Iowa father, daughter indicted for tax fraud violations

DES MOINES — A federal grand jury in Des Moines returned an indictment on Oct. 18 charging an Ottumwa man and woman with 60 fraud and tax charges.

As alleged in the indictment, 47-year-old Thein Maung, and his 20-year-old daughter Phyo Mi conspired to defraud the Internal Revenue Service by preparing and filing hundreds of fraudulent tax returns. Maung and Mi provided tax-preparation services out of their family's home in Ottumwa.

Their customers primarily were immigrants who had little or no ability to read, write, or speak English.

The indictment also alleges that Maung and Mi would prepare their customers' tax returns in exchange for a cash fee. Maung and Mi acted as "ghost preparers," meaning that they did not sign their clients' tax returns when they prepared and filed them.

Without their customers' knowledge or approval, Maung and Mi often included on their customers' federal tax returns, schedules, and forms, fraudulent items, such as false claims for residential energy credits, business-expense deductions, or moving-expense deductions. The effect of Maung and Mi including fraudulent items on the tax documents was to increase the refunds their clients received and increase Maung and Mi's customer base.

In addition, it is alleged that Maung and Mi engaged in wire fraud by directing that portions of their customers' fraudulent refunds be deposited into financial institution accounts accessible to Maung and Mi. By doing so, Maung and Mi attempted to obtain from the IRS over $140,000 in fraudulent refunds.

Maung and Mi also allegedly committed wire fraud in relation to unemployment insurance benefits.

According to court documents, Maung and Mi filed unemployment insurance benefits applications and claims with Iowa Workforce Development for some of their customers. On the materials submitted to Iowa Workforce Development, Maung and Mi directed that their customers' unemployment payments be sent to financial institution accounts that Maung and Mi had access to. Through this fraud, Maung and Mi received over $70,000 in fraudulent unemployment insurance benefits payments from Iowa Workforce Development that should have been paid to eligible claimants.

"These types of schemes often prey on vulnerable and unsuspecting clients that were merely attempting to do the right thing, including filing and paying their taxes," said Thomas Murdock, Acting Special Agent in Charge of IRS Criminal Investigation's St. Louis field office. "IRS Criminal Investigation works investigations like these to keep fraudulent tax return preparers at bay and to let others know that these efforts to rob the government are illegal and will not go unchecked."

Both Maung and Mi are charged with one count of conspiracy to defraud the United States and 14 counts of wire fraud.

Mi is also charged with 10 counts of preparing and presenting a false tax return. Maung is charged with 30 counts of preparing and presenting a false tax return and five counts of willful failure to file return.

The defendants made their initial court appearance on Monday before U.S. District Judge Stephen H. Locher of the U.S. District Court for the Southern District of Iowa. If convicted, the defendants face a maximum penalty of 20 years in prison. A federal district court judge will determine any sentence after considering the U.S. sentencing guidelines and other statutory factors.

U.S. Attorney Richard D. Westphal of the Southern District of Iowa made the announcement.

Internal Revenue Service Criminal Investigation is investigating the case with assistance from the Ottumwa Police Department. Assistant U.S. Attorney Kyle Essley is prosecuting the case.