According to a five-count indictment, a former Ohio Bureau of Workers’ Compensation employee and an unemployed co-defendant duped the Internal Revenue Service into issuing them tax refunds totaling more than $8 million.
Between Don Gooch, 64, of East Cleveland, and Gerard Scott of Cleveland, the two used some of the cash to buy a $93,000 Range Rover and also bought $100,000 worth of gold and silver coins, according to the indictment. A brief text of the indictment reads below.
- Scott attempted, but failed, to buy a $487,000 home in Aurora and a $164,000 Porsche, before he and Gooch were caught.
- Both men were taken into federal custody June 5, 2013 and appeared this afternoon in U.S. District Court, where they pleaded not guilty to charges of conspiracy and making false claims to the U.S. Government.
- Scott was ordered to be held in jail without bond pending a detention hearing on Tuesday. Gooch was set with a $25,000 unsecured bond, despite a request by Assistant U.S. Attorney John Siegel that Gooch be required to pay up to $2,500, in light of his “rejection of government and IRS authority.”
- A professional tax preparer and Scott’s girlfriend were also involved the tax-return scheme, but have not been charged with any crimes.
- The indictment accuses Gooch and Scott of creating a phony trust and then falsely reporting to the IRS that the trust had withheld $17 million in income taxes for two individuals, a trust and a holding company, in 2010. The $17 million, if even allegedly existed, was never turned over to the IRS.
- The conspirators then filed false income tax returns in the names of the two people, the trust and the holding company, resulting in the IRS issuing four checks for $249,430, $267,302, $3,758,599 and $3,758,599.
- The schemers shared the refund proceeds and attempted to make quick purchases of assets in a manner designed to delay IRS efforts to discover and retrieve the funds.
- The 10-page document does not specify how much of the federal money has been recovered. The total losses and amount recovered will be addressed at a later date, an IRS spokesman said.
- Gooch had worked as a $53,000-a-year claims specialist in a Bureau of Workers’ Compensation office in Garfield Heights until 2010, when the Ohio Inspector General’s office accused him of doing personal work on state time.
The inspector general reported that Gooch spent hours of his work day tapping into state computers, working on tax schemes and writing fictitious money orders. He used the information to fabricate documents, including one he sent to the U.S. Treasury seeking a $300 million bond to be deposited into his personal bank account.
Investigators said they suspected Gooch used the schemes to avoid paying taxes and to eliminate his credit card debt.
Gooch said he suspected the federal government has financial accounts that are available to be tapped by people for personal debts, when interviewed by the inspector general’s investigator.
That theory is similar to one held by anti-government “sovereign citizens,” who believe the government creates a secret identity for each citizen at birth and controls an account at the U.S. Treasury used as collateral for foreign debt.
The belief is that if a person files enough documents at the right offices, the money in the accounts can be used to pay off debt or make purchases worth thousands of dollars.
Gooch said in court yesterday that the bureau placed him on paid leave, and he is now receiving $12,000 per year in retirement benefits.