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NJ Man Convicted In $1.3M 'Mortgage Recovery' Scheme

IRS
IRS Photo Credit: IRS.gov

A South Jersey man was convicted in federal court for his role in a scheme to defraud the IRS of more than $3 million.

Jurors in U.S. District Court in Camden agreed that John Barry Jr., of Pemberton and accomplices in New York and elsewhere doctored tax returns that helped clients eliminate outstanding mortgage debts by claiming that a substantial amount of taxes had already been withheld.

In exchange, Barry collected 20 to 35 percent of the refunds and split the money with his co-conspirators, federal prosecutors said.

(Barry also didn’t file his own 2016 return or report any of his ill-gotten gains, they said.)

When the IRS got wise to the scheme, prosecutors said, Barry:

  • provided clients with fraudulent documents to send to the IRS;
  • directed clients to conceal his involvement from the IRS;
  • advised a client to remove funds from his bank account “in order to thwart IRS collection efforts.”

Identifying himself in court papers as an "American national, not a citizen of the United States," Barry claimed that he was "exempt and immune from the public debt and statutory non-violent criminal contempt of that debt unless by informed voluntary consent."

U.S. District Judge Robert B. Kugler scheduled sentencing for Dec. 1 after the jury convicted Barry on Friday of aiding and assisting the filing of false tax returns, obstructing tax law and failing to file his own tax return.

Trial Attorneys Sean M. Green and Samuel B. Bean of the U.S. Justice Department’s Tax Division secured the conviction following an investigation by agents of IRS-Criminal Investigation.

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