United States Attorney’s Office for the Southern District of Alabama Joins DOJ Fraud Division, IRS, and IRS-CI in National Tax Enforcement Surge Exposing over $490 Million in[...]

MOBILE, AL - The United States Attorney's Office for the Southern District of Alabama today announced sentencings as part of a nationwide enforcement actions led by the Justice Department's National Fraud Enforcement Division, Internal Revenue Service, and Internal Revenue Service Criminal Investigation (IRS-CI) targeting tax fraud and related offenses. The United States Attorney's Office for the Southern District of Alabama was key participant in this surge effort. Several defendants were sentenced for defrauding the United States of millions of dollars intended for businesses impacted by the COVID-19 pandemic.

Between early September and today, federal prosecutors across the country facilitated fraud enforcement actions spanning over 76 criminal defendants, whose alleged crimes resulted in over $490,000,000 in intended loss to American taxpayers.

Earlier this month, Echandza Maxie (Echandza), 43, and her husband, Glennie McGee (McGee), 42, both of Mobile, were sentenced to 20 years in federal prison for their roles in a scheme to defraud the Internal Revenue Service (IRS) by illegally obtaining more than $1.5 million in COVID-19-related tax credits intended to provide relief to legitimate businesses and individuals during the pandemic. Three additional defendants were convicted and sentenced for their roles in a related scheme to defraud the Small Business Administration (SBA) through fraudulent applications for COVID-19 relief loans. A sixth defendant was separately sentenced for his role in the tax fraud scheme. In total, the defendants were ordered to pay over $2.4 Million in restitution to the IRS and SBA for their crimes.

In response to the COVID-19 pandemic and its economic impact, Congress authorized refundable tax credits for paid sick and family leave to reimburse eligible employers and self-employed individuals for qualifying leave related to COVID-19. Congress also established the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program to provide emergency financial assistance to legitimate businesses suffering economic losses during the pandemic.

During a cocaine-trafficking investigation involving a court-authorized wiretap of a telephone belonging to John David Clarke of Mobile, Alabama, the Federal Bureau of Investigation (FBI), working with IRS-CI, uncovered a large-scale tax fraud scheme.

Federal agents determined that Echandza, her husband, McGee, Echandza's sister, Edeszann Maxie (Edeszann), Tiveria Populus (Populus), Jamael Nettles (Nettles), John David Clarke (Clarke), and others participated in schemes to fraudulently obtain COVID-19-related tax credits and SBA loans.

According to court documents, Echandza owned and operated a Mobile tax-preparation business known as "Self Made Taxes," which was purportedly co-located with a clothing store, an eyelash business, and other businesses. Edeszann, who also worked as a tax preparer, worked with Echandza, McGee, and others to obtain the personal identifying information of prospective taxpayers and use that information to file fraudulent tax returns in their names.

The defendants enlisted recruiters who were paid finder's fees to obtain names, dates of birth, and Social Security numbers belonging to prospective taxpayers. Echandza, Edeszann, and McGee generally required only that the prospective taxpayer had not yet filed a tax return and did not owe child support. They did not obtain information necessary to determine whether the taxpayer actually operated a business or otherwise qualified for the COVID-19 tax credits.

Using the personal identifying information they obtained, Echandza and Edeszann fabricated fictitious self-employed businesses, frequently claiming that the taxpayers operated landscaping or hairstyling businesses. The fraudulent tax returns routinely claimed that the taxpayers had taken the maximum amount of COVID-19-related sick and family leave and sought the maximum available credit of approximately $30,000 per return. Echandza and Edeszann also fabricated business revenues for the 2021 tax year.

Many of the fraudulent refunds were directed to bank accounts controlled by the defendants. Although the IRS identified and rejected a significant number of fraudulent returns after placing identity-theft holds on them, the scheme nevertheless generated more than $1.5 million in fraudulent tax refunds.

Some individuals whose information was used in the scheme believed they were legitimately eligible to receive COVID-19 relief and trusted the defendants to prepare accurate tax returns on their behalf. Some individuals unfamiliar with the tax-filing process paid between $10,000 and $15,000 to have their returns prepared, believing the payments were legitimate tax-preparation fees.

FBI and IRS-CI special agents identified dozens of individuals whose personal information had been used to file fraudulent tax returns. Many had no knowledge that a return had been filed in their names. Others were unaware that their returns contained false information, including claims that they operated businesses they did not own or operate.

In some instances, the defendants filed fraudulent returns as "self-prepared," even though the returns had been prepared and submitted by Echandza or Edeszann. Investigators identified the fraud through contact and banking information on the returns that belonged to the defendants, demonstrating that the named taxpayers had no knowledge of the refunds generated using their personal information. In other cases, individuals learned that fraudulent returns had been filed in their names after receiving notice from the Social Security Administration that their disability benefits could be affected by purported business income reported to the IRS.

Fraudulent SBA Loans

The defendants, except for Nettles, also fraudulently applied for and obtained dozens of PPP and EIDL loans administered by the SBA in response to the COVID-19 pandemic.

The PPP provided eligible businesses with potentially forgivable loans guaranteed by the SBA, while the EIDL program provided low-interest loans to help eligible small businesses maintain operations during the pandemic. The programs were intended to provide financial assistance for legitimate business expenses, including payroll, rent, and utilities.

With assistance from special agents with the SBA Office of Inspector General, investigators determined that Echandza, McGee, Edeszann, Clarke, and Populus each submitted fraudulent SBA loan applications. The applications contained material misrepresentations that the defendants operated legitimate businesses before the pandemic and that those businesses generated substantial revenue.

For businesses that had some evidence of operation before 2020, investigators determined that the defendants fabricated revenue figures and the number of employees to obtain larger loan proceeds. In total, the defendants obtained more than $885,000 in SBA loans to which they were not entitled.

Each defendant pleaded guilty to charges arising from his or her participation in the fraud schemes. United States District Court Judge Terry F. Moorer imposed the sentences.

Sentences

Echandza Maxie was sentenced to 20 years in prison, followed by a mandatory two-year consecutive sentence for aggravated identity theft. She was ordered to pay $1,576,358.88 in restitution to the IRS and $257,413.93 to the SBA. Her 20-year sentence, excluding the mandatory consecutive sentence for aggravated identity theft, was ordered to run concurrently with her life sentence stemming from a multi-million-dollar cocaine and fentanyl trafficking organization related convictions. If released from prison, she will be subject to three years of supervised release. She was also ordered to pay a $300 special assessment and forfeit approximately $85,000 in fraud proceeds seized by the FBI during the investigation.

Glennie McGee was sentenced to 20 years in prison, followed by a mandatory two-year consecutive sentence for aggravated identity theft. McGee was ordered to pay $672,219 in restitution to the IRS and $340,910.16 to the SBA. His 20-year sentence, excluding the mandatory consecutive sentence for aggravated identity theft, was ordered to run concurrently with his life sentence stemming from his multi-million-dollar cocaine and fentanyl trafficking organization. If released from prison, he will be subject to three years of supervised release. He was also ordered to pay a $300 special assessment.

Edeszann Maxie was sentenced to 135 months in prison, followed by a mandatory two-year consecutive sentence for aggravated identity theft. She was ordered to pay $187,301 in restitution to the IRS and $298,667.70 to the SBA. Upon release from prison, she will be subject to three years of supervised release. She was also ordered to pay a $300 special assessment.

John David Clarke was sentenced to 20 years in prison and ordered to pay $28,764.10 in restitution to the IRS and $55,167 to the SBA. His sentence was ordered to run concurrently with his separately imposed 20-year-sentence stemming from his convictions related to a large-scale cocaine trafficking conspiracy. Upon release from prison, Clarke will be subject to three years of supervised release. He was also ordered to pay a $200 special assessment.

Tiveria Populus was sentenced to time served and ordered to pay $28,764.10 in restitution to the IRS and $46,206.29 to the SBA. Populus will be subject to five years of supervised release and was ordered to pay a $200 special assessment.

Jamael Nettles, in a separate case, was sentenced to five days in prison and ordered to pay $29,339 in restitution to the IRS. Nettles will be subject to three years of supervised release and was ordered to pay a $100 special assessment.

"The defendants exploited programs created to provide relief to businesses and individuals during an unprecedented national crisis, stealing millions of dollars through fraudulent tax returns and applications for pandemic relief," said U.S. Attorney Sean P. Costello. "Fraud of this kind does more than steal money from the government-it undermines the integrity of our tax system and diverts resources away from the people and businesses who were entitled to receive them. I commend IRS Criminal Investigation and our other law enforcement partners for following the financial trail, uncovering this scheme, and holding fraudsters responsible."

"The defendants carried out a coordinated scheme to defraud the government by filing fraudulent tax returns, misusing personal identities, and submitting false pandemic relief loan applications," said Special Agent in Charge Demetrius Hardeman, IRS Criminal Investigation, Atlanta Field Office. "IRS Criminal Investigation special agents, working closely with our federal partners, traced the movement of illicit proceeds and uncovered the financial trails that revealed the full extent of the conspiracy. Their efforts ensured that those responsible were identified and held accountable."

The case was investigated by the Federal Bureau of Investigation, IRS Criminal Investigation, the Department of Homeland Security, Homeland Security Investigations, the Small Business Administration Office of Inspector General, and the Social Security Administration, with assistance from multiple state and local law enforcement agencies, including the Mobile County Sheriff's Office and Mobile Police Department. Assistant U.S. Attorneys Kasee S. Heisterhagen and Justin Kopf prosecuted the case on behalf of the United States.

In addition to its outstanding financial impact, this prosecution was also a part of the Homeland Security Task Force (HSTF) initiative established by Executive Order 14159, Protecting the American People Against Invasion. The HSTF is a whole-of-government partnership focused on investigating and prosecuting criminal cartels, foreign gangs, transnational criminal organizations, and human smuggling and trafficking organizations operating in the United States and abroad. Through interagency collaboration, the HSTF directs federal law enforcement resources toward investigating and prosecuting crimes committed by these organizations. HSTF Mobile includes agents and officers from, among others, Homeland Security Investigations, the Federal Bureau of Investigation, the Drug Enforcement Administration, and the Bureau of Alcohol, Tobacco, Firearms and Explosives, with prosecutions led by the United States Attorney's Office for the Southern District of Alabama.

On April 7, the Department of Justice announced the creation of the National Fraud Enforcement Division (Fraud Division). The Fraud Division investigates and prosecutes individuals and organizations that commit fraud against the American people. The Department's efforts to combat fraud support President Trump's Task Force to Eliminate Fraud, a whole-of-government effort chaired by Vice President J.D. Vance to address fraud, waste, and abuse involving federal benefit programs.

This press release details one way in which this office has contributed to ensuring that all Americans pay their fair share. To see the successes of other offices, please see this press release.

If you believe you are a victim of identity theft or suspect a paid tax return preparer is engaged in fraud or misconduct, you may report it to the IRSLinks to other government and non-government sites will typically appear with the "external link" icon to indicate that you are leaving the Department of Justice website when you click the link. and make a complaint about a tax return preparer onlineLinks to other government and non-government sites will typically appear with the "external link" icon to indicate that you are leaving the Department of Justice website when you click the link..

Individuals with information about allegations of fraud involving COVID-19 are encouraged to report it by calling the Department of Justice's National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.