Men create fake firms — and fake workers — for $25 million in tax refunds, feds say
Two California men are accused in an elaborate scheme to collect $25 million in tax refunds by creating fake companies with payrolls full of bogus workers, federal officials reported.
The Bakersfield men face charges including conspiracy to defraud the United States and submission of false claims to the Internal Revenue Service, the U.S. Attorney’s Office for the Eastern District of California said in an Oct. 10 news release.
“This is undoubtedly the most complex tax fraud case I have handled in my 35+ years as a defense (attorney)“ David Torres, an attorney for one of the men, told McClatchy News in an email. “We are continuing to review the hundreds of thousands of pages of discovery. My client is intellectually incapable of creating the software located, and this leads me to believe that his participation in this venture was minimal.”
A federal grand jury indicted the men, ages 38 and 39, on Sept. 21 and one was arrested Monday, Oct. 9, at the Los Angeles airport after returning from Mexico, the release said. The other was already in custody.
Between November 2019 and June 2023, the men filed “hundreds of fraudulent individual federal income tax returns” to claim $25 million in refunds, prosecutors said.
In order to carry out the scheme, they also created fictitious businesses and filed fake payroll and tax withholding forms to the IRS, prosecutors said.
No taxes were actually paid, officials said.
“The purported owners of the businesses listed on these documents were unaware that the businesses even existed,” prosecutors said.
At the time of his arrest, one of the men had “$750,000 in fraudulent tax refund checks and identification cards for more than 200 people,” officials said.
They face up to 15 years in prison and $500,000 in fines if convicted, prosecutors said.
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