Woman to plead guilty to perjury in tax probe

IOWA CITY, Iowa (AP) - A woman arrested last month in Texas has agreed to plead guilty to perjury for lying to a federal grand jury during a criminal investigation of a corrupt Iowa tax preparer, court records show.

Records show Denise Brown - whose age and hometown were not available - signed a plea agreement last week acknowledging she made false statements to an Internal Revenue Service investigator in 2010 and committed perjury in front of a grand jury. She is expected to formally enter guilty pleas to those two charges during a hearing Wednesday in federal court in Cedar Rapids.

Brown's case stems from the investigation of Latanya Bailey of Waterloo, who was sentenced to 30 months in prison in December 2010 for filing false information on her tax return and those of several customers to increase the size of refunds. While working at H & R Block in 2007 and 2008, Bailey listed false child care expenses, false dependents and other phony income to increase tax refunds for clients, who paid her hundreds of dollars in tips in exchange. In all, prosecutors say her actions resulted in $80,000 in bogus refunds.

On her own tax returns for 2009, Bailey falsely claimed she had personal income for operating an "interior decorating" business to increase the amount she received under the Earned Income Tax Credit. She told the IRS that Brown and others were her customers and even faxed phony receipts appearing to support her claim.

Under the plea agreement she signed, Brown admitted that she told an IRS agent that she'd paid Bailey thousands of dollars to reimburse her for furniture Bailey had purchased when no such transaction actually occurred. She also acknowledged that she falsely told the grand jury investigating Bailey in July 2010 that she'd paid her for furnishing, decorating and cleaning her apartment.

Court records show Brown was arrested on a warrant in Texas on Jan. 12, and made her initial court appearance in federal court in Fort Worth. She was released on a promise to appear in Iowa.

Brown's attorney, Gerald Kucera of Cedar Rapids, said he could not comment on any details of the case or release his client's hometown and age.