Dearborn woman, Detroit man face tax crime charges
Two Metro Detroit residents are facing charges for tax crimes, U.S. Attorney Barbara McQuade announced Friday.
Zena Karkaba of Dearborn has pleaded guilty to tax evasion, while Steven Pittman of Detroit was arraigned Friday and charged with one count of federal income tax evasion, two counts of filing false tax returns and seven counts of bankruptcy fraud.
Court records show that between 2009 and 2012, Karkaba “received monetary gifts from an individual, who provided her with personal checks in amounts ranging from $1,000 to $10,000,” according to a statement from the U.S. Attorney’s Office. “In preparing many of these checks, the individual wrote the numeric value on the checks and signed them, leaving the date, payee and written amount blank.”
In 2012, Karkaba received at least 41 checks totaling $160,100, which she altered by changing the amounts, increasing the sum to $278,100, authorities said.
She also filed an individual income tax return with the Internal Revenue Service for 2012 claiming the married joint filing status, reporting zero taxable income as well as no tax due and owing. But during her plea hearing, Karkaba, 33, admitted that her true filing status for that year was single, taxable income was $108,250 and she owed $23,771 in tax, McQuade’s office said.
“Income from any source, whether earned legally or stolen, is subject to income tax,” Special Agent in Charge Jarod J. Koopman said in a statement. “By her guilty plea today, Karkaba is acknowledging and accepting the consequences of her criminal actions.”
A sentencing hearing is set for June 24.
The maximum penalty for tax evasion is five years in prison, three years of supervised release and a $100,000 fine.
According to an indictment, Pittman worked for Direct Internet Consulting from 2003-2006 as a contract salesman providing Internet cable services to Detroit Public Schools, the Detroit Medical Center and other clients.
In mid-2007, he filed tax returns for 2003 and 2006, reporting tax due and owing approximately $70,000, the attorney’s office said.
But Pittman didn’t include payment of this tax liability with the returns, and when the IRS tried to start collecting in 2008, officials said, he “began to take steps to evade the payment of his outstanding federal tax liability.”
Pittman filed documents with the state that year forming an entity, Metrotech Solution Services LLC, with the signature “Rodman Edmons” as the organizer and resident agent, officials said.
“Around the same time, Pittman also opened a bank account in the name of Metrotech, and over the course of that year deposited more than $150,000 into the account,” the attorney’s office said Friday. “Most of the deposits were derived from payments made by the DPS for work performed by Metrotech to install security equipment.”
Pittman also used an alias when signing a contract in September 2009 with DPS to install and maintain security equipment, earning more than $700,000 for the services, authorities said.
While filing a voluntary bankruptcy petition two years later, Pittman “stated that he owed only $532.44 to the IRS; he failed to disclose the use of an alias; he failed to properly report income he earned in 2009 and 2010 and he failed to declare his interest in the bank accounts and businesses he controlled.”
Pittman also filed false tax returns for 2009 and 2010 since he “listed himself as an employee of Metrotech, failed to disclose that he was the owner of the company, and failed to report any of the income he earned from the DPS security equipment contract,” officials said.
“Pittman’s blatant abuse of the bankruptcy and tax system was motivated by greed,” Koopman said. “Investigating and seeking convictions for these violations will hopefully reinforce to the public that no one is above the law.”