Article Pandemic Fraudsters Court Files (2023-07-28)

Summary

Kenneth Long, a Special Agent with the Internal Revenue Service, attested by telephone on July 28, 2023 to this criminal complaint against Leon Haynes before Hon. André M. Espinosa in the District of New Jersey, filed as Document 1 in Case 2:23-mj-11127-AME. It charges eight counts of aiding and assisting in filing false Forms 941 that reported Individual-1's business had employees, paid wages and was entitled to COVID-related tax credits, and one count of mail fraud over a $254,117.36 U.S. Treasury check for the 2021 Q2 tax period.

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Case 2:23-mj-11127-AME   Document 1   Filed 07/28/23   Page 1 of 14 PageID: 1
2021R01118/FMC/SB

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY
UNITED STATES OF AMERICA : Hon. André M. Espinosa
v. : Magistrate. No. 23-MJ-11127
LEON HAYNES CRIMINAL COMPLAINT

I, Kenneth Long, being duly sworn, state the following is true and correct to
the best of my knowledge and belief:

SEE ATTACHMENT A

I further state that Iam a Special Agent with the Internal Revenue Service
and that this complaint is based on the following facts:

SEE ATTACHMENT B

continued on the attached pages and made a part hereof.

sf Konnelh Lon

Kenheth Long, Special Agent.
Internal Revenue Service—
Criminal Investigation

Special Agent Kenneth Long attested to this Affidavit by telephone pursuant to
F.R.C.P. 4.1(b)(2)(A) on this 28th day of July 2023.

ful UG,

Hon. André M. Espinoga
United States Magistrate Judge
Case 2:23-mj-11127-AME   Document 1   Filed 07/28/23   Page 2 of 14 PageID: 2
2021R01118/FMC/SB

ATTACHMENT A

COUNTS ONE TO EIGHT
(Aiding and Assisting in Filing False Tax Returns)

On or about the dates below, in the District of New Jersey, and elsewhere,
the defendant,

LEON HAYNES,

and other individuals, known and unknown, did willfully aid and assist in, procure,
counsel, and advise in the preparation and presentation to the Internal Revenue
Service of Employer's Quarterly Federal Tax Returns, Forms 941, for the periods
stated below, which were false and fraudulent as to a material matter, and which
LEON HAYNES did not believe to be true and correct as to every material matter
in that each return falsely reported that Individual-1’s business (“Business A”) had
employees, paid wages, and was entitled to COVID-Related Tax Credits.

Count Approx. Date | Tax Period Form 941
Received by False Items
IRS
1 2/23/2021 2020 Q2 1. Line 1, number of employees;
11. Line 2, wages, tips, and other
compensation;

11. 13e, Total deposits, deferrals, and
refundable credits

2 2/23/2021 2020 Q3 i. Line 1, number of employees;

il. Line 2, wages, tips, and other
compensation;

iil. 18e, Total deposits, deferrals, and
refundable credits

3 2/23/2021 2020 Q4 i. Line 1, number of employees;

i. Line 2, wages, tips, and other
compensation;

ill. 13e, Total deposits, deferrals, and
refundable credits

4 6/12/2021 2021 Q1 1. Line 1, number of employees;
ui. Line 2, wages, tips, and other
compensation;
Case 2:23-mj-11127-AME   Document 1   Filed 07/28/23   Page 3 of 14 PageID: 3
11. 18e, Total deposits, deferrals, and
refundable credits

5 7/20/2021 2021 Q2 i. Line 1, number of employees;

ii. Line 2, wages, tips, and other
compensation;

ui. 18g, Total deposits, deferrals, and
refundable credits

6 10/06/2021 2021 Q3 i. Line 1, number of employees;

ul. Line 2, wages, tips, and other
compensation;

11. 138g, Total deposits, deferrals, and
refundable credits

7 6/12/2022 2021 Q4 i. Line 1, number of employees;

ii. Line 2, wages, tips, and other
compensation;

iil. 18e, Total deposits, deferrals, and
refundable credits

8 6/12/2022 2022 Q1 1. Line 1, number of employees;

11. Line 2, wages, tips, and other
compensation;

11. 13e, Total deposits, deferrals, and
refundable credits

In violation of Title 26, United States Code, Section 7206(2).
Case 2:23-mj-11127-AME   Document 1   Filed 07/28/23   Page 4 of 14 PageID: 4
COUNT 9
(Mail Fraud)

From at least as early as in or around November 2020, through in or around
at least January 2028, in the District of New Jersey and elsewhere, the defendant,

LEON HAYNES,

knowingly and intentionally devised and intended to devise a scheme and artifice to ©
defraud the Internal Revenue Service and to obtain money and property by means
of materially false and fraudulent pretenses, representations, and promises,
including by filing false Forms 941 claiming COVID-related tax credits for the
businesses described below, and, for the purpose of executing and attempting to
execute such scheme and artifice, did transmit and cause to be transmitted by
means of the mails in interstate and foreign commerce, the following:

Tax Business Approx. Location Location Approx.
Period Date U.S. Check Check Amount of
Treasury Mailed Mailed To Check Issued
Check Issued From
2021 Q2 | Leon’s 8/24/2021 Kansas Bogota, $254,117.36
Tax City, New Jersey
Services Missouri
Company

In violation of Title 18, United States Code, Section 1341.
Case 2:23-mj-11127-AME   Document 1   Filed 07/28/23   Page 5 of 14 PageID: 5
ATTACHMENT B

I, Kenneth Long, a Special Agent of the Internal Revenue Service, Criminal
Investigation, having conducted an investigation and having discussed this matter
with other law enforcement officers who have participated in this investigation,
have knowledge of the following facts. Because this Complaint is being submitted
for the limited purpose of establishing probable cause, I have not included each and
every fact known to me concerning this investigation. Rather, I have set forth only
the facts that I believe are necessary to establish probable cause. Unless specifically
indicated, all dates described in this affidavit are approximate and all conversations
and statements described in this affidavit are related in substance and in part.

Background

ly At all times relevant to this complaint:
Individuals and Entities

a. Defendant Leon Haynes (“HAYNES”) was a resident of Teaneck,
New Jersey and Bogota, New Jersey, who provided tax preparation
services.

b. Leon’s Tax Services was a tax preparation company owned and
operated by HAYNES, located in New Jersey.

c. GHP Payroll and Business Services (“GHP”) was a business owned
and operated by HAYNES, located in New Jersey.

d. CNL Rentals was a business owned and operated by HAYNES,
located in New Jersey.

e. Individual-1 resided in New Jersey and was a taxpayer who used
HAYNES for tax preparation services. Individual-1 owned and
operated a cosmetics business (“Business A”).

Relevant Terms

f. The Internal Revenue Service (“IRS”) was an agency of the United
States Department of Treasury (“U.S. Treasury”) responsible for
the ascertainment, computation, assessment, and collection of
taxes, including employment taxes.

g. A responsible person at a business was required to file quarterly an
IRS Form 941—Employer’s Quarterly Tax Return. The responsible
person must supply the IRS with information about the wages paid
Case 2:23-mj-11127-AME   Document 1   Filed 07/28/23   Page 6 of 14 PageID: 6
by the business, the federal income taxes withheld from wages, and
Social Security and Medicare taxes.

h. IRS Form W-2, Wage and Tax Statement, reports wages paid by an
employer to an employee and taxes withheld from those wages. It is
issued by U.S. employers to employees and is filed by employers
with the Social Security Administration.

CARES Act, Employee Retention Credit, and
Families First Coronavirus Response Act

Z. The Coronavirus Aid, Relief, and Economic Security Act “CARES
Act”), enacted on March 27, 2020, provided for an employee retention tax credit
(“Employee Retention Credit” or “ERC”), designed to encourage businesses to keep
employees on their payroll. Subsequent legislation (The Taxpayer Certainty and
Disaster Tax Relief Act of 2020 and the American Rescue Plan Act) modified and
extended the ERC.

3. The ERC was a refundable tax credit against certain employment taxes
equal to 50% of the qualified wages an eligible employer paid to employees after
March 12, 2020 and through December 2020. For 2021, the ERC was a refundable
tax credit against certain employment taxes equal to 70% of the qualified wages an
eligible employer paid to employees after December 31, 2020 and through
September 2021.

4, For purposes of the ERC, an eligible employer was a business with
operations that were partially or fully suspended due to governmental orders due to
COVID-19 or a business that had a 50% decline in gross receipts as compared to the
same quarter in 2019.

5. The ERC was capped at $5,000 per employee retained between March
13, 2020 and December 31, 2020, and up to $7,000 per employee per quarter
retained between January 1, 2021 and September 30, 2021.

6. Qualified employers are only eligible to receive the ERC for employees,
not contractors.

7. Qualified employers could access the ERC by reducing upcoming
payroll tax deposits or requesting an advance credit (i.e., a direct refund payment to
the employer) on a Form 7200 or a. Form 941.

8. The Families First Coronavirus Response Act (“FFCRA”) required
certain employers to provide employees with paid sick leave (“Sick Leave) of up to
80 hours and expanded family and medical leave (“Family Leave”) of up to 10 weeks
for specified reasons related to COVID-19. FFCRA provided refundable tax credits
Case 2:23-mj-11127-AME   Document 1   Filed 07/28/23   Page 7 of 14 PageID: 7
that reimburse employers for the cost of providing Sick and Family Leave wages to
employees for leave related to COVID-19. FFCRA provided refundable tax credits
that reimbursed employers for the cost of providing Sick and Family Leave wages to
employees for leave related to COVID-19.

9. Under the FFCRA, employers were eligible to receive tax credits for
wages paid to employees on Sick Leave. For employees on Sick Leave because they
were sick, employers could receive a credit equal to one dollar for every dollar in
wages paid to an employee on Sick Leave, plus allocable health plan expenses and
the employer’s share of Medicare taxes, with a maximum of $5,110 per employee
per quarter. For employees on Sick Leave to care for another, employers were
eligible to receive a credit equal to two-thirds of every dollar in wages paid to an
employee on Sick Leave, plus allocable health plan expenses and the employer's
share of Medicare taxes, with a maximum of $2,000 per employee per quarter.

10. Under the FFCRA, employers were eligible to receive tax credits equal
to two-thirds of every dollar paid to an employee on family leave with a maximum of
$10,000 per employee per quarter, plus allocable health plan expenses and the
employer’s share of Medicare taxes. The maximum increased to $12,000 per
employee per quarter for periods of leave taken after March 31, 2021 and before
October 1, 2021.

11. Anemployer could not receive more in Sick and Family Leave credits
than in wages actually paid to employees.

12. Employers could only receive Sick and Family Leave credits for
employees, not contractors.

13. Together, the ERC and Sick and Family Leave credits are referred to
herein as the COVID-Related Tax Credits.

14. Self-employed individuals are not eligible for COVID-Related Tax
Credits under the FFCRA.

15. IRS Form 941 may be used to claim COVID-Related Tax Credits. The
COVID-Related Tax Credits may be greater than the tax owed by the employer,
resulting in a refund to the employer.
Case 2:23-mj-11127-AME   Document 1   Filed 07/28/23   Page 8 of 14 PageID: 8
Overview

16. From at least as early as in or around November 2020 through at least
in or around May 2028, HAYNES prepared and filed with the IRS Forms 941
claiming COVID-Related Tax Credits for businesses he owned and on behalf of
clients. According to HAYNES’ clients, HAYNES told them that the government
was giving out COVID-19 relief money for businesses and that they were eligible for
the money because they had a business. To certain clients, he stated that the money
was a grant.

17. More than 15 of HAYNES’ clients confirmed that the Forms 941
HAYNES prepared and filed for them were false and fraudulent in that they falsely
reported the number of each business’s employees and the wages paid to those
employees and falsely claimed COVID-Related Tax Credits. These clients did not
provide HAYNES with the information reported on their business’s Forms 941
despite HAYNES telling law enforcement that his clients provided all of the
information he reported on his clients’ Forms 941.

18. During the relevant period, HAYNES prepared and filed at least 1,387
false Forms 941, including fraudulent Forms 941 filed on behalf of his own
businesses, claiming a total of approximately $124,751,995.08 in tax refunds to
which HAYNES and his clients were not entitled, causing the U.S. Treasury to
disburse at least $31.6 million in tax refunds.

19. HAYNES charged each client a fee of approximately 10% of the tax
refund the client received from the U.S. Treasury. According to HAYNES, he

charged this fee because, without him, the client could not get the money. Many of
HAYNES’ clients paid HAYNES in cash at his request.

20. HAYNES owned and operated at least three businesses during the
relevant period: Leon’s Tax Service, GHP, and CNL Rentals. During the relevant
period, HAYNES filed a total of approximately 30 Forms 941 for those businesses,
claiming approximately $4,330,239.67 in tax refunds based on the COVID-Related
Tax Credits, which resulted in the U.S. Treasury paying HAYNES at least
approximately $1,428,592.21.

21. His businesses did not have any employees and did not issue any
Forms W-2. HAYNES told law enforcement his businesses had only hired
contractors during the relevant time period. His businesses were, therefore,
ineligible to receive the COVID-Related Tax Credits.
Case 2:23-mj-11127-AME   Document 1   Filed 07/28/23   Page 9 of 14 PageID: 9
Counts One through Eight:
Aiding and Assisting in Filing False Tax Returns for Individual-1

22. HAYNES prepared and filed Forms 941 on behalf of Individual-1 for
Business A, claiming COVID-Related Tax Credits for 2020 Quarter (“Q”) 2 to Q4,
2021 Q1 to Q4, and 2022 Q1.

23. HAYNES approached Individual-1 in or around 2021 about
government COVID-related relief. HAYNES explained to Individual-1 that the
government was giving out “free money” to people who had a business.

24. Individual-1 subsequently confirmed that each of the Forms 941
HAYNES prepared and filed on Individual-1’s behalf falsely claimed that Business
A had employees, paid wages to those supposed employees, and was eligible for
COVID-Related Tax Credits. Individual-1 did not provide HAYNES with the
number of employees or wages reported on any of the Forms 941 HAYNES prepared
and filed on behalf of Business A.

25. In fact, Business A had no employees and no payroll during the
relevant period. HAYNES knew all of this because Individual-1 advised HAYNES,
among other things, that Business A had no W-2 employees but only retained
contractors.

26. Before submitting false and fraudulent Forms 941 for Business A,
HAYNES did not review those forms with Individual-1. Likewise, HAYNES did not
ask Individual-1 to sign or ask for authority to sign on Individual-1’s behalf
anything relating to the Forms 941.

27. HAYNES also falsified personal income tax returns that HAYNES
submitted on Individual-1’s behalf. Specifically, HAYNES prepared Individual-1’s
2020 Individual Income Tax Return, Form 1040. On that form’s Schedule C,
HAYNES falsely reported that Business A had approximately $66,267 in contract
labor expenses in 2020 and paid $0 in wages. But HAYNES reported different
information in Business A’s 2020 Forms 941. There, HAYNES indicated that
Business A paid approximately $80,178 in wages for 2020 Q2 through Q4.

28. Individual-1 subsequently confirmed that both tax forms were false: in
2020, Business A did not pay approximately $66,267 in contract labor, as reported
on the Schedule C, or approximately $80,178 in wages, collectively reported on
Business A’s 2020 Q2 through 2020 Q4 Forms 941. Nor did Individual-1 provide
that information to HAYNES. Moreover, similar to the Forms 941, HAYNES
prepared the Form 1040 without consulting Individual-1 and then called to tell
Individual-1 how much Individual-1 owed the IRS.
Case 2:23-mj-11127-AME   Document 1   Filed 07/28/23   Page 10 of 14 PageID: 10
29. Intotal, HAYNES falsely claimed more than approximately $748,000
in tax credits on Individual-1’s Forms 941 based on COVID-Related Tax Credits, as
reflected in the chart below (all figures are approximate):

Approx. Tax False False False ERC False Sick and
Date Form | Period Number of | Wages Claimed Family Wages
941 was Employees | Listed credit Claimed
Received by Listed

IRS

2/23/2021 2020 Q2 | 4 $22,089.00 | $13,072 $43,449
2/23/2021 2020 Q3 | 4 $22,089.00 | $11,044 $43,449
2/23/2021 2020 Q4 | 4 $22,089.00 | $11,044 $43,449
6/11/2021 2021 Q1 | 2 $20,042.00 | $14,029 $40,665
7/31/2021 2021 Q2 | 4 $40,018.00 | $21,012 $91,350
10/31/2021 | 2021Q3 |5 $55,785.00 | $39,049 $168,972
6/12/2022 2021 Q4 |6 $28,118.00 | $19,682 $87,320
6/12/2022 20238 Q1 | 4 $32,558.00 | - $101,108

30. The U.S. Treasury paid Individual-1 approximately $693,493 in
COVID-Related Tax Credits based on the false claims on the above Forms 941.

381. HAYNES requested a 10 to 15% fee from Individual-1 for preparing
and filing the Forms 941. Individual-1 paid HAYNES approximately $10,000 in
cash despite HAYNES requesting additional funds.

Count Nine:
The Mail Fraud Scheme

382. From at least 2020 through 2022, LEON HAYNES purported to own
and operate a tax preparation business, Leon’s Tax Services, a payroll preparation
business, GHP, and acar rental business, CNL Rentals.

33. HAYNES falsely prepared and filed approximately 30 total Forms 941
claiming COVID-Related Tax Credits for those businesses for the tax periods 2020
Q2 through 2022 Q3.

34, During an interview with law enforcement on or about February 27,
2023, HAYNES stated that his businesses only hired contractors. He stated he paid
these individuals in cash and sometimes with checks.

385. On HAYNES’ 2020 and 2021 Forms 1040, Individual Income Tax
Returns, which HAYNES prepared, he reported on Schedules C that none of his
companies—Leon’s Tax Service, CNL Rentals, or GHP Payroll—paid any wages.
Instead, he reported those businesses paid contract labor.
Case 2:23-mj-11127-AME   Document 1   Filed 07/28/23   Page 11 of 14 PageID: 11
36. Based on HAYNES’ own statements, HAYNES’ businesses were not
eligible to receive any COVID-Related Tax Credits because they did not have any
employees.

37. Nonetheless, for 2021, HAYNES falsely reported on Forms 941
approximately $305,145 in W-2 wages for Leon’s Tax Services.!

38. The Forms 941 were also false on their face. In particular, in each
Form 941 he filed, HAYNES claimed more in Sick and Family Leave wage credits
than the total wages reported paying for each respective quarter.

39. Lastly, certain Forms 941 were facially false because HAYNES
repeatedly attempted to cause the IRS to pay out a greater amount of ERC funds
than allowed under the law. For example, on the CNL Rentals 2021 Q1 Form 941,
HAYNES reported paying three employees approximately $45,018 in wages and
claimed approximately $31,152.60 in ERC. The maximum qualified wages per
employee was $10,000 and, at that time, the ERC was limited to 70% of the
qualified wages. Thus, CNL Rentals was limited to claiming $21,000 in ERC for
that quarter.

40. On Leon’s Tax Service’s 2021 Q1 Form 941, HAYNES again claimed a
greater refund than was possible under the law. On that return, HAYNES reported
paying approximately $70,741 in wages to eight employees and claimed an ERC of
approximately $56,000. Because the maximum credit was 70% of every $10,000
paid to an employee, the maximum available ERC was just over $49,000.

41. In total, by filing approximately 30 false Forms 941 for his businesses,
HAYNES claimed approximately $4,330,239 in tax refunds to which he was not
entitled, thereby fraudulently enriching himself, as depicted below (all figures are
approximate):

Approx. Date | Tax Period | Form Business Refund Claimed
Received by

IRS

11/8/2020 2020 Q2 Form 941 | Leon’s Tax Service $77,753.64
11/8/2020 2020 Q3 Form 941 | Leon’s Tax Service $62,651.64
1/19/2021 2020 Q4 Form 941 | Leon’s Tax Service $104,852.81
4/9/2021 2021 Q1 Form 941 | Leon’s Tax Service $203,866.18

1 For 2021, Leon’s Tax Service filed one W-2 for one employee and two W-2s for two
employees for 2022, reporting a total of approximately $32,118 and $39,046 in social
security wages, respectively. HAYNES did not report withholding any income,
social security, or Medicare taxes from his employees’ pay.
Case 2:23-mj-11127-AME   Document 1   Filed 07/28/23   Page 12 of 14 PageID: 12
7/11/2021 2021 Q2 Form 941 | Leon’s Tax Service $258,280.33
9/30/2021 2021 Q3 Form 941 | Leon’s Tax Service $243,071.32
1/3/2022 2021 Q4 Form 941 | Leon’s Tax Service $281,378.91
6/7/2022 2022 Q1 Form 941 | Leon’s Tax Service $175,246.60
7/6/2022 2022 Q2 Form 941 | Leon’s Tax Service $274,309.42
10/9/2022 2022 Q3 Form 941 | Leon’s Tax Service $185,116.84
2/15/2021 2020 Q2 Form 941 | CNL Rentals $73,186
2/15/2021 2020 Q3 Form 941 | CNL Rentals $57,538.61
2/15/2021 2020 Q4 Form 941 | CNL Rentals $68,866.16
5/29/2021 2021 Q1 Form 941 | CNL Rentals $117,271.88
7/11/2021 2021 Q2 Form 941 | CNL Rentals $184,113.76
9/28/2021 2021 Q3 Form 941 | CNL Rentals $200,729.32
1/3/2022 2021 Q4 Form 941 | CNL Rentals $215,954.27
6/7/2022 2022 Q1 Form 941 | CNL Rentals $181,559.03
1/25/2023 2022 Q2 Form 941 | CNL Rentals $105,916.03
10/9/2022 2022 Q3 Form 941 | CNL Rental $112,823.22
7/12/2021 2020 Q2 Form 941 | GHP $58,212.50
7/11/2021 2020 Q3 Form 941 | GHP $42,320.26
7/11/2021 2020 Q4 Form 941 | GHP $42,748.88
7/12/2021 2021 Q1 Form 941 | GHP $59,018.50
7/12/2021 2021 Q2 Form 941 | GHP $62,858.83
10/23/2021 2021 Q3 Form 941 | GHP $210,535.01
1/3/2022 2021 Q4 Form 941 | GHP $195,140.16
6/6/2022 2022 Q1 Form 941 | GHP $114,614.83
7/6/2022 2022 Q2 Form 941 | GHP $175,204.87
10/9/2022 2022 Q3 Form 941 | GHP $185,099.86
42. These false tax returns caused the U.S. Treasury to mail tax refund

checks to HAYNES. On or about the following dates, the U.S. Treasury mailed
checks from the Department of Treasury, Bureau of Fiscal Services in Kansas City,
Missouri to HAYNES in New Jersey (all figures are approximate):

Tax
Period

Business

Approx.
Date U.S.
Treasury

Check Issued

Location
Check

Mailed From

Location
Check
Mailed To

Amount of
Check
Issued
Case 2:23-mj-11127-AME   Document 1   Filed 07/28/23   Page 13 of 14 PageID: 13
2020 Q2 | Leon’s Tax | 12/22/2020 Kansas City, | Bogota, $78,838.96
Services Missouri New Jersey
Company

2020 Q3 | Leon’s Tax | 12/17/2020 Kansas City, | Bogota, $63,736.96
Services Missouri New Jersey
Company

2020 Q4 | Leon’s Tax | 2/23/2021 Kansas City, | Bogota, $35,362.88
Services Missouri New Jersey
Company

2021 Q1 | Leon’s Tax | 5/252021 Kansas City, | Bogota, $199,209.50
Services Missouri New Jersey
Company

2021 Q2 | Leon’s Tax | 8/24/2021 Kansas City, | Bogota, $254,117.36
Services Missouri New Jersey
Company

2022 Q3 | Leon’s Tax | 11/22/2022 Kansas City, | Bogota, $160,230.13
Services Missouri New Jersey
Company

2020 Q2 | CNL 3/23/2021 Kansas City, | Teaneck, $71,417.00
Rentals Missouri New Jersey

2020 Q3 | CNL 3/30/2021 Kansas City, | Teaneck, $56,056.71
Rentals Missouri New Jersey

2020 Q4 | CNL 8/10/2021 Kansas City, | Bogota, $68,014.16
Rentals Missouri New Jersey

2021 Q2 | CNL 8/24/2021 Kansas City, | Bogota, $181,213.03
Rentals Missouri New Jersey

2021 Q4 | CNL 2/22/2022 Kansas City, | Bogota, $195,967.52
Rentals Missouri New Jersey

43. HAYNES received at least approximately $1,428,592.21 in refunds to

which he was not entitled.

HAYNES knew that he submitted false forms to the IRS. When

interviewed, HAYNES admitted to law enforcement that he had researched COVID-
Related Tax Credits and was familiar with the law related to them. Moreover, on or
about the following dates, the Social Security Administration (“SSA”) sent letters to
HAYNES regarding the businesses listed below. In each letter, the SSA informed
HAYNES that the wage information reported on the Forms 941 filed with the IRS
did not match the wages that were reported to the SSA on forms W-2 and requested
that he fill out a questionnaire:

Date Tax Period Entity

July 1, 2022 2020 Leon’s Tax Services
Case 2:23-mj-11127-AME   Document 1   Filed 07/28/23   Page 14 of 14 PageID: 14
July 1, 2022 2020 CNL Rentals
Feb. 25, 2022 2020 CNL Rentals
Dec. 28, 2022 2020 CNL Rentals
Jan. 20, 2023 2020 Leon’s Tax Services
Feb. 10, 2023 2020 CNL Rentals
Feb. 24, 2023 2021 CNL Rentals

45. Following HAYNES’ receipt of the two July 1, 2022 letters referenced
above, HAYNES returned two questionnaires to the SSA. On each questionnaire,
HAYNES made the following admissions about the false documents he had
submitted to the IRS:

I am the owner and operator of the said business listed on
this form. I certify that the compensation that was reported
to Social Security is attributed to the Employee Retention
Credit and the Family and Sick leave. Furthermore, the
compensation that was reported is inaccurate.

46. Over the course of the scheme, HAYNES filed for $4,330,239.67 in tax
refunds based on the COVID-Related Tax Credits for his three businesses. As a
result, HAYNES caused the U.S. Treasury to disburse at least approximately
$1,428,592.21 to HAYNES. In total over the course of the scheme, HAYNES prepared
and filed at least 1,387 false Forms 941, claiming a total of approximately
$124,751,995.08 in tax refunds to which HAYNES and his clients were not entitled,
causing the U.S. Treasury to disburse at least $31.6 million in tax refunds.


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