Detroit man admitted preparing false returns that generated millions in claims.
A Detroit man has pleaded guilty to taking part in a tax fraud scheme that resulted in more than $7 million in false refund claims, according to the U.S. Department of Justice (DOJ). Rodney Underwood entered his guilty plea after federal investigators found that he prepared more than 200 false tax returns for clients in the Detroit area. The returns were submitted to the Internal Revenue Service with information designed to make the clients appear eligible for refunds they had not actually earned.
Court records show that the Detroit man prepared the returns in a way that made them appear to have been completed by the taxpayers themselves. The paid preparer section was left blank, a practice known as “ghost preparing.” This allowed the returns to appear self-prepared even though Underwood had completed them for the clients. The scheme involved tax returns from people in different parts of Detroit, according to the Department of Justice.
The false returns included made-up amounts for dividend income and federal tax withholding. Those figures were used to create large refunds that the taxpayers were not entitled to receive. More than $7 million in fraudulent refunds were claimed through the returns. The government ultimately lost about $6.2 million as a result of the scheme. Underwood also failed to report the money he received for preparing the false returns as income on his own tax returns, adding another issue to the case.
Underwood pleaded guilty to making a false claim. He is scheduled to be sentenced on Jan. 6, 2027. The charge carries a maximum sentence of five years in federal prison. His eventual punishment will be decided by a federal district court judge after consideration of federal sentencing guidelines and other factors required under federal law. The guilty plea resolves the criminal charge against Underwood, but the court will determine the sentence at a later date.
The case is being investigated by IRS Criminal Investigation, the federal agency responsible for investigating possible criminal violations of the tax laws. Attorneys Shawn Noud and Alexis Hughes of the Justice Department’s National Fraud Enforcement Division Tax Section are handling the prosecution.
The case reflects the risks involved when tax returns contain false information, even when the false information is submitted in an effort to generate refunds for other people. Tax refunds are based on information taxpayers provide about income, taxes paid and other financial details. Deliberately reporting false numbers can result in criminal charges, financial penalties and possible prison time.
Federal officials have continued to pursue cases involving false tax returns and fraudulent refund claims. Underwood’s case follows other recent prosecutions involving tax preparers accused of submitting inaccurate returns for clients. In this case, investigators determined that the false filings were not isolated mistakes but part of a larger operation involving more than 200 returns.
The DOJ said the scheme caused millions of dollars in losses to the federal government. Underwood’s January sentencing date will determine the consequences he faces for his guilty plea. Until that hearing, the final sentence remains undecided. The case was announced by the Justice Department on Sept. 2, 2026, and remains part of the department’s ongoing enforcement work involving tax fraud and false refund claims.
Sources:
Michigan Man Pleads Guilty in $7M Tax Fraud Scheme
Detroit man pleads guilty in $7 million tax scheme involving 200-plus false returns
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