Authorities this week arrested a man accused of preparing fraudulent income tax returns at a Modesto accounting firm without his clients' knowledge or consent, the U.S. Attorney's Office in Sacramento announced Thursday.
A federal grand jury on April 5 indicted Chris Donell Smith, 54, of Stockton, charging him with 11 counts of assisting in the preparation of false tax returns. Smith was arrested Wednesday and was scheduled to make his first federal court appearance Thursday afternoon.
Smith prepared income tax returns for New Covenant Tax & Accounting in Modesto. Federal prosecutors said Smith prepared fraudulent income tax returns for a number of his clients that reported false items or dollar amounts.
For some of these clients, he prepared a correct tax return that he gave to the client. Smith then electronically filed a fraudulent return claiming a higher refund, according to prosecutors.
Smith allegedly arranged for the tax refund payment to be split. Prosecutors said the client's bank account would receive the refund amount expected, and the rest of the tax refund would go to Smith's bank account.
The indictment alleges that Smith defrauded about $63,000 from the IRS.
This criminal case is the result of an IRS criminal investigation. If convicted, Smith would face a maximum sentence of three years in federal prison and a $250,000 fine for each count of tax fraud.