NC man’s seminars on defrauding the IRS cost the government $38 million, feds say
Mehef Bey traveled around the country speaking at seminars in which he recruited people to file bogus tax returns seeking hundreds of thousands of dollars — if not millions — in refunds from the Internal Revenue Service, according to federal prosecutors.
He succeeded in ensnaring at least 200 clients from 19 states, the government said.
Now he’s facing prison.
Bey, who went by the alias Arthur Daniels and lives in Charlotte, North Carolina, pleaded guilty on Monday, Jan. 3, to charges of conspiring to defraud the government and filing false tax returns. He’s the fourth person charged in the scheme to plead guilty, the U.S. Attorney’s Office in the Middle District of Florida said in a news release.
A defense attorney appointed to represent him did not immediately respond to McClatchy News’ request for comment on Jan. 5.
According to court documents filed with his plea agreement, Bey was one of the primary speakers at the tax seminars — several of which were held in central Florida between 2014 and 2016. He reportedly worked alongside Iran Backstrom, also known as Shariyf Noble, from Milledgeville, Georgia, to promote the scheme.
Bey and Backstrom told prospective clients the IRS owed them money in the form of tax refunds on their mortgages and other debts, the government said.
Backstrom ultimately chose which clients would be permitted to participate, prosecutors said, and he and Bey provided instructions to other co-conspirators regarding what documents were needed. They reportedly collected names, social security numbers and addresses, often referred to as “intake” information, to file fake 1099-MISC forms, which are typically used to report forms of miscellaneous income.
Bey and his fellow conspirators filed the forms through online tax form preparation companies and made it look as if they had been prepared by financial institutions, prosecutors said.
Most of the tax returns they filed sought refunds totaling anywhere from $100,000 to $2.9 million, according to Bey’s plea agreement, and they typically charged clients between $10,000 and $15,000 to participate.
Clients paid $2,500 up front, and the rest was due after they received their refund from the IRS, prosecutors said.
Bey was reportedly the money man — he kept track of payments and what was owed to so-called subpromoters working under him and Backstrom, the government said. He also collected fees from the clients, either in cash or via bank deposits to accounts he controlled.
The IRS caught on to the alleged fraud in 2015. Bey and Backstrom, however, continued to promote the scheme, even telling clients how to dodge the government’s collection efforts and indicating on clients’ fraudulent tax returns that they had been “self-prepared,” prosecutors said.
By March 2016, they were pursuing a new method of filing false tax returns using a Schedule C form, which is typically used to report income or losses from a business the filer operates. According to court documents, Bey and Backstrom also started to distance themselves from communications with clients to evade detection.
The fraud lasted from 2014 to 2016, during which time Bey is accused of helping to submit requests for refunds totaling $64 million — about $38.5 million of which was doled out.
Bey earned over $1 million during the years the fraud was operational, according to his plea agreement. But prosecutors said he failed to report that income in 2014, even falsely claiming a $22,458 refund, and stopped short of filing tax returns in 2015 and 2016.
A grand jury indicted Bey alongside Backstrom and two other individuals in April, court filings show, and he was arrested in the Western District of North Carolina in May.
Under the terms of the plea agreement, Bey will pay more than $38 million in restitution and be permanently barred from preparing or assisting in the preparation of any federal tax returns for anyone other than himself.
Bey faces up to five years in prison on the conspiracy charge and an additional three years for each count of filing a false tax return, prosecutors said. A sentencing date has not been set.
This story was originally published January 5, 2022 at 6:30 PM with the headline "NC man’s seminars on defrauding the IRS cost the government $38 million, feds say."
