Husband and Wife Plead Guilty to Conspiracy in Relation to Fraudulent Tax Filings of Maryland Auto Body Repair Shop Ercin Kalender, 60, and Lizette Kalender, 44, of Alexandria, VA, pleaded guilty Feb. 3 to conspiracy in relation to tax fraud within their corporate filings and business taxes. As part of their plea agreements, the Kalenders have been ordered to pay $2.2 million in restitution. The guilty plea was announced by U.S. Attorney for the District of Maryland Erek L. Barron and Special Agent in Charge Darrell J. Waldon of the Internal Revenue Service-Criminal Investigation, Washington, D.C. Field Office. According to their guilty pleas, Ercin Kalender owned and operated Butch’s, a very successful Capital Heights, MD, auto body shop. Lizette Kalender worked at the auto body shop as a manager and bookkeeper. In that capacity, she handled tax reporting matters and regularly worked with an outside tax preparation and accounting agency, which prepared the taxes for Butch’s and the personal tax returns for the Kal-
enders. For the fiscal tax years of 2015, 2016, 2017 and 2018, Butch’s reported its income and expenses to the federal government by filing Forms 1120 with the IRS. During this period, the Kalenders conspired together to include materially false information on those forms, including a significantly lower report of gross and taxable incomes. The Kalenders jointly worked to divert revenue from Butch’s and avoid significant revenues being deposited into Butch’s corporate bank accounts and reported to the IRS. As part of the conspiracy, the Kalenders kept two sets of financial records for Butch’s, one that reported the actual revenues and profits of the business and a second set that reported lower figures, which were used for tax purposes. The Kalenders’ conspiracy to submit false tax returns also involved cashing checks, received at Butch’s at a Prince George’s County check
cashing facility. The checks cashed there were not reported on Butch’s tax returns and resulted in the underreporting of Butch’s annual income for fiscal years 2015, 2016, 2017 and 2018 by more than $6.6 million. The corresponding tax loss to the IRS for the four years was $2,219,602. As stated in their plea agreements, in August 2018, the Kalendars sought to sell Butch’s. As part of the investigation, an undercover federal agent posed as a potential buyer and had contact with the Kalenders. During their conversations, Ercin and Lizette explained the profitability of Butch’s and revealed their practices of the underreporting of revenues and income from Butch’s. During one conversation, while Lizette was present, Ercin informed the uncover agent he had a regular practice of taking checks intended to pay for auto body repair work and cashing them at the check cashing facility. Some of the checks were made payable to Butch’s while
other checks were written to Butch’s customers, or jointly payable to Butch’s and the customers. Further, Ercin explained while Butch’s filed tax returns showed $2.2 million in gross receipts, the actual gross receipts were closer to $3.1 million, $4.2 million and $3.9 million for the fiscal years for 2015, 2016 and 2017, respectively. He also said his father had done this for years before he had taken over Butch’s operations and his father used the same business to cash checks for 30-35 years. Ercin continued to explain the conspiracy by informing the undercover agent he regularly cashed $50,000 to $60,000 at a time in offthe-books checks at the check cashing facility but estimated he had reduced the amounts in recent years to approximately $30,000 to $35,000 cashed per visit. Ercin also informed the agent Lizette also reported sizeable W-2 income, which helped them evade scrutiny by the IRS.
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