Second Income Tax Preparer Jailed in State Tax Scheme

Date: 3/15/2004

RALEIGH – The former owner of the H&R Block in Chadbourn pleaded guilty today in Wake County District Court to felony charges filed by the North Carolina Department of Revenue.

Joseph T. Cholette, Jr., 33, of 101 Breeland Court, Wilmington, pleaded guilty to four counts of aiding or assisting in the preparation of false North Carolina individual income tax returns and four counts of forgery.

The state’s evidence showed that Cholette and his former office manager, Timothy Rivenbark, concocted a plan to defraud the federal and state governments. They prepared individual income tax returns for clients and informed them how much their refunds would be. Without the clients’ knowledge, they added false business losses to the returns to increase the amount of the refunds. The returns were electronically filed and the refunds were mailed to the address listed on the returns – post office boxes controlled by Cholette or Rivenbark. Cholette would then forge his client’s names on the refund check and deposit them into the H&R Block account. Next, he would write the client a check for the original amount they were expecting and split the difference with Rivenbark. The state’s investigation identified 26 fraudulent returns totaling $19,155 resulting from this scheme.

Wake County District Court Judge Robert Rader sentenced Cholette to four, consecutive six-month minimum, eight-month maximum prison terms. The sentences were suspended and he was placed on supervised probation for 60 months. He was ordered to serve a 30-day active sentence as a special condition of probation. He must also perform 50 hours of community service, pay a $500 criminal fine and $9,577 in restitution to the North Carolina Department of Revenue.

On March 4, 2004, Cholette’s co-defendant, Timothy Rivenbark pleaded guilty to three
counts of aiding or assisting in the preparation of false North Carolina individual income tax returns and three counts of attempting to obtain property by false pretenses. He was sentenced to three, consecutive eight-month minimum, 10-month maximum prison terms. The sentences were suspended and he was placed on supervised probation for 36 months. He was ordered to serve a 20-day active sentence as a special condition of probation. He must also pay a $1,500 criminal fine and $9,577 in restitution to the North Carolina Department of Revenue.

The charges against Cholette and Rivenbark resulted from an investigation by the North Carolina Department of Revenue’s Criminal Investigations Division. H&R Block fully cooperated in this investigation and has closed the Chadbourn Office.

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