Sentencing set today in IRS scheme

Woman masterminded plan that netted $196,940

January 03, 2003|By Laurie Willis | Laurie Willis,SUN STAFF

A Baltimore County woman who masterminded an elaborate scheme in which she, her husband's ex-wife and others bilked the Internal Revenue Service out of nearly $200,000 will be sentenced today in federal court.

Valerie Batts, of the 4000 block of Winlee Road, pleaded guilty in October to one count of conspiracy to defraud the U.S. Treasury Department, said Mary Frances Martin, spokeswoman for the IRS' Criminal Investigation Division.

Batts is scheduled for sentencing at 4:30 p.m. before Judge Marvin J. Garbis.

According to IRS officials, Batts filed 13 fraudulent federal income tax returns for 1998 and 22 fraudulent returns for 1999. The returns were sent to six separate addresses and contained bogus W-2 forms from Baltimore city government, Bethlehem Steel, Bell Atlantic and the United States Postal Service, authorities say.

On many of the returns, the wages and withholdings reported were identical, according to documents filed.

The false W-2 forms were prepared on a computer. All 35 returns included itemized deductions that were excessive or fraudulent, and all of the returns indicated that they were prepared by Batts.

Batts told officials that she enlisted the help of Joann Johnson -- her husband's ex-wife -- and Shanethia Batts, her stepdaughter, to provide names and Social Security numbers that could be written on the returns. The women provided Valerie Batts with names and information of acquaintances, and Batts split the refund-check proceeds with the pair, according to a statement of facts.

The three women had bank accounts at the State Employees Credit Union and deposited the checks into those accounts. IRS officials say that at least 11 of the refund checks were deposited into Valerie Batts' account.

When officials searched Batts' home March 14, 2001, they found the fraudulent tax returns on her personal computer. Agents also found a stack of 1099G forms with the same names used on the tax returns.

According to agents, when they searched Batts' home, she said: "I knew it was going to happen. I couldn't sleep. I was waiting for the knock on the door."

The scheme was discovered by officials at the IRS' Philadelphia Fraud Detection Center. In all, $196,940 was paid out erroneously, Martin said.

Shanethia Batts has pleaded guilty to conspiracy to defraud the U.S. Treasury Department and last month was sentenced to six months of home confinement, five years of supervised probation and 100 hours of community service, Martin said. She also must complete a mental health program and pay restitution by making $50 monthly payments, Martin said.

Shanethia Batts also cannot help with the preparation of tax returns other than her own, Martin said.

Johnson has pleaded guilty to conspiracy to defraud the U.S. Treasury Department and will be sentenced Jan. 23. Another woman who participated in the scheme, Wilhemina Harper McKay, pleaded guilty to conspiracy to defraud the U.S. Treasury Department and will be sentenced Jan. 27.

A fifth woman, Takisha Barnes, has not entered into any agreements with the U.S. attorney's office.

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