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Leon Haynes, 49, sought $124.8 million combined from the IRS in nearly 1,400 bogus tax formers that he filed claiming COVID-related employment tax credits, said U.S. Attorney Philip R. Sellinger and Acting Deputy U.S. Assistant Attorney General Stuart M. Goldberg.
"Based on Haynes’ false claims about his own companies, the U.S. Treasury mailed him multiple tax refund checks totaling more than $1 million," both men said in a joint release following the July 31 arrest.
"The U.S. Treasury also disbursed at least $31.6 million in tax refunds to Haynes’ clients based on the false tax forms that Haynes submitted," they said.
Haynes, who also had an office in Bogota, charged each client up to 15% for the service, a complaint filed in U.S. District Court in Newark says.
"At Haynes’ request, many clients paid him those fees in cash," it says.
“While our country was fighting the spread of the virus and its profound economic impact," Selinger said, Haynes "scammed the system in a massive scheme to line his own pockets."
Amid the financial hardships caused by the pandemic, Congress authorized an employee retention tax credit (ERC) that a small business could use to reduce the employment tax it owed to the IRS.To qualify, the business had to have been in operation in 2020 and experienced at least a partial suspension of its operations because of a government order related to COVID or a significant decline in profits.
The credit was an amount equal to a set percentage of the wages that the business paid to its employees during the relevant time period, subject to a maximum amount, the government release on Monday says.
Congress also authorized the IRS to give a “paid sick and family leave credit” against employment taxes to reimburse businesses for the wages paid to employees who were on sick or family leave and could not work because of COVID.The amount would be equal to the wages the business paid the employees during the sick or family leave, also subject to a maximum amount.
From November 2020 to May 2023, Haynes "repeatedly exploited" the programs by preparing and submitting 1,387 false forms to the IRS claiming COVID-related tax credits on behalf of himself and clients, Sellinger and Goldberg said.
Haynes "falsely told his clients that the government was giving out COVID-relief money for businesses and that they were eligible for the money simply because they had a business," they said.Without consulting them, Haynes submitted forms to the IRS on behalf of their businesses that grossly overstated the number of employees and amount of paid wages. Haynes also submitted similarly false forms for three of his own companies, Sellinger and Goldberg said.Haynes is charged with eight counts of aiding and assisting the filing of false tax returns and one count of mail fraud.
Sellinger credited special agents of IRS – Criminal Investigation, special agents of the Social Security Administration's Office of the Inspector General, and postal inspectors from the U.S. Postal Service with the investigation leading to Monday's arrest.
Assistant U.S. Attorney Fatime Meka Cano of the Economic Crimes Unit in Newark and Trial Attorney Samuel B. Bean of the U.S. Department of Justice's Tax Division are handling the case for the government.
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