Manhattan U.S. Attorney Announces Arrest Of NYPD Officer For Tax Fraud And Identity Theft

Preet Bharara, the United States Attorney for the Southern District of New York, Toni Weirauch, the Special Agent-in-Charge of the New York Field Division of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), and Thomas H. Mattox, the Commissioner of the New York State Department of Taxation and Finance (“DTF”), announced today the arrest of Jonathan Wally, an NYPD Police Officer, for tax fraud and identity theft offenses. WALLY was arrested yesterday in Bronx, New York, and presented in Manhattan federal court yesterday before U.S. Magistrate Judge James C. Francis IV.

Manhattan U.S. Attorney Preet Bharara said: “As alleged, Jonathan Wally was enforcing the law by day, and breaking it at night. Identity theft and tax fraud are urgent and widespread problems, and it is especially troubling when they are crimes committed by those entrusted with enforcing the law, as is alleged here.”

IRS Special Agent-in-Charge Toni Weirauch said: “IRS-Criminal Investigation is involved in this investigation for two reasons. First, IRS Criminal Investigation has made investigating stolen identity refund fraud a top priority. The filing of fraudulent tax returns using stolen identities can cause significant financial harm to the victims of ID theft, as well as a monetary loss for the U.S. Treasury. Secondly, no law enforcement officer is above any law; we have the same duty to pay our fair share of taxes as any other American citizen. IRS-Criminal Investigation is committed to ensuring that everyone pays their fair share.”

DTF Commissioner Thomas H. Mattox said: “I commend U.S. Attorney Bharara for his ongoing diligence in identifying and prosecuting tax fraud. It is particularly egregious when a police officer, whom we trust to enforce the law, is alleged to have used stolen identities to steal tax dollars for himself and his clients. Tax preparers are critical to the financial well-being of their clients, and we remind all taxpayers to be vigilant when selecting a tax professional.”

According to the Complaint unsealed yesterday in Manhattan federal court and statements made yesterday in court:

WALLY has been employed by the NYPD as a Police Officer assigned to the 34th Precinct located in the Washington Heights/Inwood section of New York, New York since 2003. Since at least 2008, WALLY also served as a tax preparer for individuals. Although the NYPD requires its Police Officers to obtain written authorization to engage in off-duty employment, WALLY never sought or obtained such authorization to work as a tax preparer.

From 2010 through April 2012, WALLY defrauded the IRS by causing it to issue tax refunds to other individuals based on fraudulent and false U.S. individual income tax returns (“tax returns”) prepared and filed by WALLY on behalf of those taxpayers.

During that time period and continuing through January 2013, WALLY further defrauded the IRS by preparing and filing fraudulent and false tax returns on his own behalf that failed to declare certain income, causing him to receive tax refunds to which he was not entitled.

In connection with the fraudulent tax return scheme, WALLY obtained personal identifying information of children and Social Security cards in the names of other children that he used to declare them as dependents on false and fraudulent tax returns he prepared and filed on behalf of others and himself.

As a result of the false and fraudulent tax returns prepared and filed by WALLY on behalf of other individuals, the IRS paid them at least $119,793 in fraudulent tax refunds. The false and fraudulent tax returns prepared and filed by WALLY on his own behalf caused the IRS to pay him at least $4,850 in fraudulent tax refunds. In addition, from 2010 up to and including the present, WALLY failed to pay the IRS at least $19,487 in income taxes that he owed based on income he earned as a tax preparer but failed to declare on his tax returns.

WALLY, 33, of Bronx, New York, is charged with five counts. Counts One and Two charge him with aiding and abetting the filing of a false and fraudulent tax return, and subscribing to a false and fraudulent tax return, respectively. Counts One and Two each carry a maximum sentence of three years in prison. Counts Three and Four charge WALLY with identify theft and Count Five charges WALLY with aggravated identity theft. Counts Three and Four each carry a maximum sentence of 15 years in prison, and Count Five carries a mandatory minimum sentence of two years in prison.

Mr. Bharara praised the investigative work of the IRS, DTF, the U.S. Drug Enforcement Agency, and the Internal Affairs Bureau of the New York City Police Department.

This prosecution is being handled by the Office's Public Corruption Unit. Assistant United States Attorney Carrie H. Cohen is in charge of the prosecution.

U.S. v. Jonathan Wally Complaint