Brick Tax Preparer has Reservations with a Federal Pen

An Ocean County tax preparer admitted to preparing fraudulent tax returns for clients and keeping over a million dollars of the inflated tax refunds for himself.

49-year-old Sharif Mahfouz of Brick, owner of Expat Focus Consulting or EFC, pleaded guilty to one-count information that charges him with aiding and assisting in the preparation of false tax returns for clients who were primarily foreign nationals from 2007 through 2012 this Thursday.

According to the Internal Revenue Service, Criminal Investigation Newark Field Office, Mahfouz, confessed to fabricating or inflating the Foreign Earned Income Exclusion amounts and Foreign Tax Credits which allowed him to obtain tax refunds for his clients greater than those they were lawfully entitled to receive. However, Mahfouz didn't tell his clients these refunds were being generated and kept the refunds for his own personal use.

According to the IRS press release, "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 (IRS), he provided and EFC Bank of America bank account and mailing address for EFC in Nanuet, NY. 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, NY. Mahfouz had the mail forwarded from the Nanuet address to his residence in Brick, NJ. 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."

The press release goes on to say that "in some instances, Mahfouz also prepare 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 for 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."

As a result of the guilty plea, Mahfouz faces a maximum prison sentence of three years and a maximum fine of $250,000. He's also required to pay twice the gross amount of any gain derived from the offense and twice the gross amount of loss sustained by any victims when he's sentenced on January 20, 2015.