10 months after an indictment was handed down against Bruce and Karen Morris of Ash Flat, a federal grand jury has issued a second federal indictment, charging the couple with filing false tax returns for themselves and clients at their Ash Flat-based tax preparation business.
According to a press release from the United States Attorney's Office for the Eastern District of Arkansas, James Bruce Morris, age 65, and his wife, Karen Sue Morris, age 48, the operators of B. Morris Ltd. Tax Preparation Services in Ash Flat, Ark., were again indicted by a federal grand jury on Feb. 2.
The indictment charges James Bruce Morris with two counts of theft of funds and one count of concealment of a material fact related to Social Security funds; one count of conspiring to defraud the government; five counts of obtaining Title IV Department of Education Funds by fraud and false statements; six counts of filing false tax returns; and 22 counts of causing another to file a false tax return.
The indictment charges Karen Sue Morris with one count of aiding and abetting in the theft of social security funds; one count of conspiring to defraud the government; five counts of filing false tax returns; and nine counts of causing another to file a false tax return.
The charges of fraud on the Social Security Administration stem from James Morris' receipt of Social Security Disability benefits. The indictment alleges that he concealed his employment and his receipt of income from his tax preparation business from 2002 to the present; and that he, aided and abetted by Karen Sue Morris, made dishonest statements to the SSA for the purpose of fraudulently obtaining benefits. Similarly, the charges related to the fraud on the Veterans Administration allege that Morris concealed his self-employment from the Veterans Administration in an effort to fraudulently obtain disability payments from the VA.
The charge against both Morris' of conspiring to defraud the United States alleges a scheme in which Karen Sue Morris under-reported her income and filed her tax return as if she were not married to James Bruce Morris, in order to receive the Earned Income Tax Credit, a credit intended for certain low income tax payers. James Bruce Morris would then file his individual tax return as if he were single, and he, too, would under-report his actual income in various ways.
Supported by these fraudulent tax returns, Karen Sue Morris would submit false applications for federal student aid for two of her daughters who were seeking Pell Grants to help fund their college educations. The substantive false tax return counts and the counts regarding obtaining grant money from the Department of Education based on false and fraudulent representations stem from this same scheme.
Finally, the charges of causing others to file false tax returns relate to the Morris' tax preparation service, B. Morris Ltd.
The indictment alleges that Karen Sue Morris aided and abetted in the preparation of fraudulent returns for several clients in connection with claiming the Earned Income Tax Credit, as Ms. Morris did for herself. James Bruce Morris is charged with causing others to file false tax returns in various ways, including overstating deductions and under-reporting income.
"Return Preparer fraud is a priority for IRS Criminal Investigation and we have committed many resources to investigating and prosecuting cases just like these," said Christopher Pikelis, Special Agent in Charge, IRS-Criminal Investigation-Nashville Field Office. "Taxpayers should be very selective in choosing a return preparer, and have confidence knowing that person will prepare accurate tax returns and safeguard their financial information."
The maximum statutory penalty for theft of government funds is 10 years imprisonment and a $250,000 fine. The maximum statutory penalty for concealing a material fact regarding the receipt of Social Security funds, conspiring to defraud the government, obtaining Title IV funds by fraud and false statement is five years imprisonment and a $250,000 fine. The maximum statutory penalty for filing a false tax return and causing another to do the same, is three years imprisonment and a $250,000 fine.
The investigation into the Morris' personal and business activities has involved the U.S. Attorney's office, along with Special Investigators from the Internal Revenue Service, Social Security Administration and the Veteran's Administration.
The case is being prosecuted by Assistant United States Attorneys Laura G. Hoey and John Ray White.
An indictment contains only allegations. The defendants are presumed innocent unless and until proven guilty.