Kansas City Tax Fraud Lawyers

Kansas City Tax Fraud Lawyers: When “Brother Jerry Love” Delivers 13 Years Instead of Tax Savings

Gerald Poynter, known as “Brother Jerry Love,” led a $100 million nationwide tax fraud conspiracy from Kansas City. The scheme convinced clients they could claim refunds for taxes they never paid on income they never earned. The OID bond scheme told clients that phantom bond income had been withheld and they were owed refunds. The returns claimed $96 million in fraudulent refunds from income that existed only on paper. His sentence: 13 years in federal prison. The man who promised his followers he’d found a loophole in the tax code delivered federal prison time for everyone who believed him.

The Western District of Missouri has seen tax fraud at scales that destroyed lives and careers. A Kansas City attorney who hid money in attorney trust accounts to evade taxes. A father who stole his own children’s identities to file fraudulent returns. A tax preparer who stole portions of the inflated refunds she generated for clients. When federal prosecutors in Kansas City bring tax charges, the defendants often trusted professionals who exploited that trust.

Brother Jerry Love And The $100 Million Scheme

Gerald A. Poynter operated under the name “Brother Jerry Love.” The religious-sounding nickname gave an air of trustworthiness to a scheme that would result in the largest tax fraud prosecution in Western District of Missouri history. His conspiracy operated nationwide, recruiting clients who believed they had found a secret loophole in the tax code.

The scheme exploited something called Original Issue Discount (OID) bonds. Poynter told clients that they could claim refunds for federal income tax that had supposedly been withheld from bond income. The problem: the clients had never earned any bond income. The withholding they claimed didnt exist.

U.S. District Judge Brian C. Wimes sentenced Poynter to 13 years in federal prison without parole. Thirteen years. The scheme that promised financial freedom delivered over a decade in federal custody. The clients who trusted “Brother Jerry Love” found themselves facing there own legal exposure for filing fraudulent returns based on his advice.

The Attorney Who Hid Money In Trust Accounts

John C. Carnes was an Independence, Missouri attorney. He was 70 years old when he pleaded guilty to tax evasion. The scheme he used exploited the very professional structure that was supposed to ensure ethical handling of client funds.

Carnes kept his income in attorney trust accounts. Trust accounts are meant to hold client funds seperately from attorney funds. Carnes used them to hide his own income from the IRS.

From 2012 through 2018, Carnes willfully attempted to evade paying his personal income taxes. He withdrew $444,527 in cash from one trust account. He withdrew another $144,364 from a second account.

U.S. District Judge Howard F. Sachs sentenced Carnes to 21 months in federal prison. He was ordered to pay restitution of $794,540.

Stealing Your Own Childrens Identities

Michael A. Kheop of Kansas City orchestrated a scheme to obtain more then $2.5 million in fraudulent federal income tax refunds. The method he chose makes the case particularly disturbing: he stole his own childrens identities.

U.S. Chief District Judge Beth Phillips sentenced Kheop to eight years and six months in federal prison without parole. The sentence reflects not just the dollar amount of the fraud but the betrayal of family trust.

He was convicted of three counts of making false claims, two counts of mail fraud, and one count of aggravated identity theft. The aggravated identity theft charge carries its own mandatory prison time that runs consecutivly with other sentences.

The Tax Preparer Who Stole Client Refunds

Dinette Kay Cadenhead, also known as Kay Taylor, ran a tax preparation business in Kansas City. She would inflate her clients refunds through false information on the returns – then keep portions of those inflated refunds for herself.

U.S. Chief District Judge Greg Kays sentenced Cadenhead to 18 months in federal prison without parole. The sentence reflects the dual betrayal – defrauding the government while stealing from the clients who trusted her.

Former IRS Employee Turned Conspirator

Taylor S. Knight was a former IRS employee. He understood how the system worked from the inside. He used that knowledge to participate in tax fraud conspiracy.

U.S. District Judge Howard F. Sachs sentenced Knight to two years in federal prison without parole. The former employee who knew the system intimately will spend two years in federal custody.

Finding Fraud Clients On Facebook

Tanisha Spencer found her clients on Facebook. She prepared tax returns for people who contacted her through social media. Spencer prepared 156 federal income tax returns that contained fraudulent information.

The returns included fraudulent Sick Leave and Family Leave credits, illegitimate fuel tax credits, and fraudulently inflated federal tax withholdings. She charged clients between $500 and $14,840 per return.

The 156 returns Spencer prepared represent 156 people now facing potential IRS examination. Every client who paid her for “help” with there taxes is now in a system that knows there preparer filed fraudulent documents.

Kansas Citys Triple Tax Exposure

Missouri has a state income tax with rates ranging from 2 percent to 4.8 percent. But Kansas City residents face additional exposure: the city imposes a 1% earnings tax on all income earned within city limits.

A single fraud scheme can trigger investigation by the Missouri Department of Revenue, the IRS, and potentialy Kansas City tax authorities simultaneosly. Triple taxation creates triple exposure.

The Districts Approach To Major Fraud

The Western District of Missouri has demonstrated through case after case that it will pursue tax fraud aggressivly. Gerald Poynter – 13 years. Michael Kheop – 8 years 6 months. John Carnes – 21 months.

By the time charges get filed, investigations have been running for months or years. The 90% federal conviction rate means most people who get charged get convicted.

Defense Strategy In Kansas City

If your facing tax fraud exposure in Kansas City, the calculus involves understanding how the Western District operates.

The Poynter case shows that scheme promoters face decades in prison. The Carnes case shows that professionals face prosecution when they exploit professional structures. The Kheop case shows that identity theft compounds tax fraud into sentences measured in years.

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.

If theres tax fraud exposure in your situation – returns prepared by someone now under investigation, income you didnt report, a scheme you participated in – the time to address it is before anyone starts looking. Appeals go to the Eighth Circuit Court of Appeals. Your exposure persists untill you address it.