Eight North Carolina Return Preparers Plead Guilty in Almost $25M Pandemic-Relief Fraud Scheme
Eight North Carolina Return Preparers Plead Guilty in Almost $25M Pandemic-Relief Fraud Scheme
The owner of a North Carolina tax return preparation business pleaded guilty yesterday to conspiring to prepare false returns claiming fraudulent refunds based on COVID-19 tax credits. Seven other return preparers have already pleaded guilty for their roles in the same scheme.
According to court documents and statements made in court, Nejlai Mitchell owned and operated a tax return preparation business out of Lumberton, North Carolina, and Hope Mills, North Carolina. From approximately April 2022 through May 2023, Mitchell and seven employees filed false tax returns seeking fraudulent refunds based on the paid sick and family leave credit, a credit passed by Congress to aid struggling businesses during the COVID-19 global pandemic. As a result of the conspiracy, the IRS paid out approximately $13,890,697 in fraudulent tax refund claims.
“Instead of honoring their legal and ethical duties as tax preparers, this group allegedly engineered a calculated scheme to enrich themselves by submitting false returns,” said Assistant Attorney General Colin M. McDonald of the Justice Department’s National Fraud Enforcement Division. “Stealing taxpayer funded relief in a national emergency is both reprehensible and deeply harmful to the public, and we will not hesitate to hold accountable those who exploit a crisis for personal gain. The Fraud Division remains unwavering in its commitment to protecting the integrity of federal relief programs and pursuing tax fraud wherever it occurs.”
Mitchell admitted to the conspiracy shortly after Whitnee Leach pleaded guilty, on May 19, 2026, to participating in the same conspiracy. Both Mitchell and Leach also pleaded guilty to assisting in the preparation of false tax returns.
Six other co-conspirators pleaded guilty to preparing federal tax returns for clients that included materially false items. Tiffany Moody and Shaneen Ray pleaded guilty on December 9, 2025; Eyoubo McBurney and Katrena Stanback pleaded guilty on September 24, 2025; and Jeannie Negron and Sylvia Swindell pleaded guilty on August 20, 2025.
Mitchell is scheduled to be sentenced in September. Leach is scheduled to be sentenced in August. Mitchell and Leach face a maximum penalty of five years for conspiracy and three years for preparing and filing false tax returns. The remaining six defendants each face a maximum penalty of three years in prison for preparing and filing false tax returns for clients. Their sentencing hearings are set for July 2026. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Assistant Attorney General Colin McDonald of the Justice Department’s National Fraud Enforcement Division and U.S. Attorney W. Ellis Boyle of the Eastern District of North Carolina made the announcement.
IRS Criminal Investigation is investigating the case.
Trial Attorney Caroline Pearson and Assistant U.S. Attorney Ethan Ontjes of the Eastern District of North Carolina are prosecuting the case.
On April 7, the Department of Justice announced the creation of the National Fraud Enforcement Division (Fraud Division). The Fraud Division is laser-focused on investigating and prosecuting those who commit fraud against the American people. The Department’s work to combat fraud supports President Trump’s Task Force to Eliminate Fraud, a whole-of-government effort chaired by Vice President J.D. Vance to eliminate fraud, waste, and abuse within Federal benefit programs.
White House Privately Braces for 2027
The White House is quietly preparing for a Democratic takeover of the House by hiring lawyers to fend off a wave of legal challenges that could cripple the final two years of President Donald Trump’s time in office.
The preparations illustrate how the White House is privately preparing for the possibility that Democrats will regain at least one chamber of Congress in November, even as Republicans express confidence in public, according to people close to the administration.
A Democratic House next year could be reminiscent of 2018 fights that included impeachment inquiries of the president and multiple investigations into his inner circle.
Michael Williams, who served in White House roles in President Donald Trump’s first term and was deputy general counsel for the Trump-Vance Inaugural Committee, said staff is already preparing for another impeachment push even as Trump sets a broader strategy for dealing with Democrats.
“They’re ready for that eventuality,” Williams told Bloomberg Government. “I don’t think they’re ready to concede that that’s the likely outcome, but they’re certainly prepared in that event.”
Emma Doyle, former chief of staff at the Office of Management and Budget during Trump’s first term who later worked in the West Wing, said the administration is already hiring experienced lawyers to help prepare officials for impeachment, as she did in the first term.
The return of advisers Jason Miller and Johnny DeStefano strengthens the White House for those fights, Doyle said, along with staff such as Mark Paoletta, the OMB general counsel who worked on impeachment defense in the first term.
Miller and DeStefano rejoined the White House last month to work on midterm strategy.
However, Democrats are facing their own problems.
House Minority Leader Hakeem Jeffries (D-N.Y.) may find himself caught in the very blue wave he hopes to ride into power this November.
More and more Democratic candidates are telling Axios that they can’t promise to support his leadership.
It’s a big change from Jeffries’ once “untouchable” position in the Democratic Party just a few years ago. This could mean his path to the speakership will be harder than people thought.
Jeffries and his supporters say they aren’t worried at all about a mass defection. They point out that he hasn’t lost a Democratic vote in 20 speakers’ ballots, even though he is in the minority.
However, this group of new candidates could potentially be the first challenge to the previously unyielding support.
A group of viable candidates has made it clear that voting for Jeffries as speaker is not a given if the Democrats win the House.
Axios reported that more than 80 Democratic House candidates across the country were either not sure if they would support Jeffries’ leadership or were completely against it.
Since then, things have only gotten worse for him.
The tension was on display in New Jersey’s 7th Congressional District. Democrat nominee Rebecca Bennett, who likely needs to beat Rep. Tom Kean (R-NJ) if Democrats have any shot at the majority, refused to commit to voting for Jeffries before her primary win.
Likewise, Iowa’s 1st congressional Democratic nominee Christina Bohannan is also noncommittal, merely responding “I don’t know yet. I haven’t made that decision,” when asked by Punchbowl News if she would support Jeffries.
“I want to get elected first,” she continued.
The nonpartisan Cook Political Report has classified both Bohannan and Bennett’s districts as toss-ups.
Republicans currently hold both seats.
Montana’s 1st congressional Democratic nominee Sam Forstag echoed similar sentiments as Bohannan.
Forstag sits in a seat labeled “likely Republican,” but has no incumbent running.
Mai Vang, the leading progressive primary challenger to Rep. Doris Matsui (D-Calif.), previously said she would “support the person that my future colleagues elect as our leader.”
But in an unprompted statement last week, she told Axios: “The Democratic Party and its leadership—Chuck Schumer and Hakeem Jeffries—have failed to mobilize meaningful opposition to Trump’s illegal war and their silence as AIPAC and corporations flood Congressional primaries with millions of dollars is deafening.”
“I cannot support this kind of leadership,” Vang said. “If we want to defeat Trump and rebuild trust with working Americans, we need new leadership and a new direction.”
“Most Democrats agree that he’s been failing to meet the moment,” said Adam Hamawy, a candidate in New Jersey’s 12th district, saying he is “looking for someone that’s gonna stand up to the administration.”
When asked if she would support Jeffries’ leadership, Claire Valdez, a New York State Assembly member who is running to replace retiring Rep. Nydia Velázquez (D-N.Y.), said in an interview with Axios that “there would need to be some conversations.”
