UPDATE: Grayson woman faces Oct. 18 trial in $9.7 million IRS fraud case
UPDATE POSTED SEPT. 20, 2021
ASHLAND, Ky. (WTVQ) – A federal judge denied Monday a woman’s motion that a federal tax fraud indictment because of faulty language and because she didn’t all under the laws cited by prosecutors.
Karen Denise Smith will stand trial Oct. 18 in U.S. District Court in Ashland as originally scheduled following Monday’s ruling.
The trial is scheduled for two and a half days. A total of 50 jurors will be called for the jury pool, according to court records.
Update posted August 2, 2021:
ASHLAND, Ky. (WTVQ) – A Grayson woman pleaded not guilty on Monday in U.S. District Court in Ashland during her first court appearance following her indictment on charges she filed a false tax return to get a nearly $10 million refund, according to federal court documents.
Karen Denise Smith told the court she wants to represent herself in her proceedings. The court appointed Jeremy L. Clark as stand-by counsel to advise Smith as needed going forward, according to the court documents.
Smith’s indictment says she filed the tax return in January 2020 to claim a refund for a trust. According to court records, Smith is the agent for the trust.
The Internal Revenue Service (IRS) issued her a refund of $9,723,822 based on her return, but the government seized the money as part of its investigation, according to court records.
Smith faces a charge of wire fraud in the case because the alleged fraudulent return was filed electronically, according to court documents.
Smith, who is also known as Karen Hable Smith and Karen Denise Hable, is scheduled for a Pretrial Conference on September 20, 2021, in federal court in Ashland. Her trial is scheduled for October 18, 2021. Three days have been set aside for the trial, according to court records.
Original story below from July 19, 2021:
GRAYSON, Ky. (WTVQ) – A woman in Grayson allegedly filed a false tax return to get a refund of almost $10 million and has been charged by a federal grand jury.
The Internal Revenue Service issued a refund of $9,723,822 based on the return, but the government seized the money as part of its investigation, according to court records.
Karen Denise Smith faces a charge of wire fraud in the case. The charge is based on filing the alleged fraudulent return electronically.
Smith filed the tax return in January 2020 to claim a refund for a trust. According to court records, she is the agent for the trust.
The return claimed the trust had a net operating loss of $10 million in tax year 2018 and claimed a refund of $9,723,822 after payment of an alternative minimum tax, according to a affidavit from Terrance Brown, a special agent with the Internal Revenue Service.
A review of IRS records showed the return was “wholly fictitious,” Brown said.
In an earlier court filing contesting the warrant to seize the refund, Smith said it was possible she failed to file a required form with the return, but believed the payment was justified.
“No fraud was ever contemplated or perceived by Smith,” she said in the document.
Smith, who is also known as Karen Hable Smith and Karen Denise Hable, faces up to 20 years in prison if convicted. She goes before U.S. District Court in Ashland on Aug. 2.