55 indicted in massive income-tax fraud scheme
SANTA ANA, Calif. (AP) — The owners of two Southern California firms were among 55 people indicted by a federal grand jury in a $250 million income-tax fraud scheme claiming refunds were available through a secret government account, prosecutors and the Internal Revue Service said Monday.
The defendants also claimed the United States was bankrupt, and the country was actually owned by England.
The IRS investigation dubbed Operation Stolen Treasures targeted Fontana-based Old Quest Foundation Inc. and Rancho Cucamonga-based De la Fuente and Ramirez and Associates for filing federal income-tax returns with bogus claims for refunds.
There are 32 federal indictments, most alleging conspiracy to defraud the United States.
Hundreds of false tax returns were filed with the IRS seeking refunds. Refund checks for $5 million went out in error, IRS Special Agent Felicia McCain said Monday.
Eighteen defendants were arrested Friday and 10 defendants are fugitives or agreed to surrender Monday. Twenty-seven defendants will get a summons to appear for arraignment in coming weeks.
During presentations throughout Southern California, people falsely claiming to be attorneys, accountants and former IRS employees told potential customers that tax refunds were available through a secret government account.
Their tax defiance arguments also included claims the U.S. was penniless and Great Britain actually owned the country.
"Frivolous arguments were made by both groups," McCain said, adding the IRS continually tries to stop such fraudulent schemes.
Those who signed up were required pay Old Quest up to $10,000 as well as a percentage of any refund they fraudulently received, authorities alleged. In exchange, Old Quest prepared and filed false income tax returns seeking huge income tax refunds, one of them for nearly $4.7 million.
When Old Quest customers received IRS letters warning that their tax returns were frivolous, members of the conspiracy prepared responses and assured customers the IRS letters were meant to intimidate them because the "IRS did not want to pay," according to the indictments.
De la Fuente and Ramirez and Associates filed more than 35 false income tax returns seeking more than $19 million in income tax refunds, prosecutors said. The indictments said they also used seminars and one-on-one consultations to recruit customers who were each charged $2,500.
Telephone listings couldn't be found in San Bernardino County for Old Quest Foundation Inc. and De la Fuente and Ramirez and Associates.