PHOENIX – On Oct. 3, Elias Bermudez, owner of El Centro de Ayuda (The Help Center), a tax preparation and immigration service business with offices in Phoenix, Tucson and other locations, was indicted by a federal grand jury on 27 counts of aiding or assisting the preparation of false tax returns in violation of 26 U.S.C. § 7206(2), Fraud and false statements, a felony.
If convicted, Bermudez “shall be fined not more than $250,000 ($500,000 in the case of a corporation), or imprisoned not more than three years, or both, together with the costs of prosecution.”
The U.S. Department of Justice’s website states, “Section 7206(2) has been described as the Internal Revenue Code’s ‘aiding and abetting’ provision … It is frequently used to prosecute individuals who advise or otherwise assist in the preparation or presentation of false documents, e.g., fraudulent tax return preparers.”
According to the indictment, between 2010 and 2012 Bermudez prepared and filed tax returns with the IRS on behalf of his clients that contained false information.
Bermudez added a false number of dependents to his clients’ returns in order to maximize refunds under the Additional Child Tax Credit.
Since Bermudez has prepared income tax returns for over 20 years, the indictment notes he was well aware of the eligibility requirements for someone to receive the Additional Child Tax Credit, a credit offered by the IRS that could reduce a taxpayer’s federal income tax by up to $1,000 for each qualifying child.
However, in order to qualify under the Additional Child Tax Credit, the child or dependent must a) be a U.S. citizen, national or resident alien; b) have lived with the taxpayer for more than half of the tax year; and c) have received at least half of his or her financial support from the taxpayer.
Not only did Bermudez not explain these requirements to his clients, he informed them that listing dependents on their tax returns would reduce their tax liability and could even provide them with a tax refund.
Under Bermudez’s direction, his clients listed dependents who did not meet IRS qualifications, including listing dependents living in Mexico and not with the taxpayer, and dependents who had not received half of their financial support from the taxpayer.
Bermudez went so far as to encourage his clients to list family members living in Mexico, many of whom were not the taxpayer’s children or dependents, as dependents on their tax returns.
The tax loss from fraudulently listing unqualified dependents on his clients’ tax returns ranged from $1,365 to $8,458 for a total of $131,651.
This isn’t the first time Bermudez has overstepped his bounds, as Sonoran News reported in May 2009: “Elias Bermudez – doctor, lawyer, notary and busboy?”
In 2008, the State Bar of Arizona filed a complaint against Bermudez, El Centro de Ayuda and Inmigrantes Sin Fronteras (Immigrants Without Borders) for engaging in the unauthorized practice of law.
Bermudez boasted he had helped people become naturalized citizens for 15 years as director of Inmigrantes Sin Fronteras in Phoenix.
In 2009, Maricopa County Superior Court Judge J. Kenneth Magnum granted the state bar’s motion for summary judgment and ordered Bermudez, El Centro de Ayuda and Inmigrantes Sin Fronteras permanently enjoined from engaging in those activities, which he listed in lengthy detail, that constituted the practice of law.
Bermudez came to the United States as an illegal alien in 1967
and eventually became a legal permanent resident by marrying a U.S. citizen.
Just two weeks prior to becoming a naturalized citizen, Bermudez was elected to the San Luis, Ariz. City Council, where he served from 1982 to 1984.
San Luis is located in Southwest Yuma County across the border from Mexico.
During the early to mid 1990s, Bermudez was the executive director of Centro de Progreso (Progress Center), a family business in San Luis that was repeatedly sued for exploiting farm workers under the Fair Labor Standards Act.
One case resulted in the court awarding the plaintiffs $4,000 plus costs, $500 was awarded in another case and $6,487.60 plus $3,365 in attorney fees was awarded in yet another case, entered as a default judgment against Bermudez, who was in prison at the time and unable to appear.
In 1994 Bermudez was indicted on ten counts of conspiracy to manufacture, distribute and possess with intent to distribute methamphetamine, aiding and abetting, and laundering of monetary instruments, for his participation in another family business involving the manufacture and smuggling of methamphetamine from Mexico into the United States for distribution and sales.
In January 1996, Bermudez was convicted of conspiracy to launder monetary instruments and sentenced to 18 months in federal prison, followed by three years supervised release.
Shortly after a new Arizona law went into effect in July 2003, requiring all individuals and businesses preparing legal documents without the supervision of an attorney to become certified as Legal Document Preparers, a certification issued to non-attorneys in Arizona who provide document preparation assistance and services to individuals and entities not represented by an attorney, Bermudez applied.
He was turned down, however, due to his felony conviction.
Prior to his conviction, Bermudez was a notary public in Yuma County. However, unless rights have been restored, felons are precluded from becoming notaries.
Curiously, Bermudez was commissioned as a notary in Maricopa County in February 2001 anyway and granted a renewal in February 2005.
While Bermudez claims he “openly provided” information about his felony conviction when he applied, Joann Cota, acting director of the Arizona Secretary of State’s Business Services Division, which appoints notaries, said, “Upon review of his notary application, it appears Mr. Bermudez did not disclose that he was convicted of a felony.”
Cota said, “Question number one on the Notary Public Application,” which was signed by Bermudez before a notary under penalty of perjury, reads; “Have you ever been convicted of a felony or a lesser offense … that is incompatible with the duties of a notary public?” Bermudez placed an “X” in the “NO” column next to that question.