A federal judge Friday issued prison sentences to five defendants convicted of taking part in a scheme to defraud the IRS by fraudulently claiming the First Time Homebuyers tax credit on 250 tax returns.
U.S. District Judge Kristine Baker made the decisions after a nearly 21/2-week jury trial and several sentencing hearings, when defendants lodged objections to their pre-sentence reports. The report helps shape a sentencing guideline range.
A Pine Bluff family, headed by Brenda Laws, bilked the IRS out of $1,364,171 in 2009, filing returns for the previous tax year on behalf of themselves, about 50 people lured by paid recruiters and others who didn't know their names were used.
The investigation began after the IRS received reports in September 2009 about suspicious account openings by members of the Laws family, who had also filed false claims for the homebuyers tax credit, prosecutors have said. The investigation showed that 298 tax returns for the 2008 tax year were filed electronically through two computer accounts registered to Brenda Laws, prosecutors said.
During the execution of a search warrant in January 2010, federal agents found several handwritten names, Social Security numbers, dates of birth, bank-routing numbers and bank-account numbers. Most of the false-credit claims had already been paid out when the agents uncovered the conspiracy, though some of the requested funds had been frozen, authorities have said.
The tax credit was available in the 2008 tax year for people who met certain income requirements and had bought a qualifying home that was to be their primary residence for at least three years, if they hadn't owned a home in the previous three years.
On Friday, Baker sentenced Laws and her daughter Lareka Laws -- both deemed to be leaders of the group -- to more than five years each in federal prison. Both will be on supervised release for a three-year period after the prison stint.
Both women had several objections to their pre-sentence reports, including the number of victims in the case, the restitution amount and the "leader" designation. Baker overruled those objections, saying prosecutors had presented a preponderance of evidence that the women's actions directly affected more than 50 people and that they organized the criminal activity.
Based on the pre-sentence report, the recommended sentencing range for Brenda Laws was between 121 and 151 months, which fell above the statutory sentencing range. Her attorney, Christophe Tarvar, on Friday asked the judge to reduce the sentence to a year and a day, saying his client had no criminal history.
But Assistant U.S. Attorney Stephanie Mazzanti pointed to instances when Brenda Laws lied to federal agents by withholding incomes in attempts to gain disability money.
"There's continuous lies throughout the course," she said. "She spent [the IRS money] gambling at casinos. She blew money."
Mazzanti added that some of the victims had mental health problems.
Tarvar pleaded with the judge to take into consideration the mother's "life, her circumstances."
Baker sentenced Brenda Laws to prison for 64 months for conspiracy to defraud the government and 30 months for aiding and abetting, making a false claim against the U.S. The sentences will run concurrently, and she will have 30 days to report to prison.
Lareka Laws' attorney, Jerry Larkowski, also asked for a lower sentence, contending his client was less guilty than her mother. A leader needs to have a strong personality, he said.
"She tends to be a lot more submissive," he said of Lareka Laws. He added that Lareka Laws has a 5-year-old child.
Lareka Laws, who worked for Jackson Hewitt, also spent the IRS money at casinos, Mazzanti said. While on pretrial release, she also filed a tax return which prosecutors said included false dependent information.
Baker noted that Lareka Laws had overcome "significant obstacles," including becoming a mother at a young age and continuing to pursue her education. Lareka Laws received a 64-month sentence for the conspiracy charge and a 30-month sentence for each of two charges of making a flase claim. Those sentences will run concurrently, and she will have to report to authorities by Dec. 1.
Also Friday, Brenda Laws' two sons -- Jameel Laws and Milton Laws Jr. -- each were given 30-month prison stints with three years of supervised release afterward.
Attorneys for the brothers asked the judge Friday for more leniency than what prosecutors and the defense had already agreed to.
"When you look at the trial, Mr. [Jameel] Laws really didn't do anything that he wasn't instructed to do by his mother," his attorney Sara Merritt said.
Jameel Laws had been on pretrial release for three years, two of which he'd maintained a clean record, Merritt said, adding the man had seven children to take care of.
Prosecutors said they held Jameel Laws accountable for what he was directly responsible for and that they had already taken into account any benefits he may receive. He's also been in trouble before, prosecutors said.
Milton Laws Jr. was "obviously a minor player," his attorney Brook Wiggins said. He was the only one of the defendants who was not on pretrial release.
Like his brother, Milton Laws Jr. also has a criminal history, Mazzanti said, adding that he used a lot of the IRS money for personal use.
Baker will recommend the brothers are housed in the same federal facility.
A fifth defendant, Teneshia Roberts, received a 15-month sentence Friday. Roberts, who had pleaded guilty to the conspiracy charge, will also have a three-year, supervised release stint.
Her attorney, Robert Morehead, asked the judge to give his client probation, noting Roberts has children and has maintained a job.
"I really regret what I did," Roberts told Baker, taking a deep breath before starting to cry. "I got a daughter and a son that's going to graduate in May. I would like to be there to watch them walk across the stage if at all possible. I really regret what I did."
Prosecutors said her criminal history spanned "several pages" and included many theft offenses. Without Roberts' participation in the scheme, the loss amount to the IRS would have been considerably less, Mazzanti said.
Before handing down the sentence, Baker said Roberts has received probation for many of her crimes.
"The offenses haven't stopped," Baker said. "In fact, they've increased in severity."
As part of all sentences, those convicted in the case will have to pay the nearly $1.4 million restitution together and will not be able to file tax returns for anyone other than themselves.
A sixth defendant -- Steven Barnett Jr., who pleaded guilty to the conspiracy charge -- is scheduled to be sentenced Monday.
Information for the article was contributed by Linda Satter of the Arkansas Democrat-Gazette.
Metro on 10/25/2014