Kingsport man sentenced in COVID-19 employment tax credit fraud scheme

GREENEVILLE, Tenn. — A Kingsport man was sentenced Thursday for his role in a COVID-19 employment tax credit fraud scheme, according to a Friday news release from the U.S. Attorney's Office for the Eastern District of Tennessee. Edward Zanes, 51, of Kingsport, was the last of three defendants charged in the extensive scheme, the release states. He was sentenced to 65 months in prison by the Honorable Judge Clifton Corker, U.S. District Judge, in the U.S. District Court for the Eastern District of Tennessee. Following his release, Zanes will be on supervised release for three years. This sentence follows an 84-month term of prison imposed earlier this year on codefendant Ryan Glidewell, 53, of Kingsport, and a 50-month prison term imposed last year on codefendant, Alyssa Glidewell, 36, of Kingsport, for their respective roles in the fraud scheme. Both codefendants will be on supervised release for three years following their release from imprisonment. Judge Corker also ordered the three to pay $1,806,637 in restitution to the U.S. According to court documents and statements made in court, Ryan Glidewell, Alyssa Glidewell, Edward Zanes and others conspired to file false tax returns seeking refunds based on the Employee Retention Credit and paid Sick and Family Leave Credit, both of which were created by Congress to aid struggling businesses during the COVID-19 global pandemic. The defendants, led by Ryan Glidewell, created at least 11 phony businesses, which lacked any employees or operations, for the sole purpose of falsely claiming the credits. Members of the conspiracy then filed numerous false tax returns for those businesses and directed the tax refunds to be mailed to addresses controlled by conspirators. In total, the false returns filed from the 11 sham businesses claimed over $3.4 million in tax refunds, of which the IRS paid $1.8 million, the news release states. "The defendants in this case exploited governmental efforts to assist businesses during a time of unprecedented uncertainty," said U.S. Attorney Francis M. Hamilton III for the Eastern District of Tennessee. "The U.S. Attorney's Office, together with our law enforcement partners, will continue to vigorously prosecute individuals that steal from the citizenry through tax fraud." "Edward Zanes and his co-conspirators created fake companies, filed fraudulent tax forms, and tried to steal from programs meant to help Americans during the pandemic," said Donald "Trey" Eakins, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI), Charlotte Field Office. "IRS CI special agents, together with our law enforcement partners, will continue to uncover COVID-19 relief fraud and hold anyone who files false tax returns fully accountable." IRS Criminal Investigation and the U.S. Secret Service investigated the case. Assistant U.S. Attorneys Ryan Blackwell and Mac Heavener, and Trial Attorney Zachary A. Cobb formerly with the Justice Department's Tax Division, represented the U.S.