Julia Chirkova
A tax preparer from Teaneck, New Jersey, has been sentenced to 12 years in federal prison and ordered to pay over $55 million in restitution for orchestrating what prosecutors have described as the largest COVID-19 tax relief fraud case ever prosecuted in the United States. Leon Haynes, 52, exploited pandemic relief programs designed to aid struggling businesses, filing over 1,900 fraudulent employment tax returns between 2020 and 2023, and illicitly seeking more than $170 million from the U.S. Treasury. The government ultimately disbursed over $55 million before the sophisticated scheme was uncovered.
The intricate fraud unraveled through a series of suspicious refund checks sent to unsuspecting clients, a stark example of which involved an HVAC contractor. In the spring of 2021, this contractor received three IRS refund checks totaling nearly $120,000, an amount far exceeding any expected refunds. Bewildered, he consulted his tax preparer, Leon Haynes. Instead of addressing the anomaly, Haynes advised the contractor and his spouse to destroy any undeposited checks. He further instructed the contractor to remain silent, demanding $10,000 for each check. Court records reveal Haynes’ alarming communication: “My friends, I have nothing at all to fear with what I’m doing, but don’t send those checks back to them; and if you already deposited them, just leave it and let god do his work, but if you didn’t deposit it yet, just take a lighter to it leave it at that and then I will amend everything and reverse it like it never happened, but I’m at a loss for words, but no matter what, I still love you guys forever and no hard feelings, just don’t stir up unnecessary s— by sending checks back is all.” This instruction, along with similar actions towards other clients, formed a crucial part of the evidence against Haynes.
A Systematic Exploitation of Crisis Relief
The Employee Retention Credit (ERC) and the Sick and Family Leave Credit, enacted by Congress in response to the economic devastation of the COVID-19 pandemic, were intended to help small businesses retain employees by providing significant tax credits. Haynes, operating a tax preparation business, recognized these programs as a lucrative opportunity for illicit gain. From November 2020, shortly after the programs’ authorization, to 2023, he systematically filed false quarterly tax returns. These fraudulent filings claimed credits for non-existent employees and fabricated payroll expenses, diverting desperately needed federal funds.
Prosecutors detailed that nearly every return filed by Haynes contained egregious misrepresentations. Claims frequently exceeded legal maximums, wages were reported multiple times, or both ERC and Sick and Family Leave credits were sought simultaneously for the same phantom employees. The initial appeal to clients was often disarmingly simple: the government was providing COVID-19 relief. However, the critical caveat – that businesses needed actual employees to qualify for these credits – was deliberately omitted.
Cases of Deception and Unwitting Participation
The impact of Haynes’ scheme extended to a diverse range of clients, some aware of the fraudulent nature of the claims and others entirely unaware. Two clients, a cosmetics business owner (Individual-1) and a construction contractor (Individual-2), were explicitly misled into believing they qualified for the credits. Haynes filed 15 fraudulent returns on their behalf, collected approximately $45,000 in fees, and, in a particularly egregious instance with the construction contractor, filed seven returns even after being informed the contractor had no employees.
The HVAC contractor, identified as Individual-3, became a victim through an earlier acquisition of his personal information. Haynes had obtained this information years prior while preparing routine income tax returns. Despite the contractor stating his business had no employees, Haynes proceeded to file four false returns without his knowledge. When the contractor expressed concern and a desire to return the funds, Haynes became agitated, discouraging any action and failing to amend the fraudulent filings as he had promised.
In another disturbing case, a client who had only a single, preliminary discussion with Haynes about potentially starting a trucking business – a venture that never materialized – had three false claims filed in their name. This client had never even discussed tax returns with Haynes.
Haynes’ Own Businesses Implicated
The fraud was not limited to client accounts; Haynes also filed dozens of false returns for his own diverse business interests. These included his tax preparation firm, a payroll management service, a car rental business, and a now-closed Mediterranean restaurant in Bogota, New Jersey. He claimed millions in credits for employees who, as he later admitted, never existed. His admission came during a voluntary meeting with federal investigators in February 2023, where he stated his businesses "only hired contractors, not employees, and did not pay them for time they did not work." Despite this confession, he proceeded to file at least three more fraudulent returns after this meeting.
Unraveling the Scheme and Official Reactions
The Social Security Administration began flagging discrepancies in Haynes’ reported wages as early as mid-2022. Letters were sent indicating that the wages reported to the IRS did not align with employee W-2 forms. Haynes acknowledged the inaccuracy of the reported compensation in his written responses but offered no substantive explanation for the discrepancies.
The U.S. Attorney’s Office for the District of New Jersey highlighted the severity of Haynes’ actions. U.S. Attorney Robert Frazer stated in a press release, "Pandemic relief programs were created to support Americans during a national crisis, but Haynes—a tax preparer entrusted to help people comply with the law—treated those programs as a personal cash machine. Our office will continue to pursue those who exploit relief programs and hold them accountable for stealing from the American people."
Haynes’ scheme generated substantial personal profit. He collected over $1.8 million in cash fees from clients, none of which were declared on his own tax returns, further compounding his criminal liability.
The investigation culminated in Haynes’ arrest in July 2023. Following a six-day jury trial in November 2025, he was convicted on 15 counts of filing false tax returns, one count of mail fraud, and two counts of tax evasion. His attorney declined to comment on the sentencing.
Broader Implications and Ongoing Enforcement
The case of Leon Haynes underscores the significant vulnerability of large-scale federal relief programs to fraudulent exploitation, particularly during times of national crisis. Tens of billions of dollars in pandemic-era tax relief claims have been identified by federal watchdogs as high-risk or potentially ineligible, a direct consequence of the expedited disbursement of aid.
IRS Commissioner Danny Werfel, speaking broadly about pandemic-era tax relief claims in 2024, noted the critical insights gained from program reviews. He stated, "The completion of this review provided the IRS with new insight into risky Employee Retention Credit activity and confirmed widespread concerns about a large number of improper claims." This sentiment reflects a broader governmental effort to identify and rectify abuses within these critical support systems. Enforcement efforts related to these pandemic relief programs are ongoing, with federal agencies continuing to investigate and prosecute individuals and entities that have engaged in fraudulent activities. The substantial restitution ordered in Haynes’ case signals the government’s commitment to recovering illicitly obtained funds and holding perpetrators accountable for defrauding the American taxpayer.
