North Carolina tax preparers plead guilty in $13.89 million COVID-19 refund fraud case

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NC tax preparers COVID fraud case

Highlights

Nejlai Mitchell and Whitnee Leach pleaded guilty to conspiring in a $13.89 million COVID-19 tax refund fraud involving false paid sick and family leave credits from April 2022 to May 2023.
Six additional co-conspirators also pleaded guilty between August and December 2025, with all defendants facing prison sentences ranging from three to eight years.
Sentencing for Mitchell and Leach is set for August and September 2026, with federal authorities emphasizing continued enforcement against pandemic-related tax fraud schemes.

Court admissions and case timeline

As reported by the U.S. Department of Justice, Nejlai Mitchell, who owned and operated a tax return preparation business in Lumberton and Hope Mills, North Carolina, pleaded guilty yesterday to conspiring to prepare false returns claiming fraudulent refunds based on COVID-19 tax credits.

According to court documents and statements made in court, Mitchell and seven employees filed false tax returns from approximately April 2022 through May 2023 seeking refunds tied to the paid sick and family leave credit, which Congress created to support struggling businesses during the COVID-19 pandemic. Mitchell also admitted guilt shortly after Whitnee Leach pleaded guilty on May 19, 2026, to participating in the same conspiracy, and both also pleaded guilty to assisting in the preparation of false tax returns.

Six other co-conspirators have already pleaded guilty to preparing federal tax returns for clients that included materially false items. Tiffany Moody and Shaneen Ray pleaded guilty on Dec. 9, 2025; Eyoubo McBurney and Katrena Stanback pleaded guilty on Sept. 24, 2025; and Jeannie Negron and Sylvia Swindell pleaded guilty on Aug. 20, 2025.

Sentencing exposure and enforcement impact

Mitchell is scheduled to be sentenced in September, while Leach is scheduled to be sentenced in August. Mitchell and Leach each face a maximum penalty of five years for conspiracy and three years for preparing and filing false tax returns, while the remaining six defendants each face a maximum penalty of three years in prison, with sentencing hearings 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 M. McDonald says the group engineered a scheme to enrich itself by submitting false returns and that the Justice Department remains committed to protecting federal relief programs and pursuing tax fraud.

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 it.

Our earlier report on Chemours’ $450 million PFAS settlement outlined a sweeping federal-and-state enforcement deal covering alleged “forever chemicals” releases from facilities in West Virginia, North Carolina, and New Jersey. The consent decree pairs a civil penalty with major spending on pollution controls and long-term drinking water measures, signaling tougher compliance expectations and higher costs for companies facing regulatory scrutiny.

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