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United States v. Kimble

United States District Court, D. Maryland, Northern Division

July 8, 2015

UNITED STATES OF AMERICA, Plaintiff,
v.
KAREN KIMBLE, Defendant.

MEMORANDUM OPINION

WILLIAM D. QUARLES, Jr., District Judge.

Karen Kimble[1] is charged in a 21-count indictment with wire fraud in violation of 18 U.S.C. § 1343 (counts one to six), tax fraud in violation of 26 U.S.C. §§ 7206(1)-(2) (counts seven to sixteen), aggravated identity theft in violation of 18 U.S.C. § 1028A (counts seventeen to twenty), and visa application fraud in violation of 18 U.S.C. § 1546(a) (count twenty-one) ECF No. 1. On July 30, 2014, Kimble waived her Sixth Amendment right to a jury trial. ECF No. 73. On January 26 and 27, 2015, the Court conducted a bench trial and heard evidence on pending motions. ECF Nos. 76, 77.[2] By way of the accompanying Verdict, and for the following reasons, this Court will find Defendant Karen Kimble guilty on all counts.

I. Findings of Face[3]

This case arises from several tax returns Kimble filed with the Internal Revenue Service ("IRS") and State of Maryland from 2008 to 2012, and an Immigration Form I-130 (Petition for Alien Relative) Kimble submitted in 2008 to U.S. Customs and Immigration Services ("USCIS"). As required by Federal Rule of Criminal Procedure 23(c), the Court makes the following findings of fact:

Megan Cheswick's and Judith Fendlay's Tax Returns

1. Megan Cheswick[4] worked with Kimble at the T. Rowe Price Participant Services Center. Tr. 68:23, 70:7-8.

2. After they became friends, Kimble told Cheswick she was a "certified tax preparer, " had a Master's Degree in Business Administration, and offered to prepare Cheswick's taxes free of charge. Tr. 72:9-25, 73:1, 73:18.

3. Kimble further told Cheswick that she had experience preparing taxes for small businesses and others at T. Rowe Price, and her tax preparation business was called "Fiscally Yours." Tr. 73:8-12.

4. Cheswick gave Kimble a complete set of tax documents[5] each year that she asked Kimble to prepare her taxes (2007, 2008, 2009, 2010, and 2011). Tr. 74:24; Gov. Ex's 3a, 3b, 3d, 3f, 3h; Gov. Ex. 12 ¶ 4.

5. Kimble told Cheswick that she prepared her taxes using Turbo Tax, signed them as the tax return preparer in case Cheswick was audited, and used the e-mail address erato24k@hotmail.com to file the tax returns with Turbo Tax. Tr. 76:25, 77:1-3, 80:7-11; Gov. Ex. 12 ¶ 5.

6. Kimble did not ask Cheswick to review her return for accuracy before she filed it, and gave Cheswick a Turbo Tax summary printout after the tax return had been filed. Tr. 77:7-12.

7. Kimble prepared and electronically filed[6] Cheswick's 2010 federal tax return. Tr. 76:23-25, 78:23-79:6; Gov. Ex 3g.

8. Kimble claimed $11, 250 in unreimbursed business expenses, $375 in tax preparation fees, and $671 in attorney accounting fees, none of which Cheswick had. Gov. Ex. 3g, line 21, Schedule A; Tr. 86:7-12, 87:6-17.

9. Kimble claimed a total of $36, 131 in itemized deductions; the correct amount was $13, 038. Gov. Ex. 3g, line 40; Gov. Ex. 8g at 14.

10. Cheswick did not authorize Kimble to file a return with false expenses and deductions. Tr. 87:18-20.

11. Cheswick's 2010 federal tax return generated an inflated $6, 233 refund. Gov. Ex. 3g, Line 74a; Tr. 188:2-6.

12. Kimble diverted $1, 300 of Cheswick's refund into her ING Bank account ending in 7686, without Cheswick's permission. Gov. Ex. 3g, Form 888; Gov. Ex. 90; Gov. Ex. 12 ¶ 7; Tr. 85:22.

13. Cheswick referred her then-husband's grandmother, Judith Fendlay, to Kimble, as she had recently retired from the Maryland Transportation Authority and needed assistance preparing her now-complicated tax returns. Tr. 80:24-81:10, 99:20, 100:8-15.

14. Kimble charged Fendlay $25 to prepare her state and federal tax returns. Tr. 101:1-5.

15. Cheswick delivered Fendlay's tax preparation documents to Kimble at work. Gov. Ex. 4a; Tr. 81:7-10.

16. On February 18, 2010, Kimble electronically filed Fendlay's 2009 federal tax return using her email account erato24k@hotmail.com. Gov. Ex. 4e; Gov. Ex. 9s at 1; Tr. 347:7-14, 21-25.[7]

17. Kimble did not allow Fendlay to review her tax return before it was filed. Tr. 103:24, 105:20.

18. Kimble included the following expenses on Fendlay's 2009 federal tax return, none of which Fendlay had or told Kimble she had: $7, 689 in medical expenses, $13, 188 in home mortgage interest, [8] $2, 652 in mortgage insurance premiums, $1, 192 in gifts to charity, $2, 124 in unreimbursed business expenses, $60 in union and professional dues, $225 in tax preparation fees, $230 in uniform expenses, $175 in job search costs, $125 in resume builder fees, $1, 205 in parking fees, and $234 in business expenses. Gov. Ex. 4e, line 40a, Schedule A; Tr. 106:21-109:3.

19. In total, Kimble falsely claimed $30, 399 in itemized deductions[9] on Fendlay's 2009 federal tax return. Gov. Ex. 4e, Schedule A; Gov Ex. 8d at 6; Tr. 109:9, 186:18-24, 338:8-339:25.

20. Fendlay's 2009 federal tax return generated a $7, 223 refund, which Kimble had deposited into her ING Bank account ending in 7686 without Fendlay's permission. Gov. Ex. 4e, Lines 73a, 73d; Gov. Ex. 9o; Tr. 109:21.

21. The correct refund amount was $1, 121. Gov. Ex. 9q.

22. Kimble wrote Fendlay a note explaining that she would receive one $2, 485 check for her federal and state tax returns. Gov. Ex. 4d; Tr. 104:25.[10]

23. Fendlay received one $2, 485 check for her federal and state tax returns. Tr. 105:11-13.

24. Fendlay did not prepare, electronically sign, or file her 2009 federal tax return, and did not authorize Kimble to file the return listing false deductions or expenses. Tr. 110:18-111:1.

25. Kimble gave Fendlay a different tax return that she had purportedly filed for Fendlay, which stated that Fendlay owed $759 in federal taxes for 2009. Gov. Ex. 4b; Tr. 111:5-12.

26. Kimble signed the "dummy"[11] tax return as Fendlay's paid preparer, and listed herself as the "Third Party Designee" along with her telephone number. Gov. Ex. 4b; Tr. 111:16-24.

27. Kimble's name does not appear as the Third Party Designee or the paid preparer on the return actually filed with the IRS. Gov. Ex. 4e.

28. Fendlay gave Kimble her tax-related documents to prepare her 2010 federal tax return. Gov. Ex. 4h; Tr. 112:24-113:2.

29. On February 27, 2011, Kimble electronically filed Fendlay's 2010 federal tax return from her email account erato24k@yahoo.com; Kimble used Fendlay's name, address, social security number, and date of birth to prepare and electronically sign the return. Gov. Ex. 4m; Tr. 113:22-114:4, 116:25, 349:4-5.

30. Kimble claimed several false deductions on Fendlay's 2009 federal tax return: $1, 158 in medical expenses, $10, 759 in home mortgage interest, $2, 714 in mortgage insurance premiums, $325 in gifts to charity, and $390 in tax preparation fees. Gov. Ex. 4m, Schedule A; Tr. 114:9-115:2, 341:2-344:2.

31. In total, Kimble claimed $19, 953 in itemized deductions. Gov. Ex. 4m, line 40a.[12]

32. Kimble also claimed a false $4, 000 education expense. Gov. Ex. 4m, Form 8863; Tr. 116:11-17.

33. Fendlay did not have, nor did she tell Kimble that she had, $19, 953 in itemized deductions, and did not authorize Kimble to file the tax return with the false deductions. Tr. 115:8, 117:2-7.

34. The false deductions generated a $5, 306 refund, which Kimble had deposited into her ING bank account ending in 7686. Gov. Ex. 4m, lines 74a, 74d; Gov. Ex. 9o.

35. The correct refund amount was $2, 583. Gov. Ex. 9q.

36. Fendlay did not authorize Kimble to deposit her refund into Kimble's bank account, nor did Fendlay receive any of the $5, 306 refund. Tr. 115:13-17.

37. Kimble did not list herself as Fendlay's paid preparer on the tax return filed with the IRS. Gov. Ex. 4m.

38. Through Cheswick, Kimble gave Fendlay a copy of the 2010 federal tax return she had purportedly filed, which stated that Fendlay was entitled to a $5 refund. Gov. Ex. 4i, Line 74a; Tr. 117:8-24.

39. The copy provided to Fendlay listed Kimble as her paid preparer. Gov. Ex. 4i.

40. Kimble also electronically filed Fendlay's 2010 Maryland tax return. Gov. Ex. 4n; Gov. Ex. 9s at 16; Tr. 118:13, 324:1-3, 328:17-24.

41. The false deductions on the federal tax return carried over to the Maryland tax return, resulting in a $19, 052 deduction. Gov. Ex. 4n.

42. The tax return Kimble filed with the State of Maryland stated that Fendlay was entitled to a $901 refund, which corresponded to the amount of taxes Fendlay had paid. Gov. Ex. 4n at 4.

43. Kimble gave Fendlay a different copy of her Maryland tax return also stating that she was entitled to a $901 refund. Gov. Ex. 4j; Tr. 118:15-119:4.

44. In June 2011, Fendlay received a letter from the IRS stating that "[t]he income and payment information... that we have on file does not match entries on your 2009 Form 1040, " and if the IRS's information was correct, Fendlay owed $811. Gov. Ex. 4k; Tr. 119:21.

45. Fendlay called Kimble, who told her that it was a mistake made by her colleague, and that she would take care of it; however, Kimble did not take care of it. Tr. 120:21-25.

46. After Fendlay received the letter from the IRS, Cheswick logged in to Turbo Tax using the credentials Kimble had provided to view her and Fendlay's tax returns. Tr. 83:19-84:6.

47. Cheswick learned that portions of her and Fendlay's tax refunds had been deposited into an ING Bank account, and that the returns had been marked as "self-prepared." Tr. 84:6-20, 89:8.

48. In February 2012, Cheswick sent Kimble a text message asking why her tax returns had been marked "self-prepared"; Kimble responded, "I do sign them.... [I'm] so surprised & hurt that u think I would steal from u or his grandmother.... Also I wouldn't put everything on line for you if I had done something wrong. [I'm] not a thief but am pretty sure they hide things like that lol." Gov. Ex. 3j; Gov. Ex. 12 ¶ 3; Tr. 88:23-24.

49. Kimble then left Cheswick a series of voicemails stating that the $7, 000 refund amount at issue in Fendlay's 2009 return was "completely not correct, " Cheswick was concerned about "misinformation, " and Kimble had sent $500 to Fendlay. Gov. Ex. 31; Gov. Ex. 3n; Gov. Ex. 12 ¶ 3.

50. Fendlay never received any money from Kimble. Tr. 90:16-17.

Alexis Thompson's Tax Returns

51. Kimble prepared 2008, 2009, and 2010 federal and state tax returns for another T. Rowe Price colleague, Alexis Thompson. Tr. 145:17-19, 150:22-24, 158:3-5.[13]

52. Thompson gave Kimble her W-2 and IRA statement for the 2009 tax year. Gov. Ex. 6f; Tr. 151:3-12, 168:11-19.

53. Thompson's name was not on the title of the home in which she lived; Thompson never gave Kimble a mortgage interest statement. Tr. 144:15-21, 168:8-10.

54. Thompson was not a student, and did not have a student loan; she never gave Kimble information indicating that she qualified for a student loan interest deduction. Tr. 153:3-13.

55. On February 24, 2010, Kimble electronically filed Thompson's 2009 federal tax return from her email account erato24k@yahoo.com; the tax return included Thompson's name, address, date of birth, and social security number. Gov. Ex. 6h at 11; Gov. Ex. 9s at 11; Tr. 157:16-158:1, 349:7-8.

56. Kimble included several false deductions on Thompson's 2009 federal tax return: $2, 385 in real estate taxes, $140 in personal property taxes, $11, 483 in mortgage interest deduction, $2, 474 in student loan interest, [14] $571 in mortgage insurance premiums, $725 in charitable contributions, $140 in tax preparation fees, $600 in attorney accounting fees, and $764 in unreimbursed business expenses, including union and professional dues, job search costs, resume building costs, and costs of professional publications and licensing materials. Gov. Ex. 6h, line 33, Schedule A; Tr. 153:3-13, 154:8-155:18-157:3.[15]

57. The false deductions resulted in $18, 430 itemized deductions, [16] and a $1, 653 refund. Gov. Ex. 6h, lines 40a, 72; Tr. 153:14-25, 157:4-7.

58. Thompson actually owed $1, 482 in federal taxes. Gov. Ex. 9q.

59. Thompson never received the $1, 653 refund; instead, Kimble gave her $136 cash. Tr. 157:11.

60. Kimble told Thompson that she would set up an account for her so that Thompson could receive her refund in cash. Tr. 157:12-15, 166:11-167:4.

61. Kimble directed the $1, 653 refund to a bank account ending in 9119; from there it was transferred to her ING Bank account ending in 7686. Gov. Ex. 6h, line 73d; Gov. Ex. 9o; Tr. 332:11-333:3, 335:13-17, 335:22-336:15.

62. Kimble gave Thompson a "dummy" 2009 federal tax return showing a refund amount of $136, and which listed Kimble as the paid preparer. Gov. Ex. 6g; Tr. 151:15-152:1.

63. The return Kimble filed with the IRS indicated that it had been self-prepared. Gov. Ex. 6h.

64. In September 2010, Thompson received an IRS letter questioning the income and payment information claimed on her 2008 federal tax return, and stating that she owed $381. Gov. Ex. 6e; Tr. 149:19-150:7.

65. The IRS told Thompson that it had not received information indicating that she had been in school and had been entitled to the student loan interest deduction. Tr. 150:11-14.

66. Kimble gave Thompson $381 to pay the IRS. Tr. 150:15-20.

67. On April 15, 2011, Kimble electronically filed Thompson's 2010 federal tax return. Gov. Ex. 6k; Tr. 349:12-16.[17]

68. Thompson had given Kimble her W-2, a dividend statement, an IRA statement, and a letter confirming a $255 charitable donation. Gov. Ex. 6i; Tr. 158:10-159:4.

69. Kimble claimed $17, 561 in itemized deductions on Thompson's 2010 federal tax return, [18] including: $3, 600 in real estate taxes, $86 in personal property taxes, $10, 000 in mortgage interest, [19] $775 in mortgage insurance premiums, $771 in charitable donations, and $529 in job expenses. Gov. Ex. 6k, line 40, Schedule A; Tr. 160:22-162:16.

70. Kimble also claimed a false education credit of $1, 514. Gov. Ex. 6k, line 49; Tr. 162:18-163:6.

71. The false deductions and credits generated a $6, 156 refund; the correct amount was $63. Gov. Ex. 6k, line 72; Gov. Ex. 9q.

72. Kimble directed the $6, 156 refund to her Susquehanna Bank account ending in 3895. Gov. Ex. 6k, line 74d; Gov. Ex. 90.

73. Kimble did not complete the paid preparer section of the tax return filed with the IRS. Gov. Ex. 6k.

74. Kimble gave Thompson a "dummy" return stating that she was entitled to a $5, 153 refund, and listing Kimble as the paid preparer. Gov. Ex. 6j, line 74a; Tr. 159:5-13.

75. Kimble gave Thompson $5, 153 in cash. Tr. 159:23-160:4.

James Woodland's Tax Returns

76. In 2009, James Woodland graduated from Sparrows Point High School in Baltimore, Maryland. Tr. 169:24-170:4.

77. From 2009 to 2012, Woodland dated Kimble's daughter, Leighann Kimble, and occasionally spent the night at Kimble's home. Tr. 170:5-171:4.

78. Woodland listed Kimble's address as his home address for his employment at the Owings Mills, Maryland, Sam's Club; Woodland's mother lived in Pennsylvania, and he thought he would be more likely to get the job if it appeared that he lived closer. Tr. 171:11-18.

79. Although Woodland had Sam's Club send his W-2 to Kimble's address, he never received it. Gov. Ex. 7b; Tr. 171:21-23.

80. Woodland initially agreed to have Kimble file his taxes for him, but changed his mind after speaking with his mother, who told him that he should not file taxes because he was not going to get much money back. Tr. 172:1-9.[20]

81. Woodland did not authorize Kimble to file tax returns for him. Tr. 172:10-12, 174:3, 176:25.

82. Although the tax return indicates that it was self-prepared, Woodland did not prepare or electronically sign his 2010 federal tax return. Gov. Ex. 7a; Tr. 173:21-174:14.

83. On February 19, 2011, Kimble electronically filed Woodland's 2010 federal tax return from her email account erato24k@hotmail.com; Woodland's social security number had been used to electronically sign the return. Gov. Ex. 7a; Gov. Ex. 9s at 29; Tr. 174:6-12, 349:18-21.

84. Woodland identified his full name, social security number, and approximate income from his job at Sam's Club on the tax return. Gov. Ex. 7a; Tr. 172:20-173:6.

85. Kimble claimed a $5, 700 deduction on the tax return, instead of the $4, 750 standard deduction. Gov. Ex. 7a, line 40; Gov. Ex. 81 at 1.

86. Kimble also claimed a false $340 student loan interest deduction and $1, 000 American Opportunity credit. Gov. Ex. 7a, lines 33, 66; Tr. 393:18-394:16.

87. Woodland's 2010 federal tax return generated a $1, 333 refund. Gov. Ex. 7a, line 74a.

88. Kimble directed the $1, 333 refund to her Susquehanna Bank account ending in 3895. Gov. Ex. 7a, line 74d; Gov. Ex. 90; Gov. Ex. 12 ¶ 7.

89. Woodland never received the $1, 333 refund. Tr. 173:14.

90. Woodland was not entitled to a $1, 333 refund. Gov. Ex. 81; Gov. Ex. 9q; Tr. 340:20-341:1.

91. Woodland did not file his 2010 Maryland tax return, nor authorize Kimble to file it for him. Tr. 174:21-24.

92. In or about February 2010, Kimble electronically filed Woodland's 2010 Form 503 (Maryland Resident Income Tax Return). Gov. Ex. 7c.[21]

93. Woodland identified his name and social security number on his 2010 Maryland tax return. Gov. Ex. 7c; Tr. 175:4-8.

94. Although it had been marked "self-prepared, " Woodland did not sign the 2010 Maryland tax return purporting to bear his signature. Gov. Ex. 7c; Tr. 175:18.

95. The phone number ending in 4508 on Woodland's 2010 Maryland tax return belonged to Kimble. Gov. Ex. 7c; Gov. Ex. 4d; Tr. 105:5-10.

96. Woodland's 2010 Maryland tax return generated a $163 refund, which was deposited into Kimble's ING Bank account ending in 7686. Gov. Ex. 7c, lines 21, 24c.

97. Woodland never received the $163. Tr. 175:15.

Zorka Kuljich's Tax Return

98. Zorka Kuljich worked with Kimble at T. Rowe Price. Tr. 123:14-124:17.

99. After withdrawing IRA funds to purchase a condominium, Kuljich needed someone to prepare her taxes. Tr. 125:19-23.

100. When Kuljich asked Kimble if she knew anyone who prepared taxes, Kimble said she did; Kuljich paid Kimble $50 to prepare her 2010 federal tax return. Tr. 124:20-125:18.

101. Kuljich gave Kimble several documents to prepare her tax return: her W-2, a letter confirming a $50 charitable donation, a 1099 savings account interest statement from Howard Bank, a 1099 dividend and distribution statement from T. Rowe Price, an IRA distribution statement showing a $10, 000 withdrawal, an income statement for her state tax refund from the previous tax year, a Fidelity IRA statement, and a mortgage interest statement showing that Kuljich paid $4, 410.22 in mortgage interest during the 2010 tax year. Gov. Ex. 5b; Tr. 125:25-128:4.

102. On April 15, 2011, Kimble electronically signed and filed Kuljich's 2010 federal tax return using Zuljich's date of birth. Gov. Ex. 5d at 11; Tr. 349:22-350:5.

103. Kimble used Zuljich's name, address, and social security number to prepare the return. Tr. 130:17-131:2.

104. Kimble falsely claimed $25, 189 in itemized deductions:[22] $5, 040 in real estate taxes, $145 in personal property taxes, $16, 049 in mortgage interest, $1, 090 in charitable contributions, $210 in tax preparation fees, and $792 in attorney accounting fees. Gov Ex. 5d, line 40a, Schedule A; Tr. 132:3-135:4, 189:15-190:2.

105. Kimble also claimed a false $1000 education credit. Gov. Ex. 5d, line 66; Tr. 135:5-15.

106. The false entries resulted in a $4, 389 refund. Gov. Ex. 5d, line 72.

107. Zuljich actually owed $2, 425 in federal taxes. Gov. Ex. 9q.

108. Zuljich received $389 by direct deposit to her bank account; the remaining $4, 000 went to Kimble's ING Bank account ending in 7686. Gov. Ex. 5d, Form 8888; Gov. Ex. 5f; Gov. Ex. 9o; Tr. 136:4-15.

109. Kimble gave Zuljich a "dummy" tax return that did not include the itemized deductions, and which stated that Zuljich was entitled to a $389 refund, and Kimble was the paid ...


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