On Friday, June 25, 2026, a federal judge in the Eastern District of New York sentenced Tiffany Williams, 43, of Brooklyn, to 36 months in federal prison for her central role in one of the largest Employee Retention Credit (ERC) fraud schemes ever prosecuted. Williams and her co-conspirators filed more than 8,000 false tax returns seeking more than $600 million in fraudulent COVID-19 pandemic relief credits — causing an actual tax loss to the United States Treasury of approximately $45 million.
The case was announced by Assistant Attorney General Colin M. McDonald of the Justice Department's National Fraud Enforcement Division and U.S. Attorney Joseph Nocella, Jr. for the Eastern District of New York. IRS Criminal Investigation (IRS-CI), the U.S. Postal Inspection Service, and Homeland Security Investigations jointly investigated the scheme. The prosecution was handled by Trial Attorney Richard J. Kelley of the DOJ Tax Section and Assistant U.S. Attorneys Adam Toporovsky and James Simmons from the Eastern District of New York.
If you or your business have received an inquiry from IRS Criminal Investigation or any federal law enforcement agency related to ERC claims, this sentencing sends an unambiguous message: the government is not done with ERC enforcement, and it is pursuing preparers, promoters, and participants with full criminal charging authority.
The Scheme: 8,000 False Returns and $600 Million in Fraudulent Credits
According to court documents and statements made at sentencing, from November 2021 through June 2023, Tiffany Williams conspired with others to file thousands of fraudulent tax returns on behalf of clients. The returns falsely claimed entitlement to two specific COVID-19 pandemic relief credits:
- Employee Retention Credit (ERC) — a refundable payroll tax credit under the CARES Act designed for employers whose businesses were fully or partially suspended by government orders, or who experienced significant revenue declines during the pandemic.
- Paid Sick and Family Leave Credit — a separate COVID-era credit for employers who provided qualifying paid leave to employees.
The fraud was straightforward in design but vast in scale. Williams and her co-conspirators prepared and filed returns for clients who either did not qualify for these credits or whose qualifying credit amounts were fabricated or grossly inflated. In total, the scheme sought more than $600 million in credits — though the government ultimately recouped most of it before it was disbursed. The actual dollar loss sustained by the U.S. Treasury was approximately $45 million, a figure that still anchored Williams's Sentencing Guidelines calculation and drove a meaningful custodial term.
Williams previously pleaded guilty to one count of wire fraud under 18 U.S.C. § 1343. The government did not separately charge Williams under the Internal Revenue Code — a strategic choice that reflects how federal prosecutors now routinely layer wire fraud and mail fraud charges onto ERC schemes to maximize sentencing exposure and avoid technical defenses tied specifically to tax willfulness. The maximum penalty for a single wire fraud count is 20 years; Williams's 36-month sentence reflects a significant downward departure from the Guidelines range, likely reflecting her cooperation and guilty plea.
What Is the ERC — and Why It Became a Fraud Magnet
The Employee Retention Credit was enacted in March 2020 under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and significantly expanded by subsequent legislation. At its peak, eligible employers could claim up to $26,000 per employee in refundable credits — making it one of the largest business tax relief programs in American history. Because the credit was refundable (meaning it could generate a cash payment to the employer even in excess of taxes owed), and because the IRS's verification infrastructure was limited relative to the volume of claims, the ERC became a primary target for fraud by tax preparers, promoters, and outright criminals.
By the time the IRS declared a moratorium on processing new ERC claims in September 2023, the program had been plagued by tens of billions of dollars in questionable or fraudulent claims. The IRS and DOJ have been working through those claims aggressively since, and criminal prosecutions like Williams's are the result. For comprehensive guidance on ERC-related criminal exposure, visit our dedicated IRS ERC Fraud Defense page.
Criminal Analysis: Badges of Fraud and the Multi-Agency Investigation
From a criminal tax defense perspective, this case illustrates nearly every badge of fraud that IRS Criminal Investigation uses to distinguish willful criminal conduct from negligent or mistaken tax filing:
- Volume of returns: Filing more than 8,000 false returns over roughly 20 months is not an accounting error. The sheer volume indicates systematic, deliberate conduct — not isolated mistakes.
- Pattern of fictitious eligibility: The returns falsely claimed credits for clients who either did not qualify or whose qualifying amounts were invented. This indicates that the preparer knew the claims were baseless.
- Financial benefit to the preparer: Return preparers who file fraudulent refund claims typically take a percentage of the fraudulent refund — creating a direct financial incentive to maximize false claims. The DOJ's reference to co-conspirators suggests a fee-splitting arrangement.
- Multi-agency investigation: The joint involvement of IRS-CI, U.S. Postal Inspection Service, and Homeland Security Investigations signals that the government identified overlapping criminal conduct — likely including money laundering, identity fraud, or use of the mail in furtherance of the scheme.
- Extended duration: The scheme ran for approximately 20 months, from November 2021 to June 2023, with no voluntary cessation. This eliminates any argument that the defendant attempted to correct course.
The multi-agency character of this investigation is particularly significant. When IRS-CI opens a case, it typically conducts what is called an administrative investigation — gathering evidence through summons, interviews, and financial records. The involvement of Postal Inspection (which investigates wire/mail fraud) and HSI (which investigates financial crimes with national security dimensions) suggests that investigators had detected significant financial flows beyond the original ERC claims. This is often the point at which what began as a tax fraud case becomes a broader financial crime prosecution. To understand how these investigations develop, read more about IRS grand jury subpoenas and what they mean for targets and witnesses.
Wire Fraud vs. Tax Fraud: Why Prosecutors Chose 18 U.S.C. § 1343
Williams was charged and convicted of wire fraud, not tax evasion under 26 U.S.C. § 7201, aiding and assisting in false returns under 26 U.S.C. § 7206(2), or filing false claims under 18 U.S.C. § 287. This is increasingly common in ERC enforcement cases. Here is why it matters:
- Wire fraud requires proof that the defendant knowingly devised a scheme to defraud and used wire communications (including electronic filing) in furtherance of it. It does not require proving willfulness in the technical tax sense established by the Supreme Court in Cheek v. United States.
- Wire fraud carries a 20-year maximum — far higher than the 5-year maximum under § 7201 or the 3-year maximum under § 7206. This gives prosecutors significant leverage in plea negotiations.
- Wire fraud charges can also support forfeiture and restitution claims more easily than traditional tax charges.
For any preparer or business owner under investigation for ERC-related claims, the critical takeaway is this: the government is not limited to charging you under the Internal Revenue Code. If it can build a wire fraud or mail fraud case — and the electronic filing infrastructure of the ERC program makes that straightforward — it will do so.
What Early Criminal Tax Counsel Could Have Changed
The sentencing of Tiffany Williams raises an important question for tax professionals, return preparers, and business owners who may have filed questionable ERC claims: at what point does intervention still matter?
In cases like this, the answer is: earlier is almost always better, and it is rarely too late to call counsel before speaking to agents. Here is what the trajectory of criminal tax defense looks like:
- Pre-investigation: If a preparer recognized that ERC claims were questionable and sought counsel before IRS-CI opened its file, voluntary disclosure to the IRS could have been an option — allowing for civil resolution of the liability with dramatically reduced criminal exposure.
- Administrative investigation stage: Once IRS-CI opens an administrative investigation, targets and witnesses should not speak to special agents without defense counsel present. A visit from an IRS special agent is a signal that criminal prosecution is being actively considered.
- Grand jury stage: Receipt of a grand jury subpoena for documents or testimony means the investigation has advanced to a formal criminal proceeding. At this stage, a skilled criminal tax attorney can often negotiate a cooperation agreement that significantly reduces the ultimate sentence — as Williams's 36-month sentence (well below the Guidelines range for a $45 million loss) appears to reflect.
- Post-indictment: Even after indictment, early cooperation and a guilty plea can still generate a meaningful sentencing reduction, as this case illustrates.
For those who filed ERC claims through a third-party promoter or preparer and are now uncertain whether those claims were legitimate, consulting a criminal tax defense attorney confidentially — before any government contact — remains the single most important step you can take to protect yourself.
The Broader ERC Criminal Enforcement Landscape
The Williams sentencing is one of dozens of criminal prosecutions arising from the ERC program. The DOJ and IRS have made clear that ERC criminal enforcement is a sustained priority, not a temporary initiative. Preparers who filed false ERC returns are being identified through IRS data matching, whistleblower tips, and referrals from the Small Business Administration's Inspector General. Business owners who received fraudulent ERC refunds are being pursued for both civil repayment and, in egregious cases, criminal prosecution.
If you are a business owner who received ERC funds based on a preparer's advice and you are now questioning whether the claims were valid, early legal counsel is critical. The IRS has an ERC voluntary disclosure program — but its windows are limited and its terms tightened as enforcement escalates. Act before you receive a notice, not after.
Contact Brightside Tax Relief: Confidential Criminal Tax Defense
If you are under investigation, have received a notice from IRS Criminal Investigation, been contacted by a federal agent, received a grand jury subpoena, or are concerned about ERC or other tax credit claims you filed or received, do not speak to federal agents without an attorney present. Anything you say can and will be used against you in a criminal proceeding.
Contact Brightside Tax Relief today for a confidential consultation. Our criminal tax defense team handles IRS-CI investigations, grand jury matters, voluntary disclosure, and federal criminal tax prosecutions nationwide. Your first call is protected by attorney-client privilege. Do not wait until charges are filed — the time to act is now.
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