Detroit tax preparer pleads guilty in $7 million IRS refund fraud scheme

A Detroit man pleaded guilty to making a false claim in connection with a scheme involving more than $7 million in fraudulent refund claims submitted to the Internal Revenue Service, according to the Justice Department.

Rodney Underwood admitted to preparing and filing more than 200 nearly identical false tax returns on behalf of clients in Detroit, prosecutors said. According to court documents and statements made in court, Underwood “ghost prepared” the returns — meaning he left the paid preparer section blank so the filings would appear to have been prepared by the taxpayers themselves.

On each return, Underwood reported false dividend income and withholding amounts to generate refunds his clients were not entitled to receive, the Justice Department said. He also failed to report the fees he collected through the scheme as income on his individual tax returns, according to court documents.

In total, the false returns fraudulently claimed more than $7 million in refunds and caused an actual loss to the government of approximately $6.2 million, prosecutors said.

“Filing false returns isn’t a shortcut — it’s pure theft,” said Assistant Attorney General Colin M. McDonald of the Justice Department’s National Fraud Enforcement Division. “Fraudulent refunds steal millions from Americans who play by the rules, and we will pursue those who willfully cheat the tax system without fear or favor.”

Underwood is scheduled to be sentenced Jan. 6, 2027, and faces a maximum penalty of five years in prison, the Justice Department said. A federal district court judge will determine his sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

IRS Criminal Investigation is investigating the case. Trial Attorneys Shawn Noud and Alexis Hughes of the National Fraud Enforcement Division’s Tax Section are prosecuting it.