October 31, 2001
TWO SOUTHLAND MEN ARRESTED IN TAX FRAUD SCHEME
INVOLVING NONEXISTENT WINNINGS FROM HORSE TRACKS
The owner of a Van Nuys tax preparation business and the owner
of a computer software business were arrested this morning on federal charges
related to a scheme in which they allegedly filed false tax returns that
sought large refunds related to taxes supposedly withheld on gambling winnings.
Carlos Alvarez, 40, and Manuel Zajdman, 64, were charged Tuesday afternoon in a nine-count indictment that accused them of conspiring to defraud the United States and causing false tax refund claims to be presented to the Internal Revenue Service.
The defendants were arrested this morning without incident, and they are both expected to make their initial appearances this afternoon in United States District Court.
According to the Indictment, Alvarez, the owner of a Van Nuys tax preparation business called A&B Professional Services, and Zajdman, the owner of Mavix International Trading Corporation, conspired to defraud the United States by filing false, fictitious and fraudulent tax refund claims to the Internal Revenue Service in 1998 and 1999. The scheme used nonexistent gambling winnings as the basis of the false income tax returns.
The indictment alleges that the conspirators obtained the names and Social Security numbers of various individuals and then filed false returns in their names. The tax returns claimed that the taxpayers had won large sums at Southern California racetracks. The tax returns also claimed substantial gambling losses. The returns claimed that the taxpayers were entitled to large refunds based on withholdings by the racetracks.
In fact, the Forms W-2G submitted by the conspirators were bogus, and the tax returns, which showed winnings and withholdings from the racetracks, were false.
As part of the scheme, the conspirators also allegedly used various false addresses, including commercial mailbox addresses, to receive the tax refunds sent out by the IRS based on the false returns. The indictment alleges that the claimed refunds ranged in amount from approximately $25,000 to approximately $70,000.
The indictment also alleges that defendant Alvarez subsequently approached a potential witness in the case and attempted to persuade her not to give information about him to the law enforcement authorities investigating the matter.
The charges filed Tuesday carry a maximum potential sentence of 40 years imprisonment for Alvarez and 30 years imprisonment for Zajdman.
This case is the result of an investigation by Internal Revenue Service Criminal Investigation.
Release No. 01-164
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