Santa Ana – Earlier this week, in United States District Court in Santa Ana, before Judge Andrew J. Guilford, a Placentia, CA man was sentenced for evading income tax.

Joseph Usunubu Aluya was sentenced to 27 months in federal prison. Aluya is a registered tax return preparer with the California Tax Education Council and holds a masters degree from the University of Phoenix. Aluya has been preparing tax returns for many years operating two Schedule C businesses, Joseph Usunubu Aluya Paradigm Financial and Paradigm Realty in Placentia, California.

On June 23, 2010, Aluya pled guilty to four counts of tax evasion and one count of possessing stolen government money. According to the plea agreement, from approximately 2003 through 2007, Aluya devised a scheme that defrauded his clients by preparing two sets of federal income tax returns for each client, and convinced his clients to file an electronic return. On the tax return Aluya provided to his client, Aluya usually inflated the amount of tax which would make the refund amount lower than it should be. Aluya would then file a correct tax return with the IRS which showed a higher refund amount. Aluya received the higher refund amount from the IRS and then he paid out the lower refund amount to his client. He kept the difference in the refund amounts for himself. Aluya carried out his scheme without the clients’ knowledge and consent. The plea agreement states that Aluya agrees to pay full restitution to victims estimated at $380,705.39.

Joseph Usunubu Aluya received a substantial amount of income each year, but each year he reported very little income or loss for his return preparation business, Paradigm Financial, on his own self-prepared Form 1040 tax return for the tax years 2003, 2004, 2005, and 2006. The plea agreement states, Aluya received $196,312.96 of unreported income for the tax years 2003 to 2006, which resulted in an additional tax due of $59,213.00 for the defendant’s tax years 2003 to 2006 respectively, to the Internal Revenue Service. Aluya agrees to cooperate with the Internal Revenue Service in the determination of defendant’s tax liability for the tax year 2007 and is liable for the fraud penalty.

IRS-CI is very serious in enforcing the laws directed at those who attempt to defraud our nation’s tax system. “Monday’s sentencing is another example of IRS-Criminal Investigation’s commitment to investigate those individuals who choose to undermine the honesty of our tax system for their personal financial gain," said Acting Special Agent in Charge Joel P. Garland for IRS-Criminal Investigation in Los Angeles. As we approach tax filing season, those who might consider preparing false tax returns should consider the consequences.

The investigation and prosecution of Aluya was conducted by IRS - Criminal Investigation and the Treasury Inspector General’s Office for Tax Administration in Laguna Niguel in conjunction with the United States Attorney’s Office for the Central District of California.