be claimed only by taxpayers with modest incomes who actually
received earned income during the tax year. Finally, on other tax returns,
Shallowhorn arranged for tax filers to list children as dependents who did not in
fact live with and were not supported by the tax return filer during the given tax
year. On these returns, the false claims were for the Earned Income Credit, the
child tax credit and/or the child care tax credit. Shallowhorn received all or part of
the tax refund and student loan checks.
Chief Judge Arcara scheduled sentencing for February 18, 2010, at 12:30
pm. Judge Arcara allowed Ms. Shallowhorn to be released pending sentencing
The guilty pleas were the result of an investigation by the Internal Revenue
Service, Criminal Investigation Division, under the direction of Special Agent In-
Charge Patricia J. Haynes, and the Department of Education, Northeastern Region,
under the direction of Special Agent In-Charge Brian Hickey
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Last Modified: 11/17/2009
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