Lara Karakasevic, aka Lara Castle, pleaded guilty to conspiring to defraud the IRS by submitting forms with details known to be false.

According to her plea agreement, Karasevic, 48, of St. Helena, admitted that between July 2008 and June of 2009, she and a co-conspirator agreed to defraud the United States by obstructing the lawful function of the IRS by deceitful or dishonest means, according to acting U.S. Attorney Alex G. Tse and IRS Criminal Investigation acting Special Agent in Charge Tara Sullivan. The plea was accepted June 26 by U.S. District Judge Vince Chhabria.

Karakasevic owned an internet-based consulting business called TTF Consulting, LLC, which operated out of a home in Petaluma. In exchange for a fee, TTF Consulting electronically transmitted for its clients certain forms to the IRS, including Forms 1099-OID. It's a form used to report annual interest on certain types of securities.

As part of the scheme, prosecutors said, Karakasevic’s co-conspirator received information from TTF Consulting clients, reviewed the information, and provided the information to Karakasevic so she could complete the forms and submit the forms to the IRS.

Between April and June 2009, Karakasevic prepared six forms for TTF clients knowing that the forms were false. Specifically, the forms reported false amounts of interest income and tax withholdings from certain financial institutions. In addition, after filing the false forms, TTF informed its clients that they could later file tax returns based on those forms.

Karakasevic acknowledged, prosecutors said, that she was aware of a high probability that the purpose of the conspiracy was to obstruct and defeat the IRS’s efforts to collect income taxes. She also reportedly said that after October 2008, when she knew the purpose of the conspiracy was unlawful, continued with the scheme.

In addition, Karakasevic submitted a 2005 federal income tax return on her own behalf requesting a $291,836 refund, based on a false and fraudulent Form 1099-OID. Karakasevic admitted that, in sum, the intended tax refunds from the false and fraudulent tax returns submitted to the IRS based on her conduct amounted to $1,231,578.

On June 24, 2014, a federal grand jury indicted Karakasevic with one count of conspiracy to defraud the United States and one count of filing a false tax return. Karakasevic pleaded guilty to the first charge. The second charge will be dismissed at the time of sentencing if she complies with the terms of the plea agreement, prosecutors said.

Karakasevic is currently free on bond until the sentencing hearing, set for Oct. 2. She faces a maximum statutory penalty of five years in prison and a fine of $250,000 for the conspiracy charge.

Assistant U.S. Attorney Cynthia Stier is prosecuting the case.