White Collar & Criminal Law News

Los Angeles Tax Prep CEO Arrested in Alleged $5M Fraud Scheme

May 9, 2019, 4:02 PM

The chief executive officer of a Los Angeles-area tax preparation company was arrested and charged May 8 for his role in an alleged scheme to defraud the IRS for more than $5 million.

Cubby Wayne Williams, who owns and operates Williams Financial Network in Inglewood, Calif., was taken into custody following a 26-count indictment alleging he declared fictitious withholdings to claim hundreds of fraudulent refunds. Before he created Williams Financial Network, he was a compliance representative for the California Franchise Tax Board.

Williams, who was arraigned and freed on a $20,000 bond, is accused of falsely claiming his clients had accrued Original Issue Discount (OID) interest income. OID is a form of interest that accrues over time, but isn’t paid during that time, according to the U.S. Department of Justice.

“Williams filed approximately 514 tax returns for clients for tax years 2010 through 2016, fraudulently claiming OID withholdings and seeking approximately $5.49 million in bogus tax refunds,” representatives for the U.S. Attorney’s Office for the Central District of California said May 8.

Prosecutors said the Internal Revenue Service paid out about $3 million on the fraudulent claims.

Williams has been charged with 22 counts of assisting in the preparation of false tax returns for his clients and four counts of subscribing to false tax returns for himself. He faces a maximum sentence of 78 years in federal prison if convicted as charged.

None of Williams’s clients have been charged.

Counsel and contact information for the defendant wasn’t immediately available May 9.

The case is United States v. Williams, C.D. Cal., No. 2:19-cr-00280-PA, indictment filed 5/7/19

To contact the reporter on this story: David McAfee in Los Angeles at dmcAfee@bloomberglaw.com

To contact the editors responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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