Scammed out of $3.5 million, IRS sues to take house
Federal prosecutors have sued to take a $775,000 Chicago house from a Milwaukee man they say bought it with money he defrauded from the IRS.
From court records, it appears it was pretty easy. The IRS sent a $3.5 million income tax refund check to an estate in the man’s name after getting a sketchy tax return that seemed to merit the large refund.
The civil forfeiture action against 4512 S. Drexel Blvd. blames Francis Burns for the scam, though he has not been charged with a crime in Wisconsin.
According to IRS special agent Park Jones’ affidavit in support of the civil forfeiture, the house was titled in 2017 to World Burns Inc., a Wisconsin corporation that lists Francis Burns as its registered agent.
A website for World Burns Inc. says it was established in 2010 for the “charitable, educational and civic purposes to enhance and enrich the local communities of Milwaukee; stimulating and encouraging positive social change.”
On a Facebook page, the organization claims to be a nonprofit, but its tax-exempt status was revoked by the IRS for failing to file the required forms, according to a leading monitor of nonprofits.
Its mission, it states, is to improve people’s lives through World Burns’ products and services that promote healthy food and living. Burns, 47, is listed as the executive director, but no one answered or returned messages at two listed phone numbers.
Court records suggest Burns discovered a variation on a persistent IRS problem in which scammers use stolen identities to file false tax returns for individuals, usually claiming low incomes and small refunds based on children and tax credits.
Jones’ affidavit says that in September 2016, the IRS received an e-filed Form 1041 for 2015 for the estate of Francis Burns. The return address was a post office box at a U.S. Post Office on West Vliet Street, owned by World Burns Inc., in care of Burns.
The form indicated the estate was created in 1985, 30 years before its initial tax return filing. It also showed no estate income or deductions. It did say $132,814 in federal income tax was withheld and would be substantiated by a Form 1099.
So, even though there was no 1099, the IRS that November sent the estate a $132,814 refund. It was deposited into an account controlled by Burns.
The next month, Burns transferred $65,580 from that account to someone in Italy with whom he’d filed a joint, married tax return in 2009.
In February 2017, the IRS got an e-filed Form 1041 from the Burns estate for the year 2016. It came from a computer in Italy, where Burns had been from December until late February 2017, travel records later showed.
This time the estate reported $1.1 million of income, though the IRS again received no record of that from institutions. The return claimed $4,023,936 had been withheld for federal income tax.
In March, the IRS cut the estate a check for $3.5 million. A few days later, Burns opened a new bank account — the affidavit doesn’t say where — and deposited the big refund.
A year later, Burns told agent Jones he would be filing corrected estate tax returns. It was also false, Jones attested.
But by then, Burns had purchased the Chicago house for $757,725.