Tennessee Man Pleads Guilty to Tax Crimes and Wire Fraud for COVID-19 Employment Tax Credit Scheme

Strategic Insights -

A Tennessee man, Edward Zanes, has pleaded guilty to tax crimes and wire fraud for his role in a scheme to claim fraudulent refunds based on false COVID-19 employment tax credits. According to court documents and statements made in court, Zanes conspired with others to file false tax returns seeking refunds based on the employee retention credit and paid sick and family leave credit, which were created by Congress to aid struggling businesses during the pandemic.

Key Takeaways:

  • Edward Zanes, a Tennessee man, pleaded guilty to tax crimes and wire fraud for his role in a scheme to claim fraudulent refunds based on false COVID-19 employment tax credits.
  • Zanes conspired with others to file false tax returns seeking refunds based on the employee retention credit and paid sick and family leave credit.
  • The scheme involved creating phony businesses with no employees or operations to claim bogus credits.
  • Zanes and co-conspirators filed false tax returns claiming over $3.4 million in tax refunds and received over $1.8 million from the IRS.
  • Zanes faces a maximum penalty of 20 years in prison for conspiring to commit mail and wire fraud, and a maximum of 20 years in prison for each count of mail fraud.
  • A federal district court judge will determine the sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
  • IRS Criminal Investigation and the U.S. Secret Service investigated the case.
  • Trial Attorney Zachary A. Cobb of the Justice Department's Tax Division and Assistant U.S. Attorney Mac Heavener for the Eastern District of Tennessee are prosecuting the case.

Statistics:

  • $3.4 million: the total amount of tax refunds claimed by Zanes and his co-conspirators.
  • $1.8 million: the amount received by Zanes and his co-conspirators from the IRS.
  • 20 years: the maximum penalty in prison for conspiring to commit mail and wire fraud.
  • 3.4 million / 1.8 million: the ratio of total tax refunds claimed to the amount received.
  • January 7, 2026: the date set for Zanes' sentencing.

Sources:

  • United States Department of Justice, News Release (no date provided)