Brother-Sister Duo Sentenced in Fraud Case | USAO-MDNC

GREENSBORO, N.C. B Two siblings were sentenced in federal court for making false claims against the United States, making false statements to a bank, and aggravated identity theft, announced United States Attorney Matthew G.T. Martin of the Middle District of North Carolina.

JAMES ERNEST GANDY, JR., age 36, of Dunn, NC, was sentenced by United States District Court Judge Catherine C. Eagles in Greensboro on Friday, September 18, 2020, to 51 months in prison and three years of supervised release. The Court also ordered JAMES GANDY to pay $129,017 in restitution, and a forfeiture money judgment in the amount of $62,088.19.

JAMIE VICTORIOUS GANDY, age 40, of Winston-Salem, NC, was sentenced today by Judge Eagles to 39 months in prison and three years of supervised release. The Court also ordered JAMIE GANDY to pay $139,254 in restitution, and a forfeiture money judgment in the amount of $62,088.19.

“Every taxpayer depends on the integrity of the tax system and the United States Attorney’s Office is committed to prosecuting tax fraud,” said United States Attorney Matt Martin. “I commend IRS-Criminal Investigation for uncovering and investigating this tax fraud scheme.”

“These defendants thought they had a clever scheme to thwart the IRS and steal from American taxpayers,” said Matthew D. Line, IRS Criminal Investigation Special Agent in Charge. “IRS-Criminal Investigation will continue to vigorously pursue those who unjustly enrich themselves by preparing false claims for refunds.”

According to court documents, JAMIE GANDY worked as a supervisor at the Liberty Tax Services franchise store in Lexington, North Carolina. In this role, she both prepared returns and reviewed returns prepared by others. One of the services the Liberty Tax Store provided to customers was rapid refund loan products from Republic Bank and Trust Company (“Republic”). A customer could apply for a repaid refund loan, by which Republic would provide the refund to the customer in a short time period and then collect loan payment from the tax customer’s refund. Up to $1,300 of the repaid refund loan could be loaded onto a NetSpend card which would allow the customer quick access to cash from the refund loan. After JAMIE GANDY began to work as supervisor at the Liberty Tax Store, her brother, JAMES GANDY, began to appear at the Lexington Liberty Tax Store, purportedly to visit his sister. JAMES GANDY operated a business in Dunn, North Carolina providing shipping pallets.

The operator of the Lexington Liberty Tax Store focused on business development and relied on JAMIE GANDY and other preparers to prepare and file returns. After receiving complaints from customers that they had not received their tax refunds and observing other indicia of fraud, a company audit revealed that numerous fraudulent returns had been filed at the Lexington Liberty Tax Store, usually under the name of JAMIE GANDY.

Many of the fraudulent returns were filed without the taxpayer’s authority or knowledge. Some of these returns were filed in the name of employees of JAMES GANDY’s pallet business without their knowledge or consent. In these cases, the W-2 forms attached to the returns had been falsified to enlarge the taxpayer’s income. Other people sold their personal identifying information to JAMES GANDY in Dunn or in Greensboro. They were also unaware that returns had been filed in their names. For most of the fraudulent returns, JAMES GANDY provided the identifying information of the victims to JAMIE GANDY at the Lexington Liberty Tax Store. JAMIE GANDY then prepared and filed the false return. She then applied for a repaid refund loan from Republic in the name of the purported taxpayer, making use of the false tax return to induce Republic to load the initial repaid refund loan onto a NetSpend card. JAMES GANDY and JAMIE GANDY then used the NetSpend cards to convert the fraudulently obtained loan proceeds. For example, in one case JAMES GANDY used a NetSpend card from a fraudulent return filing to purchase a deluxe trampoline party for his family, followed by an overnight stay at the Grandover Resort in Greensboro.

The case was investigated by Internal Revenue Service-Criminal Investigation, and Assistant U.S. Attorney Frank J. Chut, Jr., prosecuted the case.

The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

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