DES MOINES, IA – An Ottumwa man and woman were convicted of conspiring to defraud  the Internal Revenue Service by filing hundreds of fraudulent tax returns and of defrauding  applicants out of unemployment insurance benefits and the Iowa Workforce Development out of  benefits payments. 

On May 22, 2023, Thein Maung, 47, pleaded guilty to 49 fraud and tax charges. On June 2,  2023, a federal jury convicted Phyo Mi, 21, of 16 fraud charges. According to court documents and  evidence presented at Mi’s four-day trial, Maung and Mi ran a fraudulent tax-preparation business  out of their family’s Ottumwa home. In exchange for a cash fee, Maung and Mi prepared and filed their customers’ tax returns. Maung and Mi primarily catered to immigrants and refugees who  worked at meat-packing facilities in Iowa and who had little or no ability to read, write, or speak  English.  

Without their customers’ knowledge or approval, Maung and Mi included on their  customers’ federal tax returns, schedules, and forms, fraudulent items, such as false claims for  residential energy credits, business-expense deductions, or moving-expense deductions for members  of the United States Armed Forces. The effect of Maung and Mi including fraudulent items on the  tax documents was to increase the refunds their clients received and increase Maung and Mi’s  customer base. In all, from 2018 to 2022, Maung and Mi caused over 1600 tax returns to be filed  from their Ottumwa residence. The fraudulent tax returns claimed over $3.5 million in residential  energy credits. 

From 2018 to 2022, Maung and Mi received approximately over $200,000 in cash fees from  their customers. In addition, on their customers’ returns, Maung and Mi sometimes directed portions  of the fraudulent refunds be sent to financial institution accounts accessible to Maung and Mi. 

Maung and Mi also offered to help customers apply for unemployment benefits from Iowa  Workforce Development. Without their customers’ knowledge or approval, Maung and Mi  submitted materials to Iowa Workforce Development directing that their customers’ benefits  payments be sent to financial institution accounts that Maung and Mi had access to. From  October 2020 through March 2021, Maung and Mi directed nearly $100,000 in fraudulent unemployment insurance benefits payments be sent from Iowa Workforce Development to their  accounts, instead of to the eligible claimants. 

“This guilty verdict brings Phyo Mi and Thein Maung to justice. They created and  implemented this massive energy credit and false deduction scheme to fund their greed at the  expense of trusting taxpayers,” said Special Agent in Charge Thomas F. Murdock of the IRS  Criminal Investigation St. Louis Field Office. “This conviction should serve as notice that we will  vigorously prosecute those criminals who engage in any form of tax fraud.” 

Sentencings for both Maung and Mi are scheduled for September 27, 2023, in Des Moines,  before Chief United States District Court Judge Stephanie M. Rose. 

United States Attorney Richard D. Westphal of the Southern District of Iowa made the  announcement. 

The investigation was conducted by Internal Revenue Service Criminal Investigation and the  Ottumwa Police Department. Assistant United States Attorneys Kyle Essley and Laura Roan prosecuted the case.