Jason McGuire of Detroit, Mich., and Delvin Davis of Saint Clair Shores, Mich., were found guilty by a jury sitting in Detroit in the Eastern District of Michigan of conspiracy and filing $3.4 million in false claims in the form of false individual income tax returns and false trust tax returns, the Justice Department and Internal Revenue Service (IRS) announced today. The defendants were also found guilty of filing or aiding and abetting in the filing of false, fictitious and fraudulent claims; Davis was found guilty of five such counts and McGuire of 18 counts. Witness testimony revealed that the defendants attended the same high school in Detroit and began the scheme in 2008. Prior to that time, McGuire had worked as a mechanic and Davis had worked as a mortgage broker and operated a “credit repair” business.
According to court documents and evidence introduced at trial, McGuire, 37, and Davis, 36, recruited individuals from the Detroit area with whom they had existing, long-standing business and personal relationships to sign fraudulent trust and income tax returns. McGuire had the taxpayers sign blank trust return forms, and the taxpayers never saw the filled-out forms before they were filed. McGuire attached bogus forms to the income tax returns. McGuire included fictitious withholdings in both types of return forms, resulting in the taxpayers receiving large refunds. The defendants recruited at least nine different taxpayers to participate in the fraudulent scheme. The IRS received returns requesting more than $3.4 million in false refunds and paid over $1.5 million in false refunds as a result of the fraudulent scheme. Several taxpayers testified at trial that they were required to pay fines and interest to the IRS as a result of the false tax returns that the defendants submitted to the IRS.
“Those who prepare and file fraudulent returns cheat all honest taxpayers,” said Assistant Attorney General Kathryn Keneally for the Tax Division. “The Department is committed to investigating, stopping, and prosecuting these crimes.”
"When criminals cheat the IRS, they rob all of us as taxpayers,” said U.S. Attorney Barbara L. McQuade for the Eastern District of Michigan. “We hope that prosecutions like this one will deter others from stealing taxpayer funds."
Sentencing is scheduled for May 2, 2014, before U.S. District Judge Stephen J. Murphy. McGuire and Davis each face a statutory maximum potential sentence of 10 years in prison and a $250,000 fine for the conspiracy count and five years in prison and a $250,000 fine for each count of filing a false claim.
This case was investigated by IRS-Criminal Investigation and was prosecuted by Assistant U.S. Attorney Elizabeth Stafford and Trial Attorney Mark McDonald of the Tax Division.