A “Sovereign Citizen” was sentenced to five years in federal prison for conspiracy to submit false tax returns and defraud the U.S. Treasury, substantive counts of aiding in the preparation of false tax returns, and filing a false lien against the U.S. Attorney for the Northern District of Florida, followed by a consecutive four-year sentence for failure to appear.
Judy Grace Sellers was also ordered to pay restitution of $23,264.08, representing the unrecovered loss from the tax counts.
Sellers was originally indicted in December 2014.
Her indictment was superseded to add a charge for absconding while on bond in February 2024. A federal jury convicted her on all counts on March 1, 2024.
According to evidence presented at trial, in 2008 and 2009, Sellers operated a website called commercialredemption.com on which she promoted the use of IRS Form 1099-OID to commit tax fraud.
Sellers identified as a “sovereign citizen” and perpetuated the false premise that the U.S. Treasury maintains secret accounts attributed to every U.S. citizen, which can be drawn on by filing a series of bogus documents with the Treasury and other government entities.
As part of this fraud scheme, Sellers also promoted the use of IRS Form 1099-OID to fraudulently report to the IRS debts – including mortgages, student loans, credit card debts, and court judgments – as income, along with 100% withholdings of that “income” in informational returns to overcome the IRS’s internal controls and induce the IRS to issue refunds that were not owed.
The proper use of the 1099-OID form is for companies such as brokers to report to the IRS income received by the purchaser of a discounted security. Sellers personally created and submitted to the IRS 1099-OID forms that were fraudulent on their face.
Read: The Heartbreaking Murder Of A 1-Year-Old Ohio Boy At The Hands Of Mom’s Boyfriend
After submitting the fraudulent 1099-OID forms, Sellers’s co-conspirators prepared and submitted fraudulent returns seeking massive refunds, in one case exceeding half a million dollars on a single return.
All these refunds were based on non-existent 1099-OID “income” and withholdings. The conspiracy resulted in the submission of at least 22 returns requesting fraudulent refunds totaling at least $3.4 million from the IRS.
In 2011, the U.S. Attorney’s Office for the Northern District of Florida filed a civil action to enjoin Sellers from promoting her fraudulent scheme on her commercialredemption.com website. In retaliation, Sellers filed a false lien against the then-U.S. Attorney and a Department of Justice tax attorney who was leading the civil action.
In 2014, Sellers was indicted and arrested on charges of tax fraud and filing a false lien. In January 2015, she was placed on house arrest with a GPS ankle monitor pending trial.
Read: “Murderous Rampage” Colorado Man Breaks Into Ex-Girlfriend’s Home And Murders 4 People
In May 2015, Sellers was granted permission by her probation officer to leave her home to get her hair done in preparation for her pretrial hearing a few days later. The next day, Sellers cut off her GPS ankle monitor, flung it on the side of the highway, and absconded.
Sellers was located more than eight and a half years later in New Mexico. Prior to this, Sellers had pleaded guilty to failing to appear for her sentencing in her previous federal counterfeiting case in 2002. In her previous case, Sellers was apprehended living under a false name in Mississippi.
“Today’s sentencing emphasizes our resolve in pursuing those who attempt to corrupt our nation’s tax system,” said Lani Rosado-Espinal, Acting Special Agent in Charge, CI Tampa Field Office. “No one is above the law in this great nation. Our law enforcement partners are just as committed as we are to ensuring that those seeking to live above the law are brought to justice.”
This case was investigated by IRS – Criminal Investigation, the Federal Bureau of Investigation, and the Treasury Inspector General for Tax Administration, with assistance from the U.S. Marshals Service. It was prosecuted by Assistant United States Attorneys Laura Cofer Taylor and Kelly Milliron.
Help support the Tampa Free Press by making any small donation by clicking here.
Android Users, Click To Download The Tampa Free Press App And Never Miss A Story. Follow Us On Facebook and Twitter. Sign up for our free newsletter.