For Immediate ReleaseMarch 24, 2011 United States Attorney’s OfficeDistrict of MassachusettsContact: (617) 748-3100 Fourteen Individuals Charged with Tax Violations Involving First-Time Home Buyer Tax Credit Fraud BOSTON—Fourteen individuals have been charged with committing various crimes arising from their abuse of the federal government’s stimulus program by filing false claims with the Internal Revenue Service (IRS) in which they fraudulently claimed the First- Time Home Buyer Tax Credit.
“The filing of false tax returns and the abuse of the First-Time Home Buyer Tax Credit program are serious crimes. It is critically important that taxpayers who play by the rules do not end up paying for refunds to people who commit fraud and blatantly lie on the forms submitted to the IRS,” stated United States Attorney Carmen M. Ortiz. U.S. Attorney Ortiz; William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation, Boston Field Division; Cortez Richardson, Special Agent in Charge of the U.
S. Department of Housing and Urban Development’s Office of the Inspector General; Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation – Boston Field Division; and J. Russell George, the Treasury Inspector General for Tax Administration, announced today that nine indictments have been returned and one information filed involving 14 separate individuals. “At the IRS, protecting taxpayer money is a matter of the highest priority,” stated IRS Special Agent in Charge William P.
Offord. “Individuals who fraudulently claim the First-Time Home Buyer Tax Credit undermine our tax system, and will be held accountable. Honest and law abiding citizens are fed up with those who use deceit and fraud to line their pockets with other people’s money,” concluded Offord. “Congress created and modified the First-Time Home Buyer Tax Credit to stimulate the economy and help taxpayers achieve the American dream, not to line the pockets of wrongdoers,” said J.
Russell George, the Treasury Inspector General for Tax Administration. “It is especially troubling when fraud is committed by IRS employees. Their actions damage the integrity of our nation’s tax system,” George added. “TIGTA will continue to vigorously investigate allegations of wrongdoing by IRS employees.” Richard DesLauriers, FBI Special Agent in Charge said, “Today’s charges reflect the fruits of a collaboration among the FBI, IRS, HUD, United States Attorney’s Office, and state law enforcement agencies that began in 2009 to specifically thwart financial schemes related to the federal government’s effort to stimulate the economy.
The group uncovered a series of schemes by those who illegally attempted to benefit from the stimulus program. “Through the FBI’s task-force and intelligence-based model of investigating, the FBI will continue to use every capability and tool it has to root out others engaged in stimulus fraud. Additionally, the FBI will continue its efforts to prevent and deter mortgage fraud by investigating those who act illegally when obtaining mortgages,” concluded DesLauriers.
“HUD-OIG is dedicated to eliminating fraud in our nation’s housing programs. It is particularly egregious when individuals use tax payer funds to unjustly enrich themselves,” Acting Inspector General Michael P. Stephens. Seven individuals were indicted separately for filing false tax returns with the IRS and obtaining tax refunds after falsely claiming the First-Time Home Buyer Tax Credit even though they had not in fact purchased a home.
If convicted, these individuals, Celestino Alves, 43, of Brockton; John Davis, 32, of Dorchester; Trystin Johnson, 34, of Mattapan; Maxine Thevenin, 33 of Dorchester; Jerry Janvier, 32, of Hyde Park; Samuel Jean, 33, of Dorchester; and Theresa Finocchio, 38, of Canton, all face up to five years in prison, to be followed by three years of supervised release, and a $250,000 fine. An eighth individual, Michael Doyle, 44, of Hudson, NH, was also indicted for filing false, fictitious and fraudulent claims with the IRS and faces the same penalties.
The indictment of Doyle alleges that he was a long time employee of the IRS who falsely claimed to have purchased his home in 2008 in order to obtain a tax refund by claiming the First-Time Home Buyer Tax Credit, even though he had purchased his home in 2007 and therefore wasn’t eligible for the stimulus related benefit. Two individuals, Christopher Proe, 27, of Michigan and Junior Lopez, 29, of Southbridge, Mass.
, were indicted together for conspiring to defraud the Government by filing tax returns which falsely claimed the First-Time Home Buyer Tax Credit. The indictment alleges that Proe and Lopez filed these false tax returns after obtaining identity information from third parties under false pretenses and creating false W-2 forms for a fictitious company called Lawn Brothers Landscaping. The indictment further alleges that Proe and Lopez filed over 50 fraudulent tax returns for the tax year 2008 and obtained over $500,000 in tax refunds which they directed to bank accounts controlled by Proe and Lopez.
Proe and Lopez each face a maximum penalty of 10 years in prison, to be followed by three years of supervised release and a $250,000 fine on the conspiracy counts. On the substantive count, they each face up to five years in prison, to be followed by three years of supervised release and a $250,000 fine. Additionally, two Methuen brothers, George Saad, 32, and Elias Saad, 29, were charged in an information with conspiring to commit wire fraud and submitting false claims for tax refunds.
Along with the brothers, George Saad’s wife, Harlene Grullon, 34, of Methuen, and Kristijan Katjna, 32, of Boston, were also charged with falsely claiming the First-Time Home Buyer Tax Credit and making false statements on mortgage applications to the Department of Housing and Urban Development and to the Federal Housing Administration. The Information alleges that George and Elias Saad conspired to commit wire fraud by recruiting people to purchase properties on their behalf and then claiming the First-Time Home Buyer Tax Credit on those falsely obtained properties.
Frequently, those properties were obtained by lying on the mortgage application and falsely stating that the “straw” purchasers were buying the properties when, in fact, George and Elias Saad were the true purchasers. If convicted of conspiracy, George and Elias Saad each face up to five years in prison, to be followed by three years of supervised release and a $250,000 fine. George Saad, Grullon, and Katjna each face up to five years in prison on the false statement counts, to be followed by three years of supervised release and a $250,000 fine.
The false statement counts carry an additional maximum of two years’ imprisonment, to be followed by one year of supervised release and a $250,000 fine. The cases were investigated by the Internal Revenue Service’s Criminal Investigation, the U.S. Department of Housing and Urban Development, Office Inspector General, the Federal Bureau of Investigation – Boston Field Office and the Treasury Inspector General for Tax Administration.
They are being prosecuted by Assistant U.S. Attorneys Fred M. Wyshak, Jeffrey M. Cohen and Robert Fisher of Ortiz’s Public Corruption Unit. The details contained in the indictments and information are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law. AdvertisementsSee Also: Appliance Kilowatt Usage Chart
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Pennsylvania Program description Keystone Home Loan Program To be eligible, you and any other adults who will live in your home must be first-time home buyers, meaning you cannot have owned a home within the last three years. These requirements can be waived if you buy a home in a targeted area or you're a discharged U.S. military veteran. Purchase price and income limits apply. You must have an acceptable credit history, ability to repay your loan and sufficient funds for an application fee, closing costs and down payment based on the purchase price of your home.
Whether you'll have to pay mortgage insurance will depend on your choice of conventional, USDA, VA or FHA-backed financing. Keystone Advantage Assistance Loan Program This down-payment-assistance loan, which can be paired with Pennsylvania’s purchase programs, can help cover down payment and closing costs of up to 4 percent of the of the purchase price (maximum $6,000) in the form of a second mortgage at a 0 percent interest rates.
This loan is repaid over a 10 year term. Borrowers must have a credit score of at least 660, and cannot have liquid assets of more than $50,000. HFA Preferred Risk Sharing (No MI) The No MI program offers a conventional mortgage with a 30-year fixed-rate term, structured so you won't have to pay mortgage insurance (MI) even if your down payment is less than 20 percent of your home's purchase price.
Instead, your loan might have a slightly higher interest rate. To be eligible, you must have an acceptable credit history and ability to make mortgage payments, which will be not more than 30 percent of of your income, and there are income limits based upon household size and location. You'll have to pay an application fee and closing costs and contribute at least $1,000 of your own money toward your down payment.
The remaining funds can be a gift or from a down payment assistance program. HFA Preferred (Lo MI) The Lo MI program also offers a conventional mortgage with a 30-year fixed-rate term, but you will need to pay for mortgage insurance if your down payment is less than 20 percent. To be eligible, borrowers must meet the same requirements listed for the Preferred Risk Sharing Program. ACCESS Home Modification Program Made in conjunction with a Keystone Home Loan or Keystone Government Loan, this program offers an interest-free deferred-payment loan to those who have a permanent disability or live with a family member who has a one and need funds to make accessibility modifications to a home they wish to buy.
This program provides a deferred payment loan, with no interest, and no monthly payment; the loan becomes due and payable upon sale, transfer, or non-owner occupancy of the property. There are no fees associated with the loan; the minimum loan amount is $1,000 and the maximum is $10,000. Home modifications must meet the needs of the person who has a physical disability and will live in the home. Examples include bathroom modifications, installation of grab bars and handrails, lifting devices, adding a main-level bathroom or bedroom, widening doorways or hallways and other such changes.
Access Downpayment and Closing Cost Assistance Program This program can only be coupled with the ACCESS Home Modification program and and whose gross, annual household income does not exceed 80 percent of statewide family median income. The program offers an interest-free deferred-payment second loan to people who have a permanent disability or live with a family member who has a permanent disability.
The minimum loan amount is $1,000. The maximum is $15,000. This loan will become due and payable if you move out of your home or sell or transfer it to another owner. The amount of assistance is based on the borrower’s need. For any first mortgage with a loan-to-value greater than 80% (except RD and VA), the borrower is required to contribute the lesser of $1,000 or 1% of the loan amount from their own verifiable funds, and the borrower can have and have liquid assets of no more than $5,000.
HOMEstead Downpayment and Closing Cost Assistance Loan Program Homebuyers eligible for the HOMEstead program may qualify for up to $10,000 in downpayment and closing cost assistance in the form of a no-interest, second mortgage loan. HOMEstead funds are forgiven at 20 percent per year over five years for all loans closed on or after January 1, 2007. The minimum loan amount is $1,000; the maximum is $10,000.
For all loans with loan-to-values greater than 80% (except RD and VA), the borrower is required to contribute the lesser of $1,000 or 1% of the loan amount from their own verifiable funds. Renovate and Repair Loan Program Homeowners can borrow up to a maximum of $35,000 or 120 percent of the home's value for approved home repairs or renovations of their primary residence (minimum of $2,500) in the form of a 10, 15, or 20-year fixed rate loan.
Borrowers must have credit score of at least 620, but households can have a combined income no greater than 150 percent of the state’s median income. R&R loans can be a source of payment for emergency repairs to critical life–safety systems in the homes, as long as the loan application is made to the Local Program Administrator within 30 days of the repair. Purchase Improvement Loan Program Coupled with the Keystone Home Loan Program, this program allows buyers to combine a Keystone Home Loan with additional funds for home repairs or improvements.
The minimum additional loan amount is $1,000. The maximum is $15,000. The home's purchase price is subject to limits and the appraised value after completion must support the cost of the repairs. The repairs might include plumbing or electric systems, improved heating or air-conditioning systems, addition of living space, kitchen or bathroom renovation, roof replacement or energy conservation or solar energy improvements.
Up to of three inspection fees of up to $75 each may be included in the repair costs. Employer Assisted Housing (EAH) Initiative This program offers homebuyers working for a “Participating EAH Employer” (there are 49) with a 30-year fixed-rate loan and down-payment assistance. The down-payment assistance comes in the form of an interest-free 10-year loan of up to $8,000. This program targets “community employees, medical personnel, school employees, police and fire personnel, county workers, laborers, service industry staff, etc.
” Borrowers must meet the qualifications of the Keystone Advantage Program. Mortgage Credit Certificate The Mortgage Credit Certificate allows homebuyers to claim a tax credit of 20-50 percent (20%-50%) of the mortgage interest paid per year, capped at $2,000 annually. It is a dollar-for-dollar reduction against your federal tax liability; the percentage amount you can deduct depends on your annual income.
The MCC can be used in conjunction with HFA Preferred and Keystone Government programs.