United States v. Kimble

• Decision Date: 08 July 2015
• Docket Number: Criminal No.: WDQ-13-035
• Parties: UNITED STATES OF AMERICA, Plaintiff, v. KAREN KIMBLE, Defendant.
• Court: U.S. District Court — District of Maryland

UNITED STATES OF AMERICA, Plaintiff, v. KAREN KIMBLE, Defendant.

Criminal No.: WDQ-13-035

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND, NORTHERN DIVISION

July 8, 2015

MEMORANDUM OPINION

Karen Kimble¹ is charged in a 21-count indictment with wire fraud in violation of 18 U.S.C. § 1343 (counts one to six), tax fraud in violation of 26 U.S.C. §§ 7206(1)-(2) (counts seven to sixteen), aggravated identity theft in violation of 18 U.S.C. § 1028A (counts seventeen to twenty), and visa application fraud in violation of 18 U.S.C. § 1546(a) (count twenty-one). ECF No. 1. On July 30, 2014, Kimble waived her Sixth Amendment right to a jury trial. ECF No. 73. On January 26 and 27, 2015, the Court conducted a bench trial and heard evidence on pending motions. ECF Nos. 76, 77.² By way of the accompanying Verdict,and for the following reasons, this Court will find Defendant Karen Kimble guilty on all counts.

I. Findings of Fact³

This case arises from several tax returns Kimble filed with the Internal Revenue Service ("IRS") and State of Maryland from2008 to 2012, and an Immigration Form I-130 (Petition for Alien Relative) Kimble submitted in 2008 to U.S. Customs and Immigration Services ("USCIS"). As required by Federal Rule of Criminal Procedure 23(c), the Court makes the following findings of fact:

Megan Cheswick's and Judith Fendlay's Tax Returns

1. Megan Cheswick⁴ worked with Kimble at the T. Rowe Price Participant Services Center. Tr. 68:23, 70:7-8.

2. After they became friends, Kimble told Cheswick she was a "certified tax preparer," had a Master's Degree in Business Administration, and offered to prepare Cheswick's taxes free of charge. Tr. 72:9-25, 73:1, 73:18.

3. Kimble further told Cheswick that she had experience preparing taxes for small businesses and others at T. Rowe Price, and her tax preparation business was called "Fiscally Yours." Tr. 73:8-12.

4. Cheswick gave Kimble a complete set of tax documents⁵ each year that she asked Kimble to prepare her taxes (2007, 2008, 2009, 2010, and 2011). Tr. 74:24; Gov. Ex's 3a, 3b, 3d, 3f, 3h; Gov. Ex. 12 ¶ 4.5. Kimble told Cheswick that she prepared her taxes using Turbo Tax, signed them as the tax return preparer in case Cheswick was audited, and used the e-mail address erato24k@hotmail.com to file the tax returns with Turbo Tax. Tr. 76:25, 77:1-3, 80:7-11; Gov. Ex. 12 ¶ 5.

6. Kimble did not ask Cheswick to review her return for accuracy before she filed it, and gave Cheswick a Turbo Tax summary printout after the tax return had been filed. Tr. 77:7-12.

7. Kimble prepared and electronically filed⁶ Cheswick's 2010 federal tax return. Tr. 76:23-25, 78:23-79:6; Gov. Ex 3g.

8. Kimble claimed $11,250 in unreimbursed business expenses, $375 in tax preparation fees, and $671 in attorney accounting fees, none of which Cheswick had. Gov. Ex. 3g, line 21, Schedule A; Tr. 86:7-12, 87:6-17.

9. Kimble claimed a total of $36,131 in itemized deductions; the correct amount was $13,03 8. Gov. Ex. 3g, line 40; Gov. Ex. 8g at 14.10. Cheswick did not authorize Kimble to file a return with false expenses and deductions. Tr. 87:18-20.

11. Cheswick's 2010 federal tax return generated an inflated $6,233 refund. Gov. Ex. 3g, Line 74a; Tr. 188:2-6.

12. Kimble diverted $1,300 of Cheswick's refund into her ING Bank account ending in 7686, without Cheswick's permission. Gov. Ex. 3g, Form 888; Gov. Ex. 9o; Gov. Ex. 12 ¶ 7; Tr. 85:22.

13. Cheswick referred her then-husband's grandmother, Judith Fendlay, to Kimble, as she had recently retired from the Maryland Transportation Authority and needed assistance preparing her now-complicated tax returns. Tr. 80:24-81:10, 99:20, 100:8-15.

14. Kimble charged Fendlay $25 to prepare her state and federal tax returns. Tr. 101:1-5.

15. Cheswick delivered Fendlay's tax preparation documents to Kimble at work. Gov. Ex. 4a; Tr. 81:7-10.

16. On February 18, 2010, Kimble electronically filed Fendlay's 2009 federal tax return using her email account erato24k@hotmail.com. Gov. Ex. 4e; Gov. Ex. 9s at 1; Tr. 347:7-14, 21-25.⁷17. Kimble did not allow Fendlay to review her tax return before it was filed. Tr. 103:24, 105:20.

18. Kimble included the following expenses on Fendlay's 2009 federal tax return, none of which Fendlay had or told Kimble she had: $7,689 in medical expenses, $13,188 in home mortgage interest,⁸ $2,652 in mortgage insurance premiums, $1,192 in gifts to charity, $2,124 in unreimbursed business expenses, $60 in union and professional dues, $225 in tax preparation fees, $230 in uniform expenses, $175 in job search costs, $125 in resume builder fees, $1,205 in parking fees, and $234 in business expenses. Gov. Ex. 4e, line 40a, Schedule A; Tr. 106:21-109:3.

19. In total, Kimble falsely claimed $30,399 in itemized deductions⁹ on Fendlay's 2009 federal tax return. Gov. Ex. 4e, Schedule A; Gov Ex. 8d at 6; Tr. 109:9, 186:18-24, 338:8-339:25.

20. Fendlay's 2009 federal tax return generated a $7,223 refund, which Kimble had deposited into her ING Bankaccount ending in 7686 without Fendlay's permission. Gov. Ex. 4e, Lines 73a, 73d; Gov. Ex. 9o; Tr. 109:21.

21. The correct refund amount was $1,121. Gov. Ex. 9q.

22. Kimble wrote Fendlay a note explaining that she would receive one $2,4 85 check for her federal and state tax returns. Gov. Ex. 4d; Tr. 104:25.¹⁰

23. Fendlay received one $2,485 check for her federal and state tax returns. Tr. 105:11-13.

24. Fendlay did not prepare, electronically sign, or file her 2009 federal tax return, and did not authorize Kimble to file the return listing false deductions or expenses. Tr. 110:18-111:1.

25. Kimble gave Fendlay a different tax return that she had purportedly filed for Fendlay, which stated that Fendlay owed $759 in federal taxes for 2009. Gov. Ex. 4b; Tr. 111:5-12.

26. Kimble signed the "dummy"¹¹ tax return as Fendlay's paid preparer, and listed herself as the "Third Party Designee"along with her telephone number. Gov. Ex. 4b; Tr. 111:16-24.

27. Kimble's name does not appear as the Third Party Designee or the paid preparer on the return actually filed with the IRS. Gov. Ex. 4e.

28. Fendlay gave Kimble her tax-related documents to prepare her 2010 federal tax return. Gov. Ex. 4h; Tr. 112:24-113:2.

29. On February 27, 2011, Kimble electronically filed Fendlay's 2010 federal tax return from her email account erato24k@yahoo.com; Kimble used Fendlay's name, address, social security number, and date of birth to prepare and electronically sign the return. Gov. Ex. 4m; Tr. 113:22-114:4, 116:25, 349:4-5.

30. Kimble claimed several false deductions on Fendlay's 2009 federal tax return: $1,158 in medical expenses, $10,759 in home mortgage interest, $2,714 in mortgage insurance premiums, $325 in gifts to charity, and $390 in tax preparation fees. Gov. Ex. 4m, Schedule A; Tr. 114:9-115:2, 341:2-344:2.

31. In total, Kimble claimed $19,953 in itemized deductions. Gov. Ex. 4m, line 40a.¹²

32. Kimble also claimed a false $4,000 education expense. Gov. Ex. 4m, Form 8863; Tr. 116:11-17.

33. Fendlay did not have, nor did she tell Kimble that she had, $19,953 in itemized deductions, and did not authorize Kimble to file the tax return with the false deductions. Tr. 115:8, 117:2-7.

34. The false deductions generated a $5,306 refund, which Kimble had deposited into her ING bank account ending in 7686. Gov. Ex. 4m, lines 74a, 74d; Gov. Ex. 9o.

35. The correct refund amount was $2,58 3. Gov. Ex. 9q.

36. Fendlay did not authorize Kimble to deposit her refund into Kimble's bank account, nor did Fendlay receive any of the $5,306 refund. Tr. 115:13-17.

37. Kimble did not list herself as Fendlay's paid preparer on the tax return filed with the IRS. Gov. Ex. 4m.

38. Through Cheswick, Kimble gave Fendlay a copy of the 2010 federal tax return she had purportedly filed, which stated that Fendlay was entitled to a $5 refund. Gov. Ex. 4i, Line 74a; Tr. 117:8-24.

39. The copy provided to Fendlay listed Kimble as her paid preparer. Gov. Ex. 4i.

40. Kimble also electronically filed Fendlay's 2010 Maryland tax return. Gov. Ex. 4n; Gov. Ex. 9s at 16; Tr. 118:13, 324:1-3, 328:17-24.

41. The false deductions on the federal tax return carried over to the Maryland tax return, resulting in a $19,052 deduction. Gov. Ex. 4n.

42. The tax return Kimble filed with the State of Maryland stated that Fendlay was entitled to a $901 refund, which corresponded to the amount of taxes Fendlay had paid. Gov. Ex. 4n at 4.

43. Kimble gave Fendlay a different copy of her Maryland tax return also stating that she was entitled to a $901 refund. GOV. Ex. 4j; Tr. 118:15-119:4.

44. In June 2011, Fendlay received a letter from the IRS stating that "[t]he income and payment information . . . that we have on file does not match entries on your 2009 Form 1040," and if the IRS's information was correct, Fendlay owed $811. Gov. Ex. 4k; Tr. 119:21.

45. Fendlay called Kimble, who told her that it was a mistake made by her colleague, and that she would take care of it; however, Kimble did not take care of it. Tr. 120:21-25.

46. After Fendlay received the letter from the IRS, Cheswick logged in to Turbo Tax using the credentials Kimble had provided to view her and Fendlay's tax returns. Tr. 83:19-84:6.

47. Cheswick learned that portions of her and Fendlay's tax refunds had been deposited into an ING Bank account, and that the returns had been marked as "self-prepared." Tr. 84:6-20, 89:8.

48. In February 2012, Cheswick sent Kimble a text message asking why her tax returns had been marked "self-prepared"; Kimble responded, "I do sign them. . . . [I'm] so surprised & hurt that u think I would steal from u or his grandmother. . . . Also I wouldn't put everything on line for you if I had done something wrong. [I'm] not a thief but am pretty sure they hide things like that lol." Gov. Ex. 3j; Gov. Ex. 12 ¶ 3; Tr. 88:23-24.

49. Kimble then left Cheswick a series of voicemails stating that the $7,000 refund amount at issue in Fendlay's 2009 return was "completely not correct," Cheswick was concerned about "misinformation," and Kimble had...