Defendants Indicted In Alleged $35 Million Tax Fraud; 3,300 False Tax Returns Allegedly Filed In Names Of Federal Prison Inmates
A former Chicago man living in Israel since 2003, two of his sons, and a son-in-law were arrested and were among 10 defendants indicted on federal tax fraud conspiracy charges for allegedly seeking to obtain more than $35 million in federal and state income tax refunds using the identities of some 3,300 federal prison inmates, federal officials have announced. The allegedly fraudulent claims for refunds caused the Internal Revenue Service to issue actual tax refunds totaling more than $1.5 million, and various states to issue tax refunds exceeding $2.5 million, according to the indictment.
The defendants were charged by a federal grand jury in Chicago in a 41-count indictment that was unsealed on Monday. All 10 defendants were each charged with one count of conspiracy to defraud the United States (specifically, by impeding the IRS in the collection of income taxes), as well as defrauding numerous state revenue departments, and each were charged with one or more counts of mail and/or wire fraud. One defendant also was charged with six counts of identity theft.
According to the indictment, all 10 defendants conspired to defraud the IRS and state tax agencies beginning no later than 2003 and continuing to February 2009. One of the defendandts allegedly recruited and enlisted dozens of co-conspirators and associates to submit more than 2,900 federal income tax returns and more than 400 false state income tax returns, which were filed in the names and social security numbers of federal inmates without their knowledge or consent. The false returns allegedly included various fictitious and false items, including addresses and phone numbers, deductions, business losses and expenses, credits, and W-2 wage and 1099 income statements of earnings from employers. As a result, the government asserted, these false returns claimed tax refunds, with the IRS and various states issuing refunds by check or direct deposit totaling more than $4 million. Some of the defendants allegedly set up various sham businesses and bank accounts to receive the bogus tax refund payments, then issued checks from those bank accounts, or in some instances paid cash, to one of the defendants and members of his family, while retaining a commission — typically 10 percent — of the tax refund proceeds they handled for themselves.