LR woman gets 2-year term, owes $103,201 for unpaid taxes

A 65-year-old Little Rock woman who has been at odds with the Internal Revenue Service for over 25 years was ordered Monday to serve two years in federal prison and to repay $103,201 in unpaid income taxes despite her and her husband’s contention that the government lacks the authority to prosecute her.

Nina Sue Williams appeared before Chief U.S. District Judge Brian Miller on Monday for the second time in less than two weeks, after her failure to appear for a sentencing hearing Nov. 15 prompted Miller to issue a warrant for her arrest. When she appeared on that charge Nov. 20 before U.S. Magistrate Judge Joe Volpe, he refused to release her in advance of her sentencing hearing in the tax case before Miller, declaring her a flight risk.

Among the reasons Volpe cited were that she “acted confused” about when she was supposed to appear in court, and “became upset” when he denied her request to get her passport back so she could plan a trip to Aruba.

In the tax case, Williams, an accountant and former tax preparer, pleaded guilty May 21 to making a false statement to the IRS and willfully failing to file income tax returns. The first charge was for changing a form to make it appear that she was a certified public accountant, so she could justify performing work for which she wasn’t qualified. The second charge consolidated years’ worth of failing to file income tax returns, which she agreed shorted the government of $103,201 for tax years 2010 through 2014.

But since her guilty plea, Williams filed amended tax returns for the same period of time as her guilty plea covered, in an effort to show that she didn’t owe $103,201, after all.

Federal prosecutors contended the amended returns are fraudulent and that by filing them Williams lost a sentencing credit she had been promised for pleading guilty and accepting responsibility for her crime. Assistant U.S. Attorney Stephanie Mazzanti said any question about whether the newly filed returns will generate another criminal charge would first require a review by the IRS.

Williams told the judge that at the time she pleaded guilty, “I had a hard time agreeing to that, because it wasn’t correct,” but Miller noted that she had agreed to each detail of the plea in a thorough, step-by-step plea hearing in which she was accompanied by an attorney.

The tax case, in which Williams and two other people, John Dunn and Wendy Dunn, were indicted in 2016, has taken a number of twists and turns over the years, which Mazzanti let Dan Elliott, a special agent with the IRS, describe from the witness stand.

Elliott testified that Williams and her husband, David Williams, who is also an accountant, ran a business in which they performed accounting services and prepared income tax returns for others. But in the mid-1990s, he said, “they ceased filing their personal tax returns.”

He said the couple was “uncooperative” when the IRS began questioning them in the late 1990s, and eventually, the IRS assessed their taxes “based on the information we could get.”

He said that through court actions and other means, such as closing and reopening accounts, the Williamses “attempted to thwart collection actions” and refused to provide records. He said they also filed for bankruptcy four times to stop collection efforts, but the petitions were all dismissed, as was a lawsuit they filed against all IRS employees involved in the collection effort.

In 2004, when they met John Franklin Dunn, both the Williamses filed 23-page declarations that Elliott said “were

hard to follow, but basically said the IRS had no authority over them.” He noted that Dunn had “apparently prepared similar documents” for several other people. The declarations were also dismissed.

When a search warrant was executed at the couple’s business, Elliott said, agents found documents stamped “refused by fraud.” He said he believes the couple made the stamp in an effort to reject documents from the government, which they claimed was committing fraud.

Elliott noted that the Williamses were arrested in late 2008 for refusing to provide documents they had prepared for an Ohio couple under criminal investigation, and “they refused to acknowledge the authority of the court.”

He also testified that Nina Williams had prepared false tax returns for Dunn’s wife, Wendy Marie Dunn, that indicated she had “a very low income,” but during the same period of time, prepared information for a bank where Wendy Marie Dunn was seeking a home loan, claiming the woman had a six-figure income. He said Nina Williams has done the same thing for her own daughter.

In 2016, after Nina Williams received a grand jury “target letter” indicating she was being considered for prosecution, she filed 10 years’ worth of tax returns that appeared to be “fairly accurate,” Elliott said, citing corroborating bank records. But he said those returns are now being disputed by Williams’ recently amended returns.

The reduced amounts of income listed in the amended returns don’t jibe with the amount of expenses she claimed during those years, he said. He said that while the original returns showed income of about $200,000 a year, the new returns indicate her income was only $6,500 a year.

Defense attorney Mark Jesse of Little Rock suggested that she had been a victim of a “grand scheme of Mr. Dunn,” and cited Williams’ age in asking that Miller sentence her to probation or home detention. He also said he believes that she is “under the influence of someone the government hasn’t gone after.”

In denying the request, Miller noted, “Now it appears she is trying to commit a fraud on me. She is doing to me what she did to the IRS for 20-some years.”

Noting that he has seen numerous sophisticated fraud schemes come before him, Miller added, “This is not even a good fraud.”

John Franklin Dunn pleaded guilty in June to conspiracy to defraud the United States of more than $437,000, and is scheduled for sentencing Dec. 17. Wendy Marie Dunn pleaded guilty in June to five counts of willfully filing false tax returns. A sentencing date hasn’t been set.