Firefighters, police, paramedics targeted in fraudulent tax refund scheme

Channel 2's Investigative Reporter Jodie Fleischer explains how big of a problem this has become.

FULTON COUNTY, Ga. — For decades, Hapeville City Councilwoman Ruth Barr grew a booming tax preparer business, serving thousands of metro-Atlanta clients from all walks of life.

Now, Barr and 7,704 of those clients are the focus of one of Georgia's largest tax fraud investigations.

"I wouldn't be able to live with myself knowing I was doing that to people," said retired firefighter Jason Montgomery.

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Montgomery first heard about Barr from a fellow firefighter when he worked for the East Point Fire Department.

He said Barr was well-known as the tax lady on the south side who always seemed to get healthy refunds for her clients.

"Word of mouth spreads fast in the fire, police, EMS business," said Montgomery. "I heard that she was really good."

Firefighting is a profession where trust in co-workers means the difference between life and death. They share everything, so why not a recommendation for a tax preparer?

"It wasn't anything shady," Montgomery said. "It wasn't everybody saying, 'Hey, go to her, she'll get you back all this money.'"

Like many of his colleagues, he thought Barr was an accountant.

She isn't.

He thought she specialized in public safety deductions.

"They've all said pretty much the same thing, that she kind of put herself out as an expert," said Josh Waites, chief investigator for Georgia's Department of Revenue.

Waites has a team of investigators combing through 11,404 tax returns which came out of Barr's business in the past three years.

It operated under the names B&B Accounting and Tax Service and, more recently, Accounting and Tax Services of Hapeville, registered to Barr's daughter, Ann Cruz, who is also a tax preparer and also under investigation.

In early May, after WSB-TV and The Atlanta Journal Constitution inquired about Barr's history of defrauding clients, investigators hauled away an entire truck full of evidence from her office in what's become one of the state's largest tax preparer fraud cases ever.

BOGUS DEDUCTIONS, INFLATED REFUNDS

Many of the returns reviewed so far, including Montgomery's, contain thousands of dollars in deductions for meals while on the job with no documentation.

After recently taking a close look at his own returns, Montgomery spotted business expenses he didn't really have.

"That's just outrageous! I have no idea what's that for. I don't own a business," Montgomery said.

State investigators said more than 7,700 taxpayers will get letters in the mail in June demanding that they prove the deductions they claimed during tax years 2013, 2014 and 2015, or pay the money back.

The refunds under scrutiny total $7.6 million, and an early audit of a sampling indicated 80 percent were suspicious.

"Once we started asking them about specific information on their return, we kind of realized most of the stuff is made up," Waites said.

Waites said based on initial sampling, the fraudulent refunds could top $6 million on the state level, with additional millions owed to the IRS if the feds decide to join the case.

"It makes me sick, honestly," said Ashley Shoemaker, who lives in Newnan and works as a veterinarian in Peachtree City.

Shoemaker was used to getting a refund while doing her taxes herself.

So two years ago, when Turbo Tax said she owed thousands of dollars, she wanted a second opinion.

A coworker recommended Ruth Barr.

"My coworker said, 'She's great, go see her,'” Shoemaker said. "And sure enough, she got us $4,200 back."

Now, the new mom worries her family will have to pay it all back, and then some, if they really owed money to begin with.

"It's going to be a big strain on our family," Shoemaker said. "I would like to see her go to jail. And then pay us back."

The family paid Barr $440 to do their taxes those two years, which included the same telltale business expenses.

"Looking back on it, maybe I should have researched that more, but I trusted her," said Shoemaker.

LOST TRUST, LOST REFUNDS

Montgomery lost his trust in Barr back in 2012 after she allegedly stole his tax refund.

He didn't have a bank account at the time, so Barr deposited the nearly $10,000 refund into her own business account.

She was supposed to write him a check when the money came in but never did, so he filed a lawsuit.

"She never even showed up to court," Montgomery said. "I mean, that's like a slap in the face. That's like saying I don't care."

Even after he won a court judgment against Barr, he said she never paid a dime.

"She took money away from my family, away from my three children," he said.

Records showed Montgomery isn't alone.

In a 2013 report filed with Griffin police, Barr's former client, Melissa Hill, claimed Barr stole her $5,005 tax refund as well.

When she checked her tax return, she noticed Barr's account information listed for the deposit.

Griffin police simply referred Hill back to the IRS, which eventually issued her a new check.

She is unclear whether Barr was ever made to return the money she received.

"I don't know how she gets away with it, how she lives with herself," said Montgomery.

He said he's hoping Barr won't get away this time, especially with so many public safety workers in her line of fire.

Many hold two jobs just to make ends meet and don't have thousands of dollars lying around to pay back.

"The person that sat behind that desk and did your taxes was a sweet woman who you trusted," Montgomery said. "But the person she turned out to be was just pure evil."

INFORMATION FOR VICTIMS

Investigators urge anyone who used Barr or her employees' services in the past three years to email a special address set up for this case: dor.osi@dor.ga.gov

Watch our earlier stories to see how Barr responded to questions about her past and the new trouble for tax clients.

Statement from Steve Adkins, attorney for Ruth Barr:

“Ms. Barr's position is that she denies any wrongdoing. She denies that it is even possible for 80 percent of her returns filed to be suspicious as a result of invalid deductions because she doesn't itemize that many tax returns and therefore they wouldn't even have deductions.

With regard to the public safety employees- she doesn't victimize them, she specializes in them. She simply knows and utilizes a lot more valid deductions for them than most accountants, based on simple criteria such as whether they work overtime.”