Arnold Tobias Gervais, 34, of Marietta, pleaded guilty Wednesday in federal court to charges arising out of a scheme to defraud the IRS out of more than $3.4 million in federal income tax refunds while he was in state custody.
“Those who cheat the IRS take money away from everyone who pays his or her fair share of taxes,” said United States Attorney Sally Quillian Yates in a news release Wednesday. “The United States Attorney’s Office and the IRS are on the lookout for tax cheats and will aggressively pursue those individuals who try to beat the system.”
“One of the many ways that IRS Criminal Investigation protects taxpayer money involves identifying, investigating and prosecuting those who file fraudulent refund claims,” Special Agent in Charge Veronica Hyman-Pillot said in the release. “Mr. Gervais defrauded the government and the taxpaying public and will be justly punished for his actions.”
According to Yates, the charges and other information presented in court, Gervais was convicted in May 2008 and sentenced to five years in prison by the Superior Court of Cobb County for theft by taking for submitting a fraudulent tax return in an attempt to obtain a tax refund of more than $600,000 from the state of Georgia. Gervais was incarcerated on that charge from July 13, 2007, through Feb. 26, 2010.
On March 16, 2009, while in state custody, Gervais caused his then wife to file with the IRS a phony income tax return, Form 1040, for tax year 2008, which contained a claim for payment of an income tax refund in the amount of $811,073, which Gervais knew to be false, fictitious and fraudulent.
In addition, Gervais filed, or caused to be filed, six more false claims for federal income tax refunds—five in his own name for tax years 2004, 2005, 2006, 2007 and 2009, and one in the name of an acquaintance for tax year 2009.
All seven of the returns claimed false wages and federal tax withholding. And all seven of the returns falsely claimed that the taxpayer had earned a significant amount of wages from a fictitious company called “Safety Shoes & More, Inc.,” which was allegedly located in Rome, Ga. The returns also falsely claimed that the corporation had withheld from those wages a significant amount of federal income tax.
The total intended tax loss to the IRS was $3,488,135, and of that amount, $2,832,268 was actually paid by to Gervais by the IRS.
The United States Attorney’s Office in the Northern District of Georgia filed two civil forfeiture actions that resulted in the seizure of $2,232,012 from accounts controlled by Gervais, thereby reducing the out-of-pocket loss to the IRS.
Gervais pleaded guilty to a criminal information charging him with one count of filing false claims for income tax refunds. He could receive a maximum sentence of five years in prison and a fine of up to $250,000.
Sentencing is scheduled for March 28.
The case is being investigated by special agents of the Internal Revenue Service Criminal Investigation and the Federal Bureau of Investigation.