Three Barred From Preparing Federal Tax Returns

A federal district court in Connecticut has permanently barred three state residents from preparing federal tax returns because of irregularities in their accounting, according to the U.S. Justice Department.

One of those residents, John Waszczak, of Meriden, scammed the federal government out of more than $24 million in tax revenues, the Justice Department said.

According to the government’s complaint, Waszczak operated a tax return business under the name H & J Tax Service in Meriden and prepared 9,638 returns from 2003 to 2006.

Many of those returns overstated expenses on customers’ IRS Schedule C filings or fabricated Schedule C businesses for customers, the complaint said.

A Schedule C is a report that shows business income and deductible expenses for a particular tax year.

Additionally, the government complaint alleges that Waszczak improperly deducted personal clothing and commuting expenses as a business expense and habitually included a $500 noncash charitable deduction on every Schedule A that he prepared because it doesn’t require the taxpayer to submit documentation to substantiate the deduction.

Waszczak also forged a pastor’s signature on a letter to substantiate a customer’s cash donations to a church even though the customer had not made those charitable donations, the government charged.

Based on the average actual tax revenue loss per examined return, the government estimates that it lost about $24.6 million.

Deowraj Buddhu and his daughter, Sunita Buddhu, both of Wethersfield, have also been barred from preparing federal tax returns. The Buddhu’s have operated several businesses including Paradise Consulting, Phoenix Consulting, and Lotus Consulting in Hartford and Wethersfield.

A federal court found that the Buddhu’s prepared federal income tax returns and amended federal income tax returns containing falsified or inflated deductions for their customers resulting in understatements of their customers’ tax liabilities.

Based on an IRS investigation, it was determined that the Buddhu’s prepared 2,090 tax returns in 2004 and 2005, and Sunita Buddhu, operating under the name Lotus Consulting, prepared 922 federal income tax returns for the tax year 2006.

The court also found that the Buddhu’s prepared federal income tax returns for their customers on which they listed false identification numbers for themselves.

Rockville Financial Gains

Rockville Financial, the holding company of Rockville Bank, reported a net income of $1.9 million for the first quarter of 2009, compared to a profit of $1.2 million in the year-ago period, a 65.9 percent increase.

The net income hike primarily resulted from an increase in net interest income of $1.5 million, or 15.3 percent.

During the quarter the banking company’s total assets increased $36.8 million, or 2.4 percent, to $1.6 billion, from $1.5 billion at the end of December.

The bank also increased its allowance for loan losses to $12.9 million from $12.6 million at the end of December.

New England Bancshares Loses

New England Bancshares, the holding company for Enfield Federal Savings and Loan Association and Valley Bank, reported a net loss of $1 million during the first quarter of 2009, compared to a net income of $524,000 in the year ago period.

David J. O’Connor, the company’s president and CEO, said the bank’s “results reflect the stresses affecting the economy.”

“We increased our allowance for loan losses to reflect the difficulties faced by our borrowers and as with many institutions, an impairment charge on securities had a significant impact on our operating results,” O’Connor said.

“Our core earnings, and in particular net interest income, remains solid,” he added.

The company recorded a $2.9 million provision for loan losses during the fiscal year ending March 31, compared to $307,000 in the prior fiscal year.

The banking company also recorded a $247,000 expense for severance benefits in conjunction with the merger of the company’s two banking subsidiaries.

Despite the losses, total assets, net loans and deposits increased at the bank during the quarter.

Greg Bordonaro is a Hartford Business Journal staff writer.