Charges: Tax professional files hundreds of false returns, clients now owe state over $1.4 million
MINNEAPOLIS (KMSP) - A half-decade of fraudulent tax returns filed by a Brooklyn Park tax preparer resulted in over a million dollars in back tax deficiencies, according to a Department of Revenue investigation.
Most of 69-year-old Annie Mae Hester's clients were regular people who reported not knowing much about tax policy, trusting her to prepare their taxes while remaining liable for any discrepancies in the files. Now, each owes an average of $5,600 in back taxes, according to a criminal complaint.
"This is a big deal swindle," Hennepin County Attorney Mike Freeman said. "You do something like this to so many different clients over a long period of time you know what you were doing."
The Department of Revenue audited just 257 of the thousands of clients whose taxes Hester has prepared since 2011, finding a total of more than $1.4 million owed to the state of Minnesota. The 17 charges against Hester, released Tuesday, focus on only six of her clients--all of whom had false businesses, charitable donations and losses documented on their tax returns.
Hester, who is also a pastor at Holsey Memorial Church in Minneapolis, ran her tax preparation business out of several locations in Brooklyn Park over the last few years after registering an LLC in May 2012 called "Witness the Light Ministries," which she allegedly used to funnel money back into the church. It was granted tax exempt status under the claim that her business centered around teaching people to do their own taxes, despite the investigation revealing she prepared every return she filed.
Department of Revenue officials flagged a rash of these "self-prepared" tax returns all filed from the same IP address in 2015, noticing similarities in how suspicious deductions were recorded.
One of the couples listed in the complaint had a nonexistent business called "Africano Cloths Center" listed on their return, with a $29,000 loss recorded in 2012. Another had thousands of dollars in charitable donations recorded, despite telling Hester they had not given any money to charities that year.
She lied to another couple, both nurses, telling them she had previously worked for the Internal Revenue Service. A business certificate for "Tarwai Merchandise Services" allowed Hester to falsify a claim for $25,000 in business losses over a few items the couple had sent to an African orphanage.
A third couple now owes the state over $8,000--with a $166 monthly payment required to stave off a lien on their house.
Even on her own financial records Hester filed false statements, declaring less than $30,000 in taxable income over the last half decade despite bank accounts that clearly show large sums garnered through her work as a tax preparer. Investigators also reported that Hester asked many of her clients for payments in cash, leaving larger sums of untraceable earnings.
"She had them claiming all sorts of business deductions, business losses, charitable deductions when these people simply didn't have the money to do this," Freeman said. "It was all so blatant that she got caught."
Hester now faces up to 20 years in prison and over $100,000 in fines on 11 counts of falsifying tax returns and six counts of tax evasion.