Herbert Jena, the former owner of Montfort Tax Services and Jackson Hubbert tax preparation business in Dallas and Fort Worth, Texas, was on April 15th (TAX DAY) convicted on one count of conspiracy to defraud the Internal Revenue Service (IRS) and one count of obstruction of justice. He faces a maximum statutory sentence of 15 years in prison, a $500,000 fine and restitution.
In addition to owning Montfort and Jackson Hubbert, Jena also worked as a tax preparer at the businesses. Co-defendants Aurora Perez and Nancy Munoz, who worked for Jena as tax preparers, each pleaded guilty in 2007 to a conspiracy charge and testified for the government at his trial. According to the indictment, both Perez and Munoz are Irving, Texas, residents; Jena resided in Dallas. A sentencing date has not been set for the defendants.
The government presented evidence at trial that from December of 2006 through February 2007, Jena, 33, conspired with Perez, Munoz and others to defraud the U.S. by impeding, impairing, obstructing and defeating the lawful functions of the IRS. From 2004 through 2006, Jena obtained and used approximately 15 Electronic Filer Identification Numbers (EFINs) to electronically file tax returns. Jena and his co-conspirators submitted fraudulent income tax returns to the IRS that included false claims for refunds and credits. Witnesses testified that Jena instructed his employees to “make up” numbers for the Telephone Excise Tax Refund (TETR) and false Fuel Tax Credit (FTC) claims, which resulted in false credits and fraudulent refunds. The scheme also resulted in refund and credit overpayments by the IRS and unearned and fraudulent tax preparation fees paid to Jena. Jena directed his co-conspirators and others to hide the portions of the tax returns that showed the true amount of Jena’s tax preparation fees from the taxpayers.
According to evidence presented, for the 2006 tax season, Jena and his co-conspirators solicited and recruited approximately 1600 individual taxpayers to file returns with Jena’s tax preparation businesses. Between January 12, 2007, and February 29, 2007, Jena used his multiple EFINs to electronically file a total of approximately 1681 individual tax returns. Of that amount, approximately 1400 contained fraudulent and false information. Approximately 1236 contained requests for false TETR credits, totaling approximately $1,618,267. Approximately 774 of the tax returns contained requests for false FTC credits, totaling approximately $1,165,758. The government also presented evidence that during the conspiracy, Jena earned more than $500,000 in tax return preparation fees.
With regard to the obstruction of justice charge, the government presented evidence that in June 2007, during the pre-trial discovery process, Jena caused his attorney to produce fraudulent documents to the government. Trial testimony showed that these documents were fictitious employee termination letters and altered employee training records.