Buffalo Tax Fraud Lawyers

Last Updated on: 13th December 2025, 01:34 pm

Buffalo Tax Fraud Lawyers: When Gambling Addiction Drives Million-Dollar Fraud

Maureen Holleran worked remotely as a worker’s compensation claims handler for a Canadian insurance company. She had authority to approve claims up to $2,000 without supervisor review. Between July 2020 and June 2023, Holleran submitted more than 1,200 fraudulent claims – each one just under the $2,000 threshold. She created fictitious expenses for lost wages, medical supplies, and copays. She created fake email accounts that appeared to belong to claimants, then input her own banking information to receive the payments. Total fraudulent claims: $2,370,848. For tax years 2020-2022, she embezzled $1,592,095 and didn’t report it on her tax returns. Her sentence: 18 months in federal prison plus restitution of $2.3 million to the insurance company and over $1 million to the IRS. Where did the money go? Casinos in Buffalo and Niagara Falls. “I am a compulsive gambler,” she told the judge. “I let my gambling addiction destroy my life and harm others.” The trusted employee who processed claims for others processed millions in fraudulent claims for herself – and lost it all at the slots.

The Western District of New York has seen tax fraud at scales that destroyed careers and lives across Buffalo and the surrounding region. A debt collection operator who ran companies harassing people over nonexistent debts while failing to file any tax returns. Business owners who evaded hundreds of thousands in employment taxes. Tour company operators who underreported income for years. When federal prosecutors in Buffalo bring tax charges, the defendants often include people who exploited positions of trust – and their sentences reflect the depth of that betrayal.

Twelve Hundred Fraudulent Claims

Maureen Holleran was 62 years old when she was sentenced. She had worked for the Canadian insurance company since September 2015. She worked remotely – from her home in Buffalo, processing worker’s compensation claims for a company headquartered across the border. The distance created opportunity.

Heres the thing about approval thresholds. They exist to prevent fraud. Claims over $2,000 required supervisor approval. Claims under $2,000 could be processed by claims handlers like Holleran without additional oversight. The threshold that was supposed to protect the company became the target Holleran gamed. Every fraudulent claim stayed just under $2,000. Every one sailed through without review.

Between July 2020 and June 2023, Holleran submitted more then 1,200 fraudulent claims in the insurance companys claim processing system. Twelve hundred claims in three years. Thats more then one fraudulent claim per day, every working day, for three years. The scale reveals how systematic the fraud had become. Submitting fake claims wasnt exceptional – it was routine.

The mechanics of her scheme show careful planning. Holleran created fictitious expenses – claims for lost wages and reimbursements for medical supplies and copays that were never incurred. She created fictitious email accounts that appeared to be associated with policy claimants. She used those fake emails to sign up for the insurance companys client portal. Then she input her own banking information into the portal to receive the fraudulent payments.

In total, Holleran submitted approximately $2,370,848 in fraudulent claims. Two point three million dollars stolen through fake paperwork. For tax years 2020 through 2022, she embezzled approximately $1,592,095 from the insurance company that she didnt report on her income tax returns. The embezzlement was one crime. The failure to report the income was another.

The IRS estimates tax due and owing for these tax years is $545,792. Over half a million dollars in unpaid taxes on money she had already stolen and gambled away. The tax debt will follow Holleran permanantly – surviving bankruptcy, attaching to future earnings, accumulating interest for the rest of her life.

U.S. District Judge Richard J. Arcara sentenced Holleran to 18 months in federal prison. The court ordered her to pay $2.3 million in restitution to the insurance company and slightly more then $1 million to the IRS. Where did the $2.37 million go? Casinos in Buffalo and Niagara Falls. The gambling addiction that motivated the theft consumed every dollar. The slots got the money. Holleran got 18 months in federal prison and over $3 million in debt.

The Debt Collector Who Didnt Pay Taxes

Dorian Wills of Buffalo operated debt collection companies that harassed people over debts that didnt exist or debts to which the companies had no title. The companies made threatening phone calls. They collected money from people who didnt owe anything. And Wills didnt file any tax returns for any of it.

Heres the irony of Wills situation. His debt collection companies aggressivly pursued people who supposedly owed money. Meanwhile, Wills himself owed over $1.2 million in taxes he never paid. The collector who harassed others for debts was himself a massive debtor to the IRS.

Between April 2010 and October 2013, Wills operated multiple debt collection businesses under various names: Heritage Capital Services LLC, Performance Payment Processing LLC, Performance Payment Service LLC, Pinnacle Payment Service LLC, and Velocity Payment Solutions LLC. The proliferation of company names wasnt random – it was designed to avoid detection by state and federal law enforcement.

Between 2010 and 2013, none of the debt collection companies filed a tax return. Not one return from any of the five companies over four years. In addition, Wills failed to file his 2011 and 2013 personal income tax returns despite the debt collection companies earning approximately $4 million in gross receipts. Four million dollars in revenue – zero tax returns filed.

The debt collection companies were already subject to a civil investigation by the Federal Trade Commission. In August 2014, Wills and the FTC stipulated to a final order for permanent injunction banning him from debt collection activities. But civil enforcement dosent prevent criminal prosecution.

U.S. District Judge Elizabeth A. Wolford sentenced Wills to 37 months in federal prison. The court ordered $1,466,330 in restitution to the IRS. Three years for the debt collector whose companies generated $4 million in revenue and filed zero returns.

Heres the uncomfortable truth about debt collection fraud. The same tactics that generate illegal revenue – harassing calls, collecting on fake debts, threatening consumers – also generate taxable income that must be reported. The businesses were illegal. The income was real. The failure to report it was tax fraud on top of consumer fraud. Wills faced consequences from multiple angles: FTC civil action, IRS criminal prosecution, and over $1.4 million in restitution that will follow him for life.

Employment Tax Fraud In Western New York

David B. Schmitt of North Tonawanda owned and operated two different delivery businesses. Between April 2007 and June 2013, he willfully attempted to evade the payment of federal employment taxes owed by the businesses in an amount exceeding $500,000. Half a million dollars in employment taxes he collected from employees and kept for himself.

Heres the system revelation that makes employment tax fraud so serious. Employment taxes are trust fund taxes – money employers withhold from employee paychecks and hold in trust for the government. When employers keep those withholdings instead of paying them to the IRS, they’re stealing from employees whose Social Security and Medicare credits never get recorded. The theft has victims beyond the IRS.

Schmitt was indicted on three counts: tax evasion and obstructing the administration of Internal Revenue Service laws. The delivery business owner whose job was moving packages was moving money from employee withholdings to his own accounts.

Todd Cameron of East Amherst faced a fifteen-count indictment charging him with filing false tax returns and transporting and harboring illegal aliens. The combination of charges reveals how tax fraud often connects to other criminal activity.

Heres what makes employment tax fraud particulary serious. The employees worked and had taxes withheld from there paychecks. They beleived the money was being sent to the government. There W-2 forms showed deductions. But if the employer kept the money instead of remitting it, those withholdings never reached Social Security accounts. The employees retirement security was basicly stolen by there own employer.

New Yorks Highest In Nation Tax Exposure

New York has one of the highest state income tax rates in the nation – up to 10.9% for top earners. Combined with federal rates that reach 37%, the total marginal rate for high-income New Yorkers can exceed 50%. That creates enormous incentive for evasion – and enormous exposure when caught.

Heres what that means practicaly. A single fraud scheme can trigger investigation by the New York State Department of Taxation and Finance AND the IRS simultaneosly. Cases can be prosecuted at the state level, the federal level, or both. The same conduct that violates federal tax law may also violate New York tax law. Dual exposure that compounds penalties and prison time.

New Yorks nine tax brackets range from 4% to 10.9%. The top rate applies to income over $25 million – but even middle-income earners face rates around 6%. Add the supplemental tax for adjusted gross income over $107,650 and the effective rate climbs higher.

State and federal agencies coordinate there investigations. The Holleran case involved IRS Criminal Investigation. The Wills case involved both the IRS and the FTC. Information flows between agencies. A state audit can trigger federal prosecution. A federal investigation can generate state charges.

Defense Strategy In Buffalo

If your facing tax fraud exposure in Buffalo, the calculus involves understanding how the Western District of New York operates.

The Holleran case shows that embezzlement creates tax exposure on unreported income – 1,200 fraudulent claims plus unreported income equals 18 months. The Wills case shows that business owners who dont file returns for multiple companies face substantial sentences – 37 months plus $1.4 million restitution. The Schmitt case shows that employment tax evasion exceeding $500,000 triggers federal prosecution.

Heres what these cases have in common. By the time defendants faced prosecution, there options had narrowed dramaticaly. The investigations were complete. The evidence was gathered. The schemes were documented. The 90% federal conviction rate means fighting the charges rarely succeeds. The only questions were conviction and sentencing.

The time to address tax fraud exposure is before any of that happens. Voluntary disclosure programs exist. Coming forward before the IRS finds you creates opportunities to resolve issues civily – with penalties and interest, but potentialy without prison. And in New York, addressing issues proactivly can prevent state prosecution from developing alongside federal exposure.

If an investigation has already begun, damage control becomes the priority. Understanding what investigators know. Protecting against self-incrimination. Navigating toward the least damaging outcome possible in a district where embezzlers receive 18-month sentences and debt collectors receive 37 months.

Why Buffalo Specificaly Creates Exposure

Buffalos economy creates particular tax fraud exposure. The insurance and financial services sector where employees like Holleran gain access to claims processing systems. The debt collection industry where operators like Wills generate cash through aggressive tactics. The small business community where owners can evade employment taxes for years before detection.

The Holleran case reveals how approval thresholds can be exploited 1,200 times before anyone notices – and how gambling addiction can motivate systematic theft that eventualy destroys everything. The Wills case shows how debt collection schemes generate millions in unreported revenue that the IRS will eventualy trace. The Schmitt case demonstrates how employment taxes can be evaded for six years across multiple delivery businesses before investigators connect the pattern.

And New Yorks highest-in-nation state income tax creates exposure that exceeds most other states. The New York State Department of Taxation and Finance pursues violations of state tax law with its own investigators and prosecutors. Federal prosecutors handle IRS cases. Both systems are active. Both coordinate regularely. Combined fraud exposure from both jurisdictions changes everything about your risk calculation. The dual system means double the agencies investigating, double the prosecutors reviewing, and double the opportunities for detection.

If theres tax fraud exposure in your situation – embezzlement you didnt report, business income you hid, employment taxes you didnt remit – the time to address it is before investigators start looking. Appeals from the Western District go to the Second Circuit Court of Appeals. Your exposure persists untill you address it.