North Carolina Tax Return Cheater Sentenced for Almost $24 Million Covid Fraud Scheme

WILMINGTON, N.C. - A federal judge sentenced Nejlai Mitchell, 48, to five years in federal prison for conspiring to prepare false tax returns that claimed fraudulent refunds based on COVID-19 tax credits and for assisting in the preparation of additional fake returns. The Court also ordered her to pay a Forfeiture Money Judgment of $13,890,697. Seven co-conspirators have already pleaded guilty for their roles in the same covid fraud scheme, and five have been sentenced.

"The nearly $24 million in fraudulent refunds generated through this scheme were not the result of mistakes or oversight. Mitchell and her co-conspirators deliberately stole COVID money intended to help struggling Eastern North Carolinians and used that to enrich themselves at the expense of hardworking taxpayers," said U.S. Attorney Ellis Boyle. "This prison sentence holds Mitchell accountable for her role in a conspiracy that stole taxpayer funds and corrupted the tax filing process. We are paying attention. We will find you. We will prosecute and convict you. You will go to cold steel federal prison. Cheaters. Never. Win."

Mitchell owned and operated tax return preparation offices in Lumberton and Hope Mills. From April 2022 through May 2023, Mitchell and seven of her employees filed false tax returns seeking fraudulent refunds in the amount of almost $24 million by exploiting paid sick and family leave credits, a COVID-19 relief measure enacted by Congress to support struggling businesses Mitchell's actions alone caused the IRS to issue approximately $13,890,697 in fraudulent tax refunds, representing more than half of the nearly $24 million channeled through the conspiracy.

Mitchell pleaded guilty to conspiracy and preparing and filing false tax returns. The tax return preparation business's office manager, Whitnee Leach, pleaded guilty in May 2026 to participating in the same conspiracy and filing false tax returns. The remaining six defendants pleaded guilty to preparing and filing false tax returns for clients.

Five other co-conspirators already received federal prison sentences for their roles in the scheme. On September 3, 2026, the Court sentenced Tiffany Moody to over two years. On July 8, 2026, the Court sentenced Shaneen Ray and Eyoubo McBurney to 18 months each, and sentenced Sylvia Swindell to 16 months. On July 9, 2026, the Court sentenced Katrena Stanback to six months.

W. Ellis Boyle, U.S. Attorney for the Eastern District of North Carolina, made the announcement after the Honorable Chief U.S. District Judge Richard E. Myers II handed down the sentence. IRS-CI is investigating the case.

A copy of this press release is located on our website. Related court documents and information can be found on the website of the U.S. District Court for the Eastern District of North CarolinaLinks to other government and non-government sites will typically appear with the "external link" icon to indicate that you are leaving the Department of Justice website when you click the link. or on PACERLinks to other government and non-government sites will typically appear with the "external link" icon to indicate that you are leaving the Department of Justice website when you click the link. by searching for Case No. 7:26-CR-38-M.