South Orange Husband-and-Wife Accountants Accused of Tax Fraud

A husband and wife tax preparing team with offices in South Orange and Jersey City were indicted Thursday on charges of conspiracy to defraud the United States and assisting in the preparation of fraudulent tax returns, resulting in losses of nearly $400,000, according to U.S. Attorney Paul J. Fishman.

Carol Johnson, 42, was arrested by IRS agents in her Union home Thursday morning for allegedly teaming up with her husband, 43-year-old Courtney Johnson, to get unearned tax refunds for their clients to make extra money for themselves, the indictment reads. Courtney Johnson remains at large, Fishman said.

The conspiracy charge carries a maximum potential penalty of five years in prison. Each false tax return count carries a maximum potential penalty of three years in prison and a $250,000 fine.

The couple operated Johnson & Associates, PC at 76. S. Orange Ave., as well as a tax preparation business in Jersey City.

Each was charged with one count of conspiracy to defraud the United States and six counts of assisting in the preparation of fraudulent tax returns. 

According to the indictment, the Johnsons prepared and filed false income tax returns for the purpose of generating tax refunds from 2005-07, using a variety of fraudulent practices including falsely claiming a filer was a “head of household”; inventing and inflating deductions; creating fictitious businesses with bogus incomes and losses; and creating false credits for education, childcare and moving expenses.

On several occasions, the indictment alleges, the Johnsons stole part of the refunds by allegedly forging clients' signatures on cashier's checks and pocketing the money, and on one occasion they filed two federal income tax returns for the same year for the same client, providing a copy of the return with a several-hundred-dollar refund to the taxpayer and a copy with a several-thousand-dollar refund to the IRS.

Carol Johnson was expected to appear Thursday afternoon before U.S. Magistrate Judge Cathy L. Waldor in Newark federal court.