Tennessee Man Pleads Guilty to COVID-19 Employment Tax Fraud Scheme
Summary
A release reports that Edward Zanes of Kingsport, Tennessee pleaded guilty to tax crimes and wire fraud for a role in a scheme to claim fraudulent refunds based on false COVID-19 employment tax credits, the employee retention credit and the paid sick and family leave credit. According to court documents, Zanes and co-conspirators created phony businesses with no employees or operations, filed false tax returns for them and directed the returns to addresses they controlled. The returns claimed over $3.4 million in tax refunds, and the group received over $1.8 million from the IRS. Zanes is set to be sentenced on Jan. 7, 2026, and faces a maximum of 20 years in prison for conspiring to commit mail and wire fraud, 20 years for each count of mail fraud and 3 years for each count of aiding and assisting in the filing of a false tax return.
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Full text
A Tennessee man pleaded guilty on Wednesday to tax crimes and wire fraud for his role in a scheme to claim fraudulent refunds based on false COVID-19 employment tax credits. The following is according to court documents and statements made in court: Edward Zanes, of Kingsport, Tennessee, conspired with others to file false tax returns seeking fraudulent refunds based on the employee retention credit and paid sick and family leave credit, both of which were created by Congress to aid struggling businesses during the COVID-19 global pandemic. Zanes and co-conspirators created phony businesses, which lacked any employees or operations, for the sole purpose of claiming the bogus credits. Zanes aided in filing numerous false tax returns for those phony businesses and directed the tax returns to be mailed to addresses he and co-conspirators controlled. In total, Zane and his co-conspirators filed false tax returns that claimed over $3.4 million in tax refunds and received over $1.8 million from the IRS. Zanes is set to be sentenced on Jan. 7, 2026. He faces a maximum penalty of 20 years in prison for conspiring to commit mail and wire fraud, a maximum penalty of 20 years in prison for each count of mail fraud, and a maximum penalty of 3 years in prison for each count of aiding and assisting in the filing of a false tax return. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. IRS Criminal Investigation and the U.S. Secret Service investigated the case. Trial Attorney Zachary A. Cobb of the Justice Department’s Tax Division and Assistant U.S. Attorney Mac Heavener for the Eastern District of Tennessee are prosecuting the case.
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- www.justice.gov