The owner of a North Carolina tax return preparation business pleaded guilty earlier this week to conspiring to prepare false returns claiming fraudulent refunds based on COVID-19 tax credits. Seven other return preparers have already pleaded guilty to 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.
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Eight North Carolina Return Preparers PLEAD GUILTY in Almost $25M Pandemic-Relief Fraud Scheme
— National Fraud Enforcement Division (@DOJFraudDiv) June 24, 2026
“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… pic.twitter.com/q03Xxmhn3s
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.
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