Four Columbus, Georgia, men are heading to federal prison after pleading guilty to mail fraud in a pandemic-era tax scheme that grew far beyond their own business filings. Federal investigators calculated the combined attempted and actual loss to taxpayers at $17,489,749.80.
Christopher Upshaw, Johnathon Swift, Dontavis Williams and Donterious Sparks were sentenced August 5. Their prison terms range from three years and five months to nine years and seven months, and each was ordered to repay money obtained through the scheme.
The case centered on false Form 941 filings seeking COVID-related tax credits for businesses that investigators said did not have the employees or qualifying wages claimed on the returns.
The men later expanded the operation by filing returns for other people in exchange for a percentage of the refunds, according to the U.S. Attorney’s Office for the Middle District of Georgia.
The Tax Claims Had No Payroll Behind Them
Upshaw registered DOPE! Apparel, LLC with the Georgia Secretary of State’s office in June 2022. On April 29, 2023, he filed five false tax returns seeking COVID-related credits intended to help qualifying employers retain workers and cover certain paid sick and family leave wages.
The IRS issued five refunds to the business totaling $411,112.21. Investigators found no W-2s filed for Upshaw from 2019 through 2023. Georgia Department of Labor records also showed no evidence that DOPE! Apparel employed workers or paid the qualified wages and sick or family leave amounts claimed on the filings.
Upshaw cashed the refund checks and used some of the money to purchase a luxury vehicle, according to federal prosecutors. Swift, Williams and Sparks similarly used LLCs registered in their names to file false returns claiming COVID-related tax credits to which they were not entitled.
The Four Men Received More Than $1.29 Million
Swift obtained $417,095.56 through the false filings, while Williams received $156,531.74 and Sparks received $311,072.55. Combined with Upshaw’s $411,112.21, the four defendants received 16 checks totaling $1,295,812.06.
The checks were either cashed or deposited into bank accounts controlled by the defendants. The government calculated the attempted loss directly connected to their own filings at $2,250,423.67. Investigators said the operation then expanded beyond claims associated with the four men’s businesses.
They Filed More Than 150 Returns for Other People
The defendants recruited other participants and electronically filed tax returns for them in exchange for a percentage of the resulting refunds. They also helped some participants establish limited liability companies and obtain employer identification numbers.
Federal authorities said the defendants submitted more than 150 Form 941 returns for other people. Those filings generated another $15,239,326.17 in combined attempted and actual losses.
Adding that amount to the losses associated with the defendants’ own businesses brought the total attempted and actual loss to federal taxpayers to $17,489,749.80.
A 20% Cut Surfaced During a Separate Wiretap Investigation
The tax investigation emerged from a separate federal operation known as Operation Sweet Silence, which targeted organized criminal activity in Columbus. Law enforcement noticed unusually large IRS deposits entering bank accounts belonging to Tommie Mullins, another Columbus man, while investigating that broader case.
Around the same time, court-authorized wiretaps captured Mullins discussing a 20% cut connected to a fraudulent Employee Retention Credit scheme, according to prosecutors. Mullins is not one of the four defendants sentenced in this tax case.
The suspicious deposits and intercepted conversation led investigators to consult with IRS agents and open a formal investigation into the pandemic tax filings. The Employee Retention Credit was created to provide relief to qualifying employers affected by the COVID-19 pandemic that continued paying employees.
The Prison Terms Range From 41 to 115 Months
U.S. District Judge Clay Land sentenced all four defendants on August 5. Williams received the longest sentence at 115 months, or nine years and seven months, in federal prison. He was also sentenced to five years of supervised release and ordered to pay $156,531.74 in restitution.
Upshaw received 96 months, or eight years, in prison, followed by five years of supervised release. His restitution obligation is $411,112.21. Swift was sentenced to 63 months, or five years and three months, in prison and five years of supervised release. He must pay $417,095.56 in restitution.
Sparks received 41 months, or three years and five months, followed by five years of supervised release. He was ordered to repay $311,072.55. Together, the restitution orders total $1,295,812.06, matching the amount the four defendants received through the 16 refund checks tied directly to their businesses.
Swift, Williams and Sparks pleaded guilty to one count of mail fraud on January 21. Upshaw pleaded guilty to the same offense on February 4. There is no parole in the federal prison system.
Businesses Should Review Any Questionable COVID Tax Credit Claims
The IRS continues to warn employers that Employee Retention Credit eligibility depends on the individual facts of the business. Employers should retain payroll records, Forms W-2, employment tax returns and documentation supporting the wages used to calculate any credit. They should review filings prepared by third parties rather than assuming the preparer is responsible for verifying the claim.
A business that previously submitted an ERC claim and now believes it was not eligible should consult a reputable tax professional. The IRS continues to offer a withdrawal process for certain claims that have not been paid or for refund checks that have not been cashed or deposited.
The IRS warns that improperly claimed credits can result in repayment obligations, interest and penalties. Withdrawal of a deliberately fraudulent claim does not prevent a possible criminal investigation or prosecution.