United States v. Marc

• Decision Date: 01 September 2020
• Docket Number: Case No: 6:18-cv-2147-Orl-37EJK
• Parties: UNITED STATES OF AMERICA, Plaintiff, v. MARCGENSON MARC, TIANA CHARACTER, LENORRIS LAMOUTE, DOSULD PIERRE, SHIRLEEN THALES, ADVANCED TAX SERVICES, INC., GENSON FINANCIAL GROUP, LLC and CHARACTER FINANCIAL SOLUTIONS, LLC, Defendants.
• Court: U.S. District Court — Middle District of Florida

UNITED STATES OF AMERICA, Plaintiff,
v.
MARCGENSON MARC, TIANA CHARACTER, LENORRIS LAMOUTE,
DOSULD PIERRE, SHIRLEEN THALES, ADVANCED TAX SERVICES, INC.,
GENSON FINANCIAL GROUP, LLC and CHARACTER FINANCIAL SOLUTIONS, LLC, Defendants.

Case No: 6:18-cv-2147-Orl-37EJK

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA ORLANDO DIVISION

September 1, 2020

REPORT AND RECOMMENDATION

This cause comes before the Court on Plaintiff's Motions for Default Judgment (the "Motions") (Docs. 104, 107), filed April 21 and 27, 2020. Therein, Plaintiff seeks the entry of default judgment against Defendants, Advanced Tax Services, Inc., Genson Financial Group, LLC, Lenorris Lamoute, and Dosuld Pierre. After reviewing the Motions, and the declarations and exhibits submitted in support of same, I respectfully recommend that the Motions be granted.

I. BACKGROUND

A. Procedural Posture

Plaintiff, the United States, filed its Complaint on December 17, 2018 against (1) Marcgenson Marc ("Marc"); (2) Tiana Character ("Character"); (3) Lenorris Lamoute ("Lamoute"); (4) Dosuld Pierre ("Pierre"); (5) Shirleen Thales ("Thales"); (6) Advanced Tax Services, Inc. ("Advanced Tax Services"); (7) Genson Financial Group, LLC ("Genson Financial"); and (8) Character Financial Solutions, LLC ("Character Financial"). (Doc. 1.) Plaintiff

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alleges, in general, that Defendants prepared false federal income tax returns for personal profit. (Id. ¶ 1.) Specifically, the 84-page Complaint asserts four claims against Defendants, seeking: (1) an injunction under 26 U.S.C. § 7407 (Count I); (2) an injunction under 26 U.S.C. § 7408 (Count II); (3) an injunction under 26 U.S.C. § 7402(a) (Count III); and (4) disgorgement under 26 U.S.C. § 7402(a) (Count IV). (Doc. 1.) Essentially, these claims were brought with the aim of barring Defendants from preparing tax returns and from owning and operating a tax preparation business, and to disgorge any ill-gotten gains that they received for the preparation of false tax returns. (Id.)

The case has been resolved as to Defendants Marc, Thales, Character, and Character Financial, as each has reached stipulated agreements for permanent injunctions and judgments or the Court has dismissed the remaining claims pursuant to agreement between the parties. The Court entered a stipulated permanent injunction against Marc on January 1, 2020, which resolved Counts I, II, and III of the Complaint. (Doc. 88). The Court directed entry of judgment against Marc in the amount of $710,191.55 on March 19, 2020, which resolved Count IV. (Docs. 100, 101.) The Court entered a stipulated permanent injunction against Thales on April 4, 2020, which resolved Counts I, II, and III and dismissed Count IV. (Doc. 103.) The Court entered a stipulated permanent injunction against Tiana Character and Character Financial Solutions, LLC on March 26, 2019, resolving Counts I, II, and III of the Complaint against both parties. (Doc. 49.) The Court directed entry of judgment against Character in the amount of $77,927.84 on February 24, 2020, resolving Count IV of the Complaint. (Docs. 93, 94.) The United States consented to dismissal of Count IV of the Complaint against Character Financial, and the Court dismissed Count IV as to Character Financial on March 4, 2020. (Docs. 95, 96.)

Plaintiff has filed the present Motions for default judgment against the remaining Defendants in this case: Advanced Tax Services, Genson Financial, Lamoute, and Pierre. (Docs.

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104, 107). The Motions are each accompanied by supporting declarations and exhibits. No responses have been filed, and the time to do so has expired.

B. Factual Allegations Deemed Admitted as to Advanced Tax Services, Genson Financial, Lamoute, and Pierre¹

Advanced Tax Services is a tax return preparation business. (Doc. 1, ¶ 10.) On or about February 3, 2012, Marc incorporated Advanced Tax Services in Florida. (Id. ¶ 11.) On November 27, 2013, Marc, identifying himself as the "Owner, CEO" of Advanced Tax Services, amended the officers and directors of Advanced Tax Services to name Genson Financial as the president, secretary, and treasurer of Advanced Tax Services. (Id.) The Annual Report that Marc, as "Owner" of Advanced Tax Services, filed on April 6, 2018, also identifies Genson Financial as the president, treasurer, and secretary of Advanced Tax Services. (Id.) Advanced Tax Services' business address is 5212 W. Colonial Dr., Orlando, FL 32808. (Id.)

On November 25, 2013, Marc and two other individuals incorporated Genson Financial in Florida. (Id. ¶ 12.) According to the amended Annual Report that Marc, as Manager, filed on June 13, 2018, Marc is the sole manager of Genson Financial, and its business address is 5212 W. Colonial Dr., Orlando, FL 32808. (Id.) Advanced Tax Services and Genson Financial operated up to eight tax preparation stores in Gainesville, Orlando, Eatonville, Kissimmee, Pensacola, and Sanford, Florida. (Id. ¶¶ 13-14.) Advanced Tax Services and Genson Financial employ individuals who prepare tax returns for compensation. (Id. ¶ 16.)

Defendants, Lamoute and Pierre, have prepared tax returns for compensation at Advanced Tax Services since at least 2015. (Id. ¶¶ 7-8.) Defendants prepare tax returns to generate bogus

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refunds for customers, enabling them to charge high fees and maximize profits at the expense of the United States Treasury and their customers. (Id. ¶ 32.) Many of Defendants' customers earn low to moderate incomes and lack knowledge regarding tax law and tax return preparation. (Id. ¶ 33.) Customers often have no knowledge regarding what can legally be claimed as a credit or deduction on their tax returns or that Defendants prepared and filed false tax returns on their behalf. (Id.)

Defendants make false claims on tax returns, particularly on the forms attached to those returns, in order to improperly increase customers' refunds. (Id. ¶ 34.) Defendants charge customers fees for preparing the return, fees for each tax form attached to the return, and fees for filing the return. (Id.) These fees are all deducted from the customer's tax refund, often without the customer being told the amount Defendants actually charged for preparing the tax return. (Id.) Defendants draft tax returns that request a refund amount that is not based on the customer's actual income, expenses, deductions, and applicable qualifying credits. (Id. ¶ 35.) Instead, the refund is based on fabricated income, expenses, deductions, and credits reported by Defendants. (Id.)

Defendants prepare tax returns that include fraudulent claims for the Earned Income Tax Credit ("EITC"), often based on fabricated business income and expenses, bogus or improperly claimed dependents, and false filing status. (Id. ¶ 37.) The EITC is a refundable tax credit available to certain low-income working people. (Id. ¶ 38.) The amount of the credit is based on the taxpayer's income, filing status, and claimed number of dependents. (Id.) Because the EITC is a refundable credit, claiming an EITC can, in certain circumstances, reduce a taxpayer's federal tax liability below zero, entitling the taxpayer to a payment from the Treasury. (Id.)

Defendants falsified information to claim the maximum EITC for customers. (Id. ¶ 41.) For example, to bring the customer's reported earned income within the "sweet spot" for the EITC,

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and depending on a customer's actual income, Defendants inflated or fabricated business income reported on a Form Schedule C, "Profit or Loss from Business (Sole Proprietorship)" (used to report income and expenses from a sole proprietorship), in order to fraudulently increase customers' reported earned income, or claim bogus Schedule C expenses to fraudulently decrease customers' reported earned income, in order to obtain the maximum EITC. (Id.)

Because of the potential for abuse in claiming the EITC, Congress has authorized the Secretary of the Treasury to impose "due diligence" requirements on federal tax return preparers claiming the EITC for their customers, obligating the preparer to make "reasonable inquiries" to ensure the customer is legitimately entitled to the EITC. (Id. ¶ 43.) Defendants failed to comply with the due diligence requirements. (Id. ¶ 46.)

Defendants prepare tax returns reporting non-existent businesses on bogus Form Schedule C. (Id. ¶ 47.) On some of these returns, Defendants report substantial business income, but little or no expenses. (Id.) On other returns, Defendants report substantial expenses, but little or no income. (Id.) The determining factor is whether the tax return preparer needs to inflate a customer's income (or create income when the customer has none) to bring the reported income within the EITC "sweet spot," or to lower the taxable income of a customer who has actual income (such as wages reported on a W-2) in order to either bring the income within the EITC "sweet spot" or simply to create a phony business loss to offset the customer's wages and falsely or fraudulently reduce the customer's income tax liability. (Id. ¶¶ 48-52.)

Defendants also claim false itemized deductions on Form Schedule A to fraudulently reduce customers' taxable income. (Id. ¶ 92.) Defendants prepare tax returns for customers that make false claims for unreimbursed employee business expenses on Form Schedule A, particularly for purported business miles driven by customers. (Id. at ¶¶ 92-94.)

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Further, Defendants prepare and file federal tax returns on which they improperly claim false or fraudulent fuel tax credits. (Id. ¶ 136.) The fuel tax credit is available only to taxpayers who operate farm equipment or other off-highway business vehicles. (Id.) The fuel tax credit does not apply to passenger cars or vehicles that are registered to drive on public highways. (Id.) Defendants claim the fuel tax credit for fabricated and non-qualifying fuel purchases. (Id. ¶¶ 136-140.)

Defendants prepare tax returns on which they falsely report the amount of taxes withheld from customers'...