Brick Man Admits Defrauding IRS, Clients of $1.1 Million

A Brick man has admitted to defrauding the government and his clients of $1.1 million through preparing false tax returns and/or stealing refunds that were supposed to go to clients, according to a news release from the U.S. Attorney’s office.

Sharif Mahfouz, 49, who operated Expat Focus Consulting out of his home in Brick, pleaded guilty to one-count indictment that charges him with aiding and assisting in the preparation of false tax returns. The plea was entered before U.S. District Judge Joel A. Pisano, sitting in Trenton.

“While most return preparers provide excellent service to their clients, a few dishonest tax preparers file false and fraudulent returns to defraud the government, the taxpaying public and their own clients,” stated Jonathan D. Larsen, Acting Special Agent in Charge, IRS-Criminal Investigation, Newark Field Office.

Mahfouz was the sole owner and operator of Expat Focus Consulting, and his clients were primarily expatriated individuals -- those living outside the United States. They provided Mahfouz with their financial information so he could prepare their individual income tax returns.

For the tax years 2007 through 2012, Mahfouz admitted that he prepared false tax returns for certain clients by reporting either fabricated or inflated foreign earned income exclusion amounts and foreign tax credits. By falsifying this information, Mahfouz was able to obtain tax refunds for his clients greater than those they were lawfully entitled to receive. Mahfouz did not tell his clients these refunds were being generated and kept the refunds for his own personal use.

In order to carry out the refund fraud, when Mahfouz prepared and submitted false tax returns claiming refunds on behalf of clients to the Internal Revenue Service, he provided an EFC Bank of America bank account and a mailing address for EFC in Nanuet, N.Y. When the IRS issued refunds based on these false tax returns, the refunds were either directly deposited into the EFC bank account or a refund check was mailed directly to the EFC address in Nanuet.

Mahfouz had the mail forwarded from the Nanuet address to his residence in Brick. For the refunds issued by check, Mahfouz forged his clients’ signatures and deposited the checks into the EFC bank account. Mahfouz would then transfer the money from the EFC bank account to his personal bank account.

In some instances, Mahfouz also prepared accurate versions of his clients’ tax returns to show his clients, who reviewed and approved them. If the return showed a refund due, Mahfouz advised the client to apply the refund as a credit to the following year’s income taxes. If the return showed a tax due, Mahfouz instructed the client to write a check payable to EFC, which he was supposed to use to pay the IRS on behalf of the client. Instead, Mahfouz used the money for his own personal use. In total, Mahfouz prepared and submitted to the IRS approximately 26 fraudulent tax returns on behalf of his clients which resulted in a tax loss to the IRS of approximately $1,152,253.

Sentencing is scheduled for Jan. 20, and Mahfouz faces a minimum of 3 years in prison, a fine of either $250,000 or twice the amount of money he stole, or twice the amount of the largest loss of any of his victims the release said.

The investigation was conducted by IRS-Criminal Investigation, Newark Field Office, under the direction of Acting Special Agent in Charge Jonathan D. Larsen and The U.S. Attorney’s Office, under the direction of U.S. Attorney Paul J. Fishman.