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4 Valley residents charged with conspiracy to defraud U.S.



Published: Sat, August 11, 2012 @ 12:01 a.m.

By JOHN W. GOODWIN JR. | jgoodwin@vindy.com

YOUNGSTOWN

Download as PDF:
US vs. Hinz

Indictment CR No. 4:11CR 586 - United States of America vs. Steven R. Hinz, Heather L. English, Patricia A. Polk, and William E. Phillips, III.

Youngstown’s Steven Hinz had an idea. Federal officials would dub it a scheme.

It involved an obscure federal tax form for acquired or abandoned property, as well as income allegedly generated and then withheld. He partnered with Patricia Polk of Youngstown to see if it would work.

It did.

In February 2009, Polk received a tax return of $160,444.

Authorities said Hinz, of North Heights Avenue, celebrated with this email:

“We did it! The first six figure 1099 OID return has been received! We came, we saw, we kicked BUTT! We have received our second OID Federal Tax Return and as promised in a previous email this one was 6 figures.”

That success launched Hinz, Polk and two others on a two-year spree that would use 14 other people, several businesses and, ultimately, bilk federal taxpayers out of more than $3 million.

Hinz, Polk, Heather English of Canfield and William Phillips III of ¥oungstown are set for trial in October on a 21-count federal indictment. Charges include making false returns as well as aiding and assisting preparation of false returns.

Hinz, according to Vindicator files, attempted to run for city council in the 3rd Ward in 2007 as an independent but was disqualified and did not appear on the ballot. He moved to the area in the late 1990s and has acquired at least 19 parcels of property in the city.

The basic explanation of the case is these individuals are alleged to have prepared and filed tax returns with the Internal Revenue Service and received large tax refunds based on false tax withholdings, said Craig Casserly, public information officer for the IRS Criminal Investigations division for Ohio.

The federal indictment says Hinz was involved in the acquisition and sale of real estate to investors and the management of rental property for investors in Youngstown under various business names including Debt Busters, Hinz-Dom and Youngstown Integrated Property Management.

According to the indictment, Hinz and the three other defendants were part of a scheme to prepare and file false income tax returns using fake “original issue discount” (OID) and fake “acquisition or abandonment of secured property” forms.

The forms falsely reported the withholding of large amounts of federal income tax based on nonexistent income for the four defendants and others for whom they prepared tax returns.

The scheme took place from October 2008 through at least August 2009.

Hinz and English, according to the indictment, used the forms themselves and persuaded taxpayers to file tax returns using the bogus forms. They promoted the scheme to investors in and employees of Hinz’s real-estate business and people they met at seminars.

Hinz and English offered to prepare tax returns for taxpayers for up to a $350 upfront fee plus 20 percent of the “tax benefit” from using the OID process.

Besides the four people mentioned in the federal indictment, there were tax forms prepared and filed for 13 additional people. The scheme ultimately bilked the federal government out of $3,157,231.

The indictment claims the scheme went on after IRS agents learned of the payments and demanded that the money be paid back.

Those involved in the scheme, the indictment says, provided the IRS with more fraudulent documents to avoid repayment of the money and refused to give money back to those who paid to have taxes filed under the OID scheme so that the money could be repaid to the federal government.

It is not clear in the indictment how much of the money has been recovered.

All four of those charged in the indictment are due in federal court Oct. 4 and are set for trial Oct. 22.


Comments

1southsidedave(4780 comments)posted 2 years, 1 month ago

Greed is a terrible sickness...now it's time to pay for you misdeeds!

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2IslandMike(752 comments)posted 2 years, 1 month ago

I hope they get sent to club Fed for 100 years.

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3Knightcap(699 comments)posted 2 years, 1 month ago

I don't know guys, usually around here if you pay 10% of it back you get the rest in probation and community service. But then it's the feds and not the local yokel judges who have soft hearts for criminals.

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4WarrenRicheyKid(167 comments)posted 2 years, 1 month ago

And then you can be rich and pay no taxes.

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5mcgill319(8 comments)posted 2 years, 1 month ago

They are most likely Republicans and are in the same circles as Mitt Romney. I don't understand why the media isn't talking about Romney's tax schemes. Is the general public aware that he took over abandon properties and paid no taxes?
This is another reason The Gov shouldn't have tax loop holes like the OID.

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6Jerry(498 comments)posted 2 years, 1 month ago

Why do we have an insane tax system that is so ridiculous and convoluted that it allows things like this to happen?

Yet another example about how Government screws things up.

And now, Government is going to be handling our healthcare too; and administering the system of fees/penalties/taxes (or whatever we're calling it today) through........you guessed it........the IRS !!!!

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7Capybara91(11 comments)posted 2 years, 1 month ago

It isn't a tax loophole. It's fraud to use the form to claim false withholding. And, if you read the article, IRS Criminal Investigation caught up with the cheats and they are being prosecuted. And an agency needs adequate funding to stop frauds and cheats like these. But go ahead and blame the government if it makes you feel better. Easy target.

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8anothermike(211 comments)posted 2 years, 1 month ago

Don't know where "Knightcap" gets "accurate" information, but I never heard of anyone being able to settle for 10 cents on the dollar with the IRS since the juice (interest) is more than that, Also, the federal judges have a reputation for throwing the book at offenders when found guilty. At least here in the Valley.......

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9Jerry(498 comments)posted 2 years, 1 month ago

@ Capybara:

So you are suggesting that the Government and the IRS are not big enough yet, and if we gave them MORE power and spent MORE money these problems would be solved. I am not drinking this KoolAid.

The IRS caught them only after giving out the money first. I wonder how many are NOT caught??? I wonder how many innocent people are persecuted???

If the tax system wasn't so insanely convoluted, made this way by an insanely stupid big government ideology, this could not have happened.

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10fattynskinny(195 comments)posted 2 years, 1 month ago

jimbo right again...abolish the irs

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11Capybara91(11 comments)posted 2 years, 1 month ago

Alas, the 1099-OID scam is chump change compared to the wholesale theft of SSNs and filing of fraudulent tax returns. ID Theft must be blamed on big government, too. It never happens in commercial transactions. Yes, abolish the IRS. God will provide manna from heaven. Everyone is honest.

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12Jerry(498 comments)posted 2 years, 1 month ago

I didn't suggest abolishing the IRS, because taxes are necessary.

How about scrapping the tax code, writing a new one that prints on two 8.5 x 11 sheets (single spaced #12 font), including a simple federal sales tax at the retail level, and cutting the IRS down to about 10% of its current size.

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13TylerDurden(367 comments)posted 2 years, 1 month ago

"They are most likely Republicans and are in the same circles as Mitt Romney. I don't understand why the media isn't talking about Romney's tax schemes. Is the general public aware that he took over abandon properties and paid no taxes?
This is another reason The Gov shouldn't have tax loop holes like the OID."

How do you cross the street without being struck by a vehicle?

As several posters have indicated, it was blatant fraud, not a tax loophole that caused this. The IRS has 3 years to look at a tax return for a reason, becasue it has to review millions of them.

Why don't we address the fraud that goes on with entitlement credits like the EIC or dependent exemptions. Taxpayers bilk the treasury out of millions there as well.

You have no idea if anyone committed a tax scheme, let alone what a tax scheme is. You also have no idea how Original Issue Discount works, you just write down what you hear in the restroom at the union hall.

Uneducated I can deal with, stupid has to go.

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14IslandMike(752 comments)posted 2 years, 1 month ago

.......on second thought, they should be let go. Heck, they've only cheated the US Govt. out of 3 MILLION DOLLARS, that's about a tenth of what Mitt Flopper has cheated them out of.

They'll make good RepubliCONS some day.

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15TylerDurden(367 comments)posted 2 years, 1 month ago

"on second thought, they should be let go. Heck, they've only cheated the US Govt. out of 3 MILLION DOLLARS, that's about a tenth of what Mitt Flopper has cheated them out of.

They'll make good RepubliCONS some day."

Clearly it's my own fault for responding, I am just waisting time, but I'll play along.

You think Mitt Romney has cheated the government out of 30 million dollars? I think the IRS does a better job than that.

Good thing Sebelius, Geithner, Daschle, and Solis never cheated either. They just amended a mistake after they were nominated to cabinet posts.

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16Jerry(498 comments)posted 2 years, 1 month ago

@ TylerDurden / IslandMike

There is one more key thing to point out regarding your response Tyler

There is actual evidence that Sebelius, Geithner, Daschle, and Solis cheated (oh sorry......I meant made "mistakes")

There has been no evidence offered that Mitt Romney cheated. So far, this can be characterized as a wild eyed delusional accusation intended for political gain, made by some very sleazy people.

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17ygstneighbor(1 comment)posted 2 years, 1 month ago

Why don't people realize that cheating the "Government" or "IRS" is really cheating all of us. Where do they think the Government or IRS gets the money.

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