OTTUMWA, Iowa — An Ottumwa man and his daughter were convicted of conspiring to defraud the Internal Revenue Service by filing hundreds of fraudulent tax returns and of defrauding applicants out of unemployment insurance benefits and the Iowa Workforce Development out of benefits payments.
On May 22, 2023, Thein Maung, 47, pleaded guilty to 49 fraud and tax charges. On June 2, 2023, a federal jury convicted Phyo Mi, 21, of 16 fraud charges.
"One of the allegations was the preparation and submission to the IRS of fraudulent tax returns," said William Steenson, assistant special agent in charge with the St. Louis Field Office of IRS Investigations.
According to court documents and evidence presented at Mi’s four-day trial, Maung and Mi ran a fraudulent tax-preparation business out of their family’s Ottumwa home.
In exchange for a cash fee, Maung and Mi prepared and filed their customers’ tax returns. Maung and Mi primarily catered to immigrants and refugees who worked at meat-packing facilities in Iowa and who had little or no ability to read, write or speak English.
"[The victims] were saying, 'I don't speak English, I don't even know what a tax return is, I just know that I have to do it,'" said Ottumwa Police Investigator Jeremy Tosh. "And so then they were just directed to go to these people by family members, friends, people who had done it. And they had no idea what was happening."
Without their customers’ knowledge or approval, Maung and Mi included on their customers’ federal tax returns fraudulent items like false claims for residential energy credits, business-expense deductions or moving-expense deductions for members of the United States Armed Forces.
"I think really, the most egregious part of this case was when the targets decided to start inflating the refunds and pocketing the difference without without anyone's knowledge," Steenson said. "It's just pure theft."
The effect of Maung and Mi including fraudulent items on the tax documents was to increase the refunds their clients received and increase Maung and Mi’s customer base. In all, from 2018 to 2022, Maung and Mi caused over 1,600 tax returns to be filed from their Ottumwa residence. The fraudulent tax returns claimed over $3.5 million in residential energy credits. The pair also brought in over $200,000 in cash fees from customers.
Maung and Mi also offered to help customers apply for unemployment benefits from Iowa Workforce Development. Without their customers’ knowledge or approval, Maung and Mi submitted materials to Iowa Workforce Development directing that their customers’ benefits payments be sent to financial institution accounts that Maung and Mi had access to.
From October 2020 through March 2021, Maung and Mi directed nearly $100,000 in fraudulent unemployment insurance benefits payments be sent from Iowa Workforce Development to their accounts, instead of to the eligible claimants.
Sentencings for both Maung and Mi are scheduled for September 27, 2023, in Des Moines, before Chief United States District Court Judge Stephanie M. Rose.
You can avoid being a victim of a scam like this by heading to the IRS website and using the Return Preparer Directory. There you can input your zip code to find a tax preparer who has credentials that are recognized by the IRS.