How a San Diego CPA Turned Tax Forms Into a $5M Fraud Machine

What happens when a trusted CPA turns tax forms into a fraud machine? For Oladapo Olagbemi, a 72-year-old San Diego CPA, it led to a federal guilty plea, a lifetime ban from preparing tax returns, and a sentencing scheduled for August 28, 2026. Olagbemi owned and managed D.A.O. Accounting, Consulting, and Taxation. Between 2019 and 2023, prosecutors say he filed thousands of false tax returns that generated more than $5 million in improper deductions and credits for clients. Assistant U.S. Attorney Peter Horn put it plainly: “The defendant used his professional credentials not to navigate the tax code, but to systematically exploit it.”

How Did He Pull It Off?

Olagbemi used common tax forms to create fake tax benefits. His biggest tool was Schedule C. From 2020 to 2023, he prepared at least 5,470 Form 1040 returns with Schedule C attached. At least 3,981 of those reported zero gross receipts, meaning the supposed businesses had no income. He still claimed business losses by treating personal expenses as deductible business costs. When the IRS started looking closely at those Schedule C filings, he shifted gears. He prepared at least 1,684 Forms 2106 for clients who did not qualify. Form 2106 is limited to specific taxpayers, including certain fee-based state or local government officials, but Olagbemi used it to claim improper employee business expenses. He also claimed false charitable deductions on Schedule A and submitted fake residential energy credits on Form 5695 for solar water heating costs that clients never paid.

Where Does the Case Stand Now?

Olagbemi pleaded guilty to four counts of aiding and assisting in the preparation of false tax returns. Each count carries up to three years in prison and a fine of up to $250,000. He agreed to pay at least $1,522,794 in restitution for tax losses tied to the schemes from 2018 through 2023. He also agreed to a permanent ban from preparing, assisting with, or supervising federal tax returns for anyone other than himself. His sentencing is set for August 28, 2026, before U.S. District Judge Ruth Bermudez Montenegro.

What Accountants, Tax Preparers, and Firms Must Do Now

This case presents critical takeaways for finance and auditing professionals:

• Document everything: Require original receipts for business expenses, charitable donations, and energy upgrades. No documentation = no claim.
• Validate eligibility before filing: Form 2106 is restricted to fee-based government officials. Schedule C business losses must correspond to real gross receipts.
• Implement red-flag checks: High-volume Schedule C filings with zero gross receipts or repeated Form 2106 submissions should trigger internal reviews.
• Train staff on form restrictions: Ensure all preparers know which forms are allowed for which client types.
• Adopt pre-filing audits: Run a quick compliance sweep before submitting returns, especially for high-risk deductions.
• Report suspicious activity: If a client requests claims that don’t match their profile, decline and document the interaction.

What Comes Next?

Olagbemi’s sentencing will determine the criminal penalty, but the larger message is already clear. The IRS and DOJ are going after preparers who use professional credentials to file fraudulent returns at scale. For clients, the fallout may include audits, back taxes, penalties, and interest. For preparers, the risks include restitution, prison time, loss of license, and permanent removal from the profession. This case shows that tax fraud does not need fancy tricks. Sometimes, it starts with familiar forms, weak controls, and a preparer willing to cross the line. For professionals, the smart move is clear: document every claim, verify eligibility, and treat repeated filing patterns like the red flags they are.