The IRS was not amused by 2FT Fast Facts Tax Service, a tax preparation service owned by Sherri Davis (“Sherri”) and by Davis Financial Services, a similar follow-on operation that it contended was run by her son, Andre Davis (“Andre”), although she was its principal. Both concerns filed returns that falsely reported charitable and business deductions. With the aid of LaDonna Davis (“LaDonna”), Sherri’s niece and employee, and as it turned out, star cooperating witness, the Government indicted Sherri and Andre with conspiracy to defraud the United States by preparing and filing fraudulent and false individual income tax returns, in violation of 18 U.S.C. §§ 2, 371. Other counts charged Sherri and Andre with willfully aiding and assisting in the preparation of false returns, in violation of 26 U.S.C. § 7206(2); and Sherri was further charged with filing false individual returns, in violation of 26 U.S.C. § 7206(1) and 18 U.S.C. § 2.
At trial, the Government presented eleven witnesses who testified about Sherri’s preparation of false individual tax returns that claimed huge illicit deductions. LaDonna, for her part, related a story about being trained by Sherri on the niceties of tax fraud, to the point where ““it all became like a routine’ and she began filling in charitable deductions without even asking clients if they had receipts.” (Slip Op. at 4-5). Allegedly, after search warrants were executed, LaDonna tried to wave Andre away from coming to work for his mother but he demurred, expressing the view that “the investigation ‘wasn’t a big deal, and that it was just going to go away.’” (Slip Op. at 7).
Neither Sherri nor Andre testified, although Sherri presented witnesses as to her character and to impugn LaDonna’s. The Trial Judge dismissed as speculative one count against Andre of preparing a false tax return. The jury convicted Sherri and Andre on the conspiracy charge, convicted Sherri of several of the fraudulent preparation charges, and found Andre guilty of one charge of preparing a false tax return. (Slip Op. at 7-8).