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Criminal Corner

Phony CPA Arrested on State Income Tax Charges

Business Colleague Also Arrested

The owner of a Glendale tax preparation business and his colleague were arrested on multiple felony charges of filing false personal state tax returns, not filing a personal return, and not paying taxes on income from their bogus securities investment scheme.

Donald R. Ford, of Glendale, was charged with filing false state tax returns and failing to pay more than $101,000 in taxes on more than $1.3 million of income. It is alleged he acquired the income from an unlawful investment scheme he created. He persuaded his clients to invest by posing as a Certified Public Accountant. Gregory A. Edwards, of Culver City, CA, was charged with receiving more than $961,000 from the scheme, not filing a state tax return, and not paying more than $81,000 in tax.

Department of Justice (DOJ) Agents arrested Ford without incident at his place of business, Donald R. Ford Financial and Tax. Edwards was arrested without incident at a Glendale diner.

This is a joint investigation between FTB and the DOJ. Deputy Attorney General Edward Skelly with the DOJ is prosecuting this case.

San Pedro Tax Practitioner Ordered to Pay for Filing False Tax Returns

The judge ordered a San Pedro tax practitioner to pay more than $35,000 for filing false state income tax returns.

Eddie Lee Lewis, owner of Lewis Tax Service, was found guilty in December 2008, of filing false state tax returns for tax years 2003 and 2004. Lewis generated fraudulent state income tax refunds for his clients by claiming inflated Child and Dependent Care Credit or by using fictitious childcare providers to create a credit. FTB has recovered the false credits from the taxpayers making the claims. Lewis was also required to pay taxes due on the income received from the operation of his business including the income received from the tax refund scheme. All income is taxable including income from illegal sources.

Long Beach Courthouse Superior Court Judge Charles D. Sheldon, Department K, sentenced Lewis to five years formal probation. The judge also ordered Lewis to pay more than $35,000 restitution to FTB representing the unpaid tax, interest, penalties, and the cost of investigation.

The filing of false tax returns and the failure to file tax returns is part of the annual $6.5 billion tax gap facing California. The tax gap is defined as the difference between taxes that are owed and what is paid.

Taxpayers are legally responsible for all the information entered on their return. To learn more about choosing a qualified tax professional, the Internal Revenue Service and FTB issued FTB Publication 982, How to Select an Income Tax Return Preparer, which is available online at ftb.ca.gov.

CPAs are licensed by the state. The public can check on the status of a CPA with the California Board of Accountancy at www.cba.ca.gov or by calling 916.263.3680.