On September 29, 2023, Thein Maung, 47, of Ottumwa, was sentenced to twelve years in prison after pleading guilty to forty-nine fraud- and tax-related charges. Phyo Mi, 21, of Ottumwa, was sentenced to nine years in prison after a jury convicted her of sixteen fraud-related charges. In all, Maung and Mi’s fraud resulted in nearly $4 million in losses to the Internal Revenue Service, Iowa Workforce Development, and numerous Iowa citizens.
According to public court documents and evidence presented at trial, for several years, Maung and Mi ran a fraudulent tax-preparation business out of their family’s Ottumwa home. In exchange for a cash fee, Maung and Mi would prepare and file their customers’ tax returns. Maung and Mi primarily catered to immigrants and refugees who worked at meat-packing facilities in Iowa and who had little or no ability to read, write, or speak English.
Without their customers’ knowledge or approval, Maung and Mi included fraudulent items on their customers’ federal tax returns, like false claims for residential energy credits, business-expense deductions, or moving-expense deductions for members of the United States Armed Forces. The effect of Maung and Mi including fraudulent items on the tax documents was to increase the refunds their clients received and increase Maung and Mi’s customer base. In all, from 2018 to 2022, Maung and Mi caused over 1600 tax returns to be filed from their residence. Those returns claimed over $3.5 million in fraudulent residential energy credits.
It is estimated that from 2018 to 2022, Maung and Mi received over $200,000 in cash fees from their customers. In addition, on their customers’ returns, Maung and Mi sometimes directed that portions of the fraudulent refunds be sent to financial institution accounts accessible to Maung and Mi. As a result, Maung and Mi obtained nearly $50,000 in fraudulent tax refunds.
Maung and Mi also offered to help customers with applying for unemployment benefits from Iowa Workforce Development. Without their customers’ knowledge or approval, Maung and Mi submitted materials to Iowa Workforce Development directing that their customers’ benefits payments be sent to financial institution accounts that Maung and Mi had access to. Maung and Mi obtained nearly $70,000 in fraudulent unemployment insurance benefits payments be sent from Iowa Workforce Development to their accounts, instead of to eligible claimants.
At sentencing, Chief United States District Court Judge Stephanie M. Rose described Maung and Mi’s fraud as being elaborate and extensive, involving layers of subterfuge, and victimizing hundreds of vulnerable immigrants and refugees with little education and limited English fluency.
Following their prison terms, Maung and Mi will be on supervised release for three years. There is no parole in the federal system.
“This sentence should send a strong message to any return preparers who are looking to cheat innocent taxpayers and the U.S. government that a prison cell awaits them,” said Special Agent in Charge Thomas F. Murdock, IRS Criminal Investigation (CI), St. Louis Field Office. “Maung and Mi preyed on people who were vulnerable. CI special agents do not take this kind of fraud lightly. Our law enforcement partners worked diligently to help us bring these two to justice.”
United States Attorney Richard D. Westphal of the Southern District of Iowa made the announcement.
The investigation was conducted by Internal Revenue Service Criminal Investigation and the Ottumwa Police Department. Assistant U.S. Attorneys Kyle Essley and Laura Roan prosecuted the case.