Two plan to plead guilty in federal tax fraud case

Two of the four Knox County defendants indicted in October on federal charges of tax fraud have announced their intent to change their initial “not guilty” pleas.

Thirty-two-year-old Diana Hill and 59-year-old Patsy Carnes filed paperwork in U.S. District Court in London last week seeking a rearraignment in the case.

U.S. District Court Magistrate Judge Hanly A. Ingram granted the requests, setting Carnes’ rearraignment for Tuesday and Hill’s for Wednesday.

According to the indictment the defendants are accused of filing false income tax returns and cashing more than $125,000 in refund checks between Jan. 2011 and July 2012.

According to the indictments, Hill allegedly obtained the names Social Security numbers and other personal information from third parties, passing it along to co-defendants Billy Ray and Brian Hamilton.

The Hamiltons allegedly used the information provided to prepare multiple false, fictitious, and fraudulent individual income tax returns, which, according to the indictment, claimed tax refund payments.

According to the indictment, Carnes received the tax refund payments, depositing them and then distributing them to other members of the conspiracy and to third parties.

The indictment alleges that 29 returns were filed between Jan. 17, 2012 and May 1, 2012 seeking refunds in amounts ranging between $1,241 and $7,382.

The defendants each face up to 10 years in a prison and a fine of up to $250,000 if convicted of taking part in the conspiracy.

The case was presented to a federal grand jury following an investigation by the IRS and the U.S. Secret Service.
Billy Ray and Brian Hamilton are scheduled to go to trial on Feb. 22.

In addition to the conspiracy charge, Billy Ray and Brian Hamilton each face 30 counts of participating in a scheme to defraud the United State to obtain money by means of materially false and fraudulent pretenses, misrepresentations, transmitted and caused to be transmitted to the United States Treasury Department through its agency the Internal Revenue Service, and 10 counts of using the names, Social Security numbers and other personal identifying information of 10 different individuals in relation to the wire fraud alleged in previous charges.