A man from North Carolina was given a sentence of 41 months in jail Wednesday for planning to defraud the US by drafting and filing fake tax returns.
Joseph Octave, 49, of Charlotte, was the mastermind of a multi-year, multi-million dollar tax fraud conspiracy involving hundreds of false tax returns, according to court documents and testimony given in court. Octave was the proprietor and manager of Kapital Financial Services, a Charlotte-based tax preparation company with two locations. From 2014 through 2019, Octave orchestrated a criminal conspiracy with the help of his tax company, ordering his staff to create and submit false tax returns.
Octave gave his staff the go-ahead to file bogus tax returns for clients by using a variety of strategies, including claiming fictitious business losses, American Opportunity credits, education credits, and earned income tax credits. In order to prevent the IRS from discovering the fraud, Octave also instructed his staff members and gave them scripts and cheat sheets. Octave gave his workers instructions not to send clients copies of their personal tax returns and not to divulge any information to the clients other than the overall refund amount in order to further conceal the fraud.
According to the paperwork and material provided in court, Octave’s clients’ tax liabilities were decreased and their tax refunds were inflated as a result of the fake tax returns and deductions. Additionally, because tax preparation expenses were frequently deducted immediately from clients’ falsely increased tax returns, many times the clients were unaware of the fees they were being charged. Kapital Financial Services got at least $700,000 in fees from producing the false tax returns as a result of the tax scheme, with Octave receiving the largest portion of this money as the owner. A total tax loss of more than $2.5 million was brought on by the scheme.
In addition to the jail sentence, U.S. District Judge Max O. Cogburn Jr. mandated that Octave complete two years of supervised release as well as pay the government almost $2.5 million in restitution.
The announcement was made by Special Agent in Charge Donald “Trey” Eakins of IRS-Criminal Investigation, Charlotte Field Office, U.S. Attorney Dena J. King for the Western District of North Carolina, and Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.
Criminal Investigation at IRS investigated into the situation.
The case was prosecuted by Assistant U.S. Attorney Caryn Finley of the Western District of North Carolina and Trial Attorney Brian Flanagan of the Tax Division.