Total Loss Exceeds $1.3 Million
Portland, Ore. – Harry Nels Kyllo, 63, of Portland, Oregon, was sentenced Wednesday by U.S. District Court Judge Garr M. King to 51 months imprisonment and 36 months supervised release following his prison sentence. In January of this year, Kyllo pled guilty to one count each of Mail Fraud, Tax Evasion, and Impersonation of an IRS Employee. Kyllo was a Certified Public Accountant until his license was revoked by the Oregon State Board of Accountancy on September 30, 2003.
At the plea hearing, Kyllo admitted that from about 2000 to 2003, he devised a scheme to defraud some of his tax preparation clients, the IRS, and the Oregon Department of Revenue. Kyllo instructed his clients to leave the payee line blank on the checks they provided to him to pay their tax liabilities. He then fraudulently endorsed the checks and deposited the proceeds into one of his own bank accounts. Kyllo stated in his plea agreement that the stolen money was used to operate his business.
“The fine cooperative efforts of the Portland Police Bureau, the Internal Revenue Service – Criminal Investigation, and the Treasury Inspector General for Tax Administration in investigating this matter resulted in a very successful outcome,” stated U.S. Attorney Karin Immergut. “This case effected several victims, including some who were elderly and extremely vulnerable.”
According to court documents, Kyllo told his clients that he hand-delivered their tax returns to the IRS in Portland, when in fact, he did not file their returns at all. When the IRS sent notices to Kyllo’s clients concerning unpaid taxes or delinquent tax returns, he created false letters, purporting to be from the IRS, stating that the problem had been resolved. Kyllo then mailed these false letters to his clients, delaying the discovery of his thefts.
Kyllo also prepared fraudulent client tax returns by falsely reducing income or inflating their deductions in order to reduce the reported tax liability to zero, and filed these returns with the IRS. This in turn, stopped the IRS from sending notices to his clients.
Kyllo billed and collected fees for his services based on false representations to clients that he had properly handled their tax payments. As a result of his scheme, Kyllo stole tax payments totaling $1,322,582 from 36 victims. In turn, the Internal Revenue Service and the Oregon Department of Revenue suffered lost tax revenue because of the thefts.
As a result of Kyllo’s thefts, some of his victims reported health problems, while others reported the need to use savings, retirement funds, funds from trusts set aside for others, and second mortgages on property to raise the funds necessary to pay the taxes they still owed after the theft. Individual victim losses ranged from several thousand dollars up to $390,000.
This case was investigated by the Portland Police Bureau, the Internal Revenue Service – Criminal Investigation and the Treasury Inspector General for Tax Administration. It was prosecuted by Assistant United States Attorney Lance Caldwell.