VOL. 128 | NO. 72 | Friday, April 12, 2013
Mo’ Money Fraud Sparks Fed Shutdown Effort
By Bill Dries
Less than a week before the April 15 federal tax-filing deadline, U.S. Justice Department attorneys from Washington went to Memphis federal court seeking to shut down a Memphis-based company that operates five tax preparation companies.
Criminal cases against individual income tax preparers on fraud and tax charges are common in the U.S. District Court for the Western District of Tennessee.
The civil action seeking a permanent injunction from federal Judge Thomas Anderson to stop multiple tax preparation businesses is not common.
The civil action filed Tuesday, April 9, against Mo’ Money Taxes and four other connected businesses also names Markey Granberry, Derrick Robinson and Eumora Reese as defendants.
The related businesses are MoneyCo USA LLC, Caymau Service Bureau LLC, Marquis Taxes and Southern King Taxes.
Granberry and Robinson, who are cousins, are identified as owners of the businesses. Reese is identified as an employee and manager of a Mo’ Money location at 5090 Millbranch Road that doubles as a central “service bureau.”
In seeking the permanent injunction, the Justice Department attorneys allege that Granberry, Robinson and Reese have created and maintain “a business environment … that expressly promotes and encourages the preparation of false and fraudulent income tax returns.”
“However, the defendants ... routinely and illegally file those estimated income tax returns ... without customer authorization to ‘lock-in’ prospective customers.”
–Complaint filed in federal court against Mo’ Money Taxes
Mo’ Money Taxes was founded in the mid-1990s and claimed on its website to have operated 300 offices in 18 states at one time, processing 30,000 federal tax returns in 2008.
That was the peak that included a series of garish television ads and an expansion with new locations. But the fall from the peak was swift during the 2012 tax season when customers at Memphis locations began showing up in large numbers at the locations demanding answers about their tax returns and refunds. In several cases, Memphis police had to be called to calm the crowds.
The company returned in 2013 with new names and a new batch of ads in which a defiant Granberry said he had done nothing wrong.
The 53-page complaint filed this week indicates federal authorities including Internal Revenue Service agents have interviewed a number of employees cited throughout a detailed filing.
One licensee, identified as Toney Fields, is quoted in the complaint as telling IRS agents he doesn’t do his own tax returns because he is “not that good.” Fields also told the agents that he doesn’t use Mo’ Money or any of its affiliated companies to do his taxes.
“Upon questioning by IRS agents, most licensees and preparers did not understand the requirements for claiming dependents, head of household filing status, the Earned Income Tax Credit, or meeting the ‘due diligence’ requirements set forth in” federal law.
Licensees also pay first-year costs that can total as much as $31,500 with a requirement to use the company’s software, banks and service bureau.
And the licensees pay a $5 fee for every tax return that is filed without a loan product – a refund anticipation loan. The 2013 reformation of the business was also an expansion that included financial products including mortgages, auto financing, credit and insurance.
The offices open for the tax season in November, before W-2 forms are available from employers reflecting the year’s wages for tax purposes. But the early opening is aimed at the Christmas shopping season, according to the Justice Department filing.
The investigators claim the company takes advantage of customers who will take a refund anticipation loan from Mo’ Money and the other companies and use pay stubs instead of W-2s.
The use of pay stubs is a key part of the allegations in the civil action that specifically alleges fraud by Mo’ Money preparers. It also alleges the companies routinely describe taxpayers as heads of household and married filing separately when they are not.
And the complaint alleges the companies push customers to fill out an “estimated” income tax return to give the customer an idea of their refund but pledging not to file it electronically.
“However, the defendants … routinely and illegally file those estimated income tax returns … without customer authorization to ‘lock-in’ prospective customers,” the complaint reads.
A prospective Mo’ Money customer in Norfolk, Va., testified before a congressional subcommittee in June 2012 that he did the estimated tax return at Mo’ Money, didn’t like what he saw and went back to his old tax preparer to do his taxes. He found his taxes had already been filed, a refund check cut by the government in his name and the check deposited in a Mo’ Money bank account.