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CPAs Allegedly Helped Hide $100M Income

gavelThree tax professionals, including two owners of a Waxahachie, Texas-based CPA firm, have been accused of helping a lawyer who helped clients falsely shelter $1 billion in income from the Internal Revenue Service.

A superseding indictment this week claimed the professionals, Craig Fenton, and CPAs Kevin McDonnell, James Richardson, owners of McDonnell Richardson, P.C., were handpicked by attorney, Joseph Garza of Dallas, who promoted the illegal shelter, which the Department of Justice says caused a $200-million tax loss. Fenton is a tax manager at the firm and McDonnell is also reportedly a licensed attorney.

The indictment of Garza on October 18 says from about 2012 to 2021 hepromoted a tax shelter that allowed high-income clients to claim bogus tax deductions. He and the co-conspirators allegedly told clients to transfer funds into shell companies, which was then returned untaxed to clients.

The group then allegedly concealed the circular flow of funds by commissioning fictitious business valuation reports, creating  invoices for fake business expenses, and drafting sham contracts.

McDonnell, Richardson and Fenton are accused of aiding the fraud by filing phony tax returns for clients and the shell companies.

 All four have been indicted on charges of wire fraud, conspiracy to commit wire fraud, helping clients file false tax returns, and conspiracy to defraud the United States.

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Bob Scott
Bob Scott has provided information to the tax and accounting community since 1991, first as technology editor of Accounting Today, and from 1997 through 2009 as editor of its sister publication, Accounting Technology. He is known throughout the industry for his depth of knowledge and for his high journalistic standards.  Scott has made frequent appearances as a speaker, moderator and panelist and events serving tax and accounting professionals. He  has a strong background in computer journalism as an editor with two former trade publications, Computer+Software News and MIS Week and spent several years with weekly and daily newspapers in Morris County New Jersey prior to that.  A graduate of Indiana University with a degree in journalism, Bob is a native of Madison, Ind
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