DOJ: Owner And Chief Executive Officer Of Tax Preparation Firm Pleads Guilty To Federal Tax Offenses

• Holtz agreed to pay $8,793,805 in restitution, while Pellot and Scott each agreed to pay $7,129,389.
• The fraudulent scheme involved inflating deductions and creating fictitious business entities to reduce clients' tax liabilities and increase refunds.

Steven Holtz, Israel Pellot, and Alton Scott, associated with the Holtz Group tax preparation firm, pled guilty to federal tax offenses after admitting to falsifying information on clients’ tax returns to reduce liabilities and increase refunds. The scheme, led by Holtz, spanned from at least 2014 through at least 2025 and involved training staff to create fraudulent deductions and business entities.

The Holtz Group charged clients fees based on purported 'tax savings,' sometimes exceeding one hundred thousand dollars per client. As part of their guilty pleas, Holtz agreed to pay $8,793,805 in restitution, while Pellot and Scott each agreed to pay $7,129,389, with sentencing to be determined by Judge Mary Kay Vyskocil.

• $8,793,805 Holtz restitution amount
• $7,129,389 Pellot and Scott restitution each
• $175,000 Fee for preparing a 2021 client return

• Review client engagements with the Holtz Group for inflated or fictitious deductions, especially on Schedules A, C, D, and E.
• Check for clients who established partnerships or S Corporations through the Holtz Group and claimed large unreimbursed partnership expenses.
• Scrutinize any tax returns prepared by Steven Holtz, Israel Pellot, or Alton Scott for fraudulent head of household status or Earned Income Tax Credit claims.

This case highlights the risks of tax preparer fraud and the importance of robust due diligence on third-party service providers. Compliance officers must be vigilant for schemes involving inflated deductions, fictitious business entities, and improper filing statuses, as these can facilitate large-scale tax evasion and expose financial institutions to regulatory and reputational risk. The significant restitution amounts and criminal penalties underscore the consequences of failing to detect and report such fraudulent activities, reinforcing the need for effective AML/CFT controls and ongoing monitoring of high-risk clients and service providers.