(STL.News) – A federal grand jury has handed down two separate indictments charging a Charleston tax preparer and her mother in connection with a fraud scheme, according to United States Attorney Mike Stuart.
“Small businesses and entrepreneurs are the backbone of the American economy. Business is tough especially for smaller businesses that may not have the resources of larger enterprises. In this case, the victims did everything right- hired good employees, managed their company, and, as all good business should do, hired an accountant. Unfortunately, they hired what we allege is a fraudster that, for nearly a decade, faked, constructed and defrauded her victims out of nearly $600,000,” said United States Attorney Mike Stuart. “These two indictments- separate but certainly related- allege a very complex fraud scheme carried out by the defendants for the purpose of personal enrichment. Greed for lack of a better term. I applaud the efforts of our federal and state law enforcement partners for conducting the quick, but thorough investigation resulting in today’s indictments.”
“A great deal of trust was placed in these two individuals to not violate the fiduciary responsibility they had with their clients,” said FBI Pittsburgh Special Agent in Charge Michael Christman. “Instead, these women chose to pocket the hard earned money of local companies. The FBI does not take lightly any betrayal of trust and will fully investigate these crimes.”
Misty Brotherton-Tanner, 40, was charged in an 18-count indictment with wire fraud, aggravated identity theft, unlawful monetary transactions and making false statements. She faces up to 270 years in prison, with as much as four years running consecutively, a $4.5 million fine and three years of supervised release, if convicted.
The indictment alleges that from 2014 until March 13, 2020, Brotherton-Tanner provided tax preparation and bookkeeping services to several businesses, including three West Virginia corporations, all located in Kanawha County. The indictment further alleges that she had provided the same services in the past to a now dissolved Kanawha County non-profit. According to the indictment, as part of Brotherton-Tanner’s work for the companies, she had access to each company’s accounting software that was connected to each of the company’s bank accounts. Brotherton-Tanner used QuickBooks software to embezzle from the local businesses – she created “ghost” employee accounts and then funneled the money to the employee accounts before ultimately transferring the money to bank accounts over which she maintained control. Brotherton-Tanner used identities of herself, members of her family and others to create “ghost” employee accounts at the companies and connected those to her personal bank accounts. She was not employed by any of the companies, but would submit bills for her services to get paid. She created herself an employee profile in each company’s Quickbooks payroll system, knowing that she was not entitled or authorized to receive the funds she transferred to herself. According to the indictment, Brotherton-Tanner also transferred a portion of the stolen funds to a non-profit’s bank account that she controlled and from the nonprofit’s bank account, she would then write checks to be distributed to herself and her family members, including Lois Brotherton, who is charged in a separate indictment. In addition, the indictment alleges that Brotherton-Tanner fraudulently misrepresented to two companies that she had filed the federal and state tax returns for both of the companies, although she knew she had not filed the tax returns or paid the taxes due since 2013. In furtherance of the scheme, Brotherton-Tanner made six electronic transfers from a third company’s bank account to the State of West Virginia Tax Department to pay off the state tax debt of one of the companies in an attempt to conceal her previous fraudulent transfers to herself and other “ghost employees.” According to the indictment, Brotherton-Tanner defrauded several businesses of at least $582,696.
In a separate five count indictment, Brotherton-Tanner’s mother, Lois Brotherton, 65, was indicted for conspiracy to commit wire fraud and wire fraud. She faces up to 100 years in prison, a $1 million fine and three years of supervised release, if convicted. According to the indictment, Brotherton also provided bookkeeping, accounting and website design services to the same Kanawha County non-profit organization as Brotherton-Tanner. The non-profit is now dissolved. According to the indictment, in 2017, Brotherton asked Brotherton-Tanner to write her checks from the non-profit’s bank account, although Brotherton knew she was not entitled to those funds. Brotherton-Tanner agreed to do so. Brotherton would receive money at the non-profit that her daughter would transfer from three different companies, without their knowledge or consent. Brotherton would then deposit the money into her personal account. As a result, the indictment alleges that Brotherton and Brotherton-Tanner defrauded the companies of at least $48,509.
The cases were investigated by the Federal Bureau of Investigation (FBI), the Internal Revenue Service-Criminal Investigations, the United States Postal Inspection Service and the West Virginia State Tax Department-Criminal Investigation Division. United States Attorney Mike Stuart and Assistant United States Attorneys Erik Goes and Kathleen Robeson are handling the prosecution.