NC tax preparers plead guilty in $25M pandemic-relief fraud scheme

A North Carolina tax return preparation business owner has joined seven former colleagues in pleading guilty to a scheme that sought almost $25 million in false COVID-19 relief tax refunds. 

The Justice Department on Wednesday announced that the company’s owner, Nejlai Mitchell, filed fake tax returns based on a paid sick and family leave credit — which Congress passed to help struggling businesses during the COVID-19 pandemic — from April 2022 through May 2023.

The IRS paid out approximately $13.9 million in false tax refund claims due to the conspiracy, which operated out of the North Carolina cities of Lumberton and Hope Mills, according to documents and statements presented in court.

Seven other return preparers who worked for Mitchell have already pleaded guilty to their roles in the scheme, which was to prepare the fake tax returns: Jeannie Negron and Sylvia Swindell pleaded guilty in August 2025; Eyoubo McBurney and Katrena Stanback in September 2025; and Tiffany Moody and Shaneen Ray in December 2025.

“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,” Assistant Attorney General of the DOJ’s National Fraud Enforcement Division, Colin McDonald, said in a statement.

Mitchell, along with one co-conspirator, Whitnee Leach, also pleaded guilty to assisting in preparing the fraudulent returns. Leach previously pleaded guilty on May 19, with her sentencing scheduled for August. Mitchell awaits a September sentencing.

The two face a maximum of five years in prison for conspiracy and three years for preparing and filing false tax returns. The other six defendants’ hearings will take place in July, and each face up to three years in prison.

A federal judge will decide each penalty.

“Stealing taxpayer funded relief during a national emergency is both reprehensible and deeply harmful to the public,” McDonald said.

The IRS investigated the case, prosecuted by Caroline Pearson, a trial attorney, and Ethan Ontjes, assistant U.S. attorney for North Carolina’s Eastern District.

Katherine Pugh is a reporter for Just the News. Follow her on X for more coverage.