Minnesota Tax Return Preparer Sentenced to More Than 10 Years in Prison for Leading a Multimillion Dollar IRS Fraud Scheme and Failing to Appear at Sentencing

Defendant Fled to South Africa After his Conviction

A Minneapolis based tax return preparer was sentenced to serve 121 months in prison today for managing and directing a fraudulent return-preparation business, Primetime Tax Services Inc. (Primetime), announced Principal Deputy Assistant Attorney General Richard E. Zuckerman.

Kenneth Mwase, who also fraudulently used the name Chatonda Khofi, 54, of St. Paul, Minnesota, pleaded guilty to one count of conspiracy to defraud the United States, one count of aggravated identity theft, and one count of failure to appear at sentencing.

In addition to the term of imprisonment, Chief U.S. District Judge John R. Tunheim also ordered Mwase to serve 3 years of supervised release, following his release from prison.

In April 2014, the defendant was charged in a seventy-count second superseding indictment, along with codefendants Ishmael Kosh, 39, of Philadelphia, Pennsylvania, Amadou Sangaray, 36, of New York, New York, and Francis Saygbay, 43, of Minneapolis, and David Mwangi, 47, of Arlington, Texas, for their involvement with Primetime, a tax preparation business with three storefronts in the Minneapolis area.  Together with his co-defendants, Mwase prepared and filed with the Internal Revenue Service (IRS) over 2,000 fraudulent individual income tax returns on behalf of customers of Primetime for the years 2006, 2007 and 2008.  Mwase and his co-defendants also prepared approximately 1,700 fraudulent state income tax returns filed with the state of Minnesota for those years.

In November 2014, Mwase plead guilty to one count of conspiracy to defraud the Government and one count of aggravated identity theft.  As part of his plea agreement, Mwase admitted overseeing a conspiracy that caused a tax loss of over $2.5 million dollars.  Mwase and co-defendants Kosh, Sangaray, and Saygbay established Primetime’s flagship location in Brooklyn Center, Minnesota, in late 2006.   They then prepared tax returns in 2007, 2008, and 2009, for Primetime’s customers, which reported false dependents, fake business income and losses, inflated deductions, inflated credits, and false filing statuses, in order to get their customers inflated refunds. The defendants maintained control over their customers’ IRS refunds by instructing  that those  refunds be sent directly to Primetime.  They then caused their preparation fee to be directly withdrawn from the refund. When a customer came to pick up their refund check or debit card, the defendants sometimes escorted that customer to a check cashing location or ATM and demanded additional cash.

Mwase was scheduled to be sentenced on August 18, 2016, following the two-week trial of co-defendants Kosh and Sangaray, which occurred in September 2015, and the guilty plea of co-defendant Saygbay, in November 2015. However, on August 7, 2016, he fled to South Africa, using a fake identity and a fraudulently-obtained Zimbabwean passport. In April 2017, Mwase was charged with one count of failure to appear for sentencing.

With the assistance of the United States Department of State, INTERPOL, and Zimbabwean and South African authorities, Mwase was arrested in South Africa in May 2018. Over the years, Mwase used multiple fake identities, including passing himself off as Chatonda Khofi, an individual born in Washington, D.C. to diplomats from Malawi. In October 2018, following an extradition request from the United States, Mwase was surrendered to the custody of the United States Marshals Service and returned to Minnesota to face sentencing. On November 16, 2018, Mwase pled guilty to the charge of failing to appear for sentencing.  Mwase’s co-conspirators were previously sentenced to prison.

The case was investigated by special agents of IRS-Criminal Investigation and deputy marshals of the United States Marshals Service. It was prosecuted by Trial Attorneys Thomas W. Flynn and Arthur J. Ewenczyk, as well as former Trial Attorneys Dennis R. Kihm and Ryan R. Raybould, of the Tax Division who prosecuted the case. The Tax Division would like to thank the Minnesota Department of Revenue for their significant work in identifying the tax fraud and identity theft occurring at Primetime.

Former Pharmacy Owner Headed to Prison for Bogus Claims to Health Insurers

The pharmacist and former owner of Gibson’s Discount Drugs in Red Bud, Illinois, has been sentenced to 33 months in prison for engaging in a scheme to defraud federal health care benefit programs and private insurance companies. Steven P. Gibson, 30, pleaded guilty to federal charges back in August 2018.

Court records establish that Gibson purchased the pharmacy in October 2016 and began defrauding health insurers just two months later. From December 2016 to February 2018, Gibson submitted nearly 1,000 claims for "make believe" prescriptions under the names of his wife, his family members, and his pharmacy customers. To maximize his fraudulent gains, Gibson deliberately chose the most expensive drugs, such as Creon, a drug used to treat chronic pancreatitis, Pentasa, a drug used to treat ulcerative colitis, and hydroxychloroquine, a drug used to treat and prevent malaria. The fictitious prescriptions were not authorized by a licensed medical practitioner and were never actually filled. Gibson’s total take from Medicare, Medicaid, and private insurance companies exceeded $620,000 – money he has now been ordered to pay back in restitution.

Gibson’s crimes first came to light in late 2017, after a pharmacy customer recognized that her son had been billed for expensive medications he had not received and called to complain. The pharmacist who took that call then discovered Gibson’s fraud, quit her job, and notified authorities. A federal search warrant was executed at the pharmacy on February 8, 2018. Shortly thereafter, Gibson agreed to cooperate in the investigation and plead guilty.

As part of his plea deal with the United States, Gibson agreed to repay all of the money and to make restitution payments in advance of sentencing to the fullest extent possible. At sentencing, however, Gibson had repaid only $30,000 and had otherwise failed to account for the rest of the money he stole. In imposing sentence, United States District Judge Staci M. Yandle found Gibson’s failure to pay back more of the money incompatible with his expressions of remorse and refused to award him credit for acceptance of responsibility. "Talk is cheap," Judge Yandle told the defendant, quoting an opinion from the Seventh Circuit Court of Appeals. "The remorseful or repentant criminal would want to do everything possible to rectify the harmful consequences of his crime, and so if he still has any of the loot he will return it."

Judge Yandle was also troubled by statements made by Gibson’s wife in an online post to the pharmacy’s public Facebook account. The post, which was made on the same day Gibson pleaded guilty but was recently taken down, attempted to downplay his criminal conduct to the pharmacy’s customers:

Everything that was wrote about us receiving 630,000 or whatever the number that was put out there, is laughable to me and completely false. I SEE our bank accounts , I KNOW. * * * Everything that was wrote about him running claims and collecting money on multiple people that is a complete LIE. I know all the details of the investigation.

Although Gibson’s attorney maintained that his client had not known about his wife’s Facebook post and did not condone it, Judge Yandle found that position not credible and specifically cited the Facebook post as further indication that Gibson had not adequately accepted responsibility for his crimes. In handing down the nearly three-year sentence, Judge Yandle also emphasized the seriousness of so-called "white collar crimes" such as this one. "Some people minimize these kinds of crime," she said. "This court does not.

Steve Hanson, Special Agent in Charge, U.S. Department of Health and Human Services, Office of Inspector General, Office of Investigations, Kansas City Region, stated, "Individuals in trusted positions who submit false claims to our healthcare programs for personal enrichment will be pursued to the fullest and brought to justice."

Gibson was released on bond with special conditions pending the start of his prison term. His sentence also includes two years of supervised release. Because of the large amount of restitution he still owes, Gibson was not ordered to pay a fine.

The investigation was conducted by the U.S. Department of Health and Human Services, Office of Inspector General; the Illinois State Police, Medicaid Fraud Control Bureau; the Federal Bureau of Investigation; the Drug Enforcement Administration; United States Postal Inspection Service; and the National Insurance Crime Bureau. The case was prosecuted by Assistant United States Attorneys Michael J. Quinley and Nathan D. Stump.

If you suspect or know of an individual or company that is not complying with healthcare laws or public aid programs, you may report this activity to the local office of the U.S. Department of Health and Human Services, Office of Inspector General, or you may call 1.800.447.8477.

Sex Trafficker Lavelleous Purcell, a/k/a “King Casino,” a/k/a “Mike Hill,” Sentenced To 18 Years In Prison In Manhattan Federal Court

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that LAVELLEOUS PURCELL, a/k/a “King Casino,” a/k/a “Mike Hill,” was sentenced today by United States District Judge Denise L. Cote to 216 months in prison for sex trafficking by force, fraud, and coercion, and other related offenses.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Lavelleous Purcell, a violent and notoriously brutal predator, used physical violence and intimidation to force women into sexual servitude for his financial enrichment.  Appropriately, Purcell has now been sentenced to surrender his own freedom for many years.”

According to the Indictment filed in Manhattan federal court, previous court filings, and statements made at public proceedings:

From at least in or about 2012 to in or about 2017, LAVELLEOUS PURCELL, a/k/a “King Casino,” a/k/a “Mike Hill,” the defendant engaged in the sex trafficking and commercial sexual exploitation of numerous women across the country, including in New York, Pennsylvania, and North Carolina.  The defendant recruited, enticed, harbored, transported, provided, obtained, and maintained women for the purposes of commercial sex, and he used violent force, threats of force, coercion, intimidation, and fear to force at least one woman to engage in commercial sex for his own profit.  For example, the defendant strangled and choked certain of his victims, he hit and threatened to hit certain of his victims, and he kidnapped certain of his victims.

The victims of the defendant’s prostitution business were required to follow a strict set of rules, which the defendant enforced through threats, fear, intimidation, and violence.  The defendant’s rules required his victims to:  make money for the defendant through prostitution, give the defendant all money earned from any commercial sex acts, call the defendant “Daddy,” not speak to men other than the defendant, not look at any men other than the defendant, not talk back to the defendant, not disrespect the defendant, not have boyfriends, not wear sneakers or loose-fitting clothing, and brand themselves with a tattoo bearing the defendant’s alias, “Casino,” on their necks.

The defendant recruited women to engage in commercial sex through social media websites, and he used Backpage.com, an online classifieds website, to post advertisements for commercial sex.  The defendant also booked various rental cars and hotel rooms to transport women across state lines to engage in commercial sex.  Meanwhile, the defendant boasted about the violence he used against women and his prostitution of women through social media posts, phone, text, and online communications, and in person.

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In addition to his prison sentence, PURCELL, 40, was sentenced to five years of supervised release.

Mr. Berman thanked the FBI and the NYPD for their outstanding investigative work in this matter.  Mr. Berman also thanked the New York County District Attorney’s Office for its assistance with this investigation.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Sheb Swett, Jane Kim, and Margaret Graham are in charge of the prosecution.