The companies operated by Watson and Allen included Fludd's Express Tax Service and Gold Valley Pawn. The two were accused of making unwarranted use of the Earned Income Tax Credit by reporting phony Schedule C businesses, business income and non-existent dependents or dependents who did not live with the taxpayers and also of fabricating and inflating deductions.
In its original complaint, the government said all 32 returns prepared by Watson and six prepared by Allen that were examined had problems. Based on these examinations, the IRS estimated that the taxes lost via Watson's work could reach $5 million while the over-inflated refunds claimed on returns prepared by Allen might reach $3.5 million.
The two were also accused of systematically not signing returns. Allen was cited for using the identification numbers of other preparers, including Watson and of a former employer.