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Tax Franchise Owner Guilty of Fraud

scales-of-justiceThe owner of a North Carolina tax franchise, whose ability to efile returns was shut down in 2012, has pleaded guilty to tax fraud, healthcare fraud and money laundering in two separate cases in federal court. Claude Arthur Verbal II, formerly of Raleigh, N.C., and now of Miami, faces up to 28 years in prison and $850,000 fines. He has agreed to pay restitution to the Internal Revenue Service and Medicaid.

Verbal pleaded guilty to one count of conspiracy to defraud the United States, one count of aiding and assisting the preparation of false tax returns, one count of healthcare fraud and one count of money laundering. The pleas stem from the operation of Nothing But Taxes, a franchise with 10 branches in North Carolina that operated from 2005 through 2012.

In a side story to the tax and healthcare issues, Claude and his later estranged wife Pamela, who had been convicted for tax fraud in 2009, had a 15,000 sq.-ft. home built in an exclusive Raleigh, N.C., suburb that they styled the Metropolitan Lifestyle Mansion. Parties were advertised under the theme, "What Happens at the Metropolitan Mansion Never Happened." Pamela moved into the residence in 2013 and conducted parties with themes such as "Eyes Wide Shut." A court banned the parties after residence claimed some drew as many as 2,000 guests and 600 cars to a 15-house development.

In terms of the tax business, Verbal prepared dozens of phony tax returns and taught his employees to do the same. Four return preparers, a client recruiter and two branch managers received sentences ranging from 15 months to 60 months. The longest sentences were the 70 months drawn by branch manager, Leslie Brewster, and 61 months for branch manager, Nikki Brewster. Each of the seven individuals pleaded guilty to one count each of wire fraud, aggravated identity theft and aiding and assisting the preparation of false tax returns:

The staff and Verbal were reportedly to have frequently offered clients a dramatically larger tax refund if they agreed to make a cash payment to the person who prepared their return. This was in excess of the chain's flat return preparation fee. Verbal and many employees were involved in the purchase of names, dates of births and social security numbers to be used as dependents on client returns. In a related case, Rakecia Brame pleaded guilty to wire fraud, aggravated identity theft and aiding and assisting the preparation of false tax returns. Brame, a former social worker with the Alamance County Department Social Services sold the identities of DSS clients to NBT preparers.

After the fraud was brought to the attention of a U .S. Probate office in November 2010, Verbal transferred electronic filing privileges of the branch on Fayetteville Street, Durham, N.C., in order to keep the business operating as usual. Verbal and his wife paid a relative, who had no knowledge of the fraud and was not involved in operations, $10,000 to be able to apply for efiling privileges for the location. After the Internal Revenue Service revoked the efiling privileges at all 10 sites, Verbal re-applied twice for all locations in the names of relatives.

Verbal was also the owner and operator of Infinite Wellness Concepts. a Medicaid behavioral health provider with locations in Burlington, Durham and Greensboro, N.C. The company provided group therapy, intensive in-home services, enhanced mental health and substance abuse services. Court documents said Verbal obtained at least $1 million from the Medicaid program fraudulently via a variety of means.

Pamela Verbal was sentenced in 2009 to 15 months in prison followed by three years of supervised release for tax fraud committed in 2004. She had to pay $40,041 in restitution to the Internal Revenue Service.

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