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Feds: South Holland tax preparer cheated IRS out of at least $12 million

A federal court in Chicago has been asked to bar a South Holland tax preparer and her company from preparing returns for others, the Justice Department announced today.

The government complaint, filed in federal court in Chicago, alleges LaShawn Littrice and Diamond Accounting & Financial Services Inc. fabricated phony tax deductions and credits for their customers, most of whom are from the Chicago area, the Justice Department said.

Papers filed in the case allege that Littrice and her firm prepared and filed more than 3,800 tax returns between 2003 and 2005, with tax losses from their misconduct projected at more than $12 million.

Instances of alleged fraud cited in court papers include defendants making up medical, charitable and business tax deductions for customers who had not asked for such deductions, had no records to support the deductions, and were clearly not entitled to them, the Justice Department said.

One example alleged in court papers involved a married couple who "went to the defendants for return preparation after having heard from co-workers that Littrice could generate large tax refunds. It was not until the Internal Revenue Service examined their 2003 to 2005 returns that they realized Littrice had claimed thousands of dollars of employee business expense deductions. The (couple) did not discuss employee business expenses with Littrice and provided her with no documentation regarding such expenses."

The court papers state that "Littrice also falsely claimed between $7,821 and $9,072 in annual charitable contributions despite the (couple) telling her they donated no more than $20 a week to their church. Their 2005 return claimed a $6,000 child care expense allegedly paid to St. Walter School. The (couple) never heard of that school and never used its services. Littrice simply fabricated the item (and others)," court documents claim.