california man pleads guilty to nearly $100 million
tax fraud conspiracy
largest false claims case everprosecuted in mO
KANSAS CITY, Mo. – David M. Ketchmark, Acting United States Attorney for the Western District of Missouri, announced today that a Temecula, Calif., man has pleaded guilty in federal court to his role in a tax fraud conspiracy that attempted to receive nearly $100 million in fraudulent refunds from the IRS in the largest federal false claims case that has ever been prosecuted in Missouri.
John V. Perdido, 56, of Temecula, pleaded guilty before U.S. District Judge Brian C. Wimes on Tuesday, June 26, 2012, to the charge contained in a Sept. 22, 2011, federal indictment.
Perdido admitted that he participated in a conspiracy that promoted a tax refund scheme across the United States from July 1, 2008, to Sept. 21, 2011. Conspirators received more than $3.5 million of the total $96 million in attempted fraudulent refunds. Perdido, who acted as a “branch manager” and recruited clients for the scheme, received the largest single refund from the scheme – $805,749 on Feb. 6, 2009.
Perdido is the second defendant to plead guilty. Jennifer S. Wilson, 35, of Cumming, Ga., pleaded guilty on April 10, 2012, to filing a false claim for a tax refund.
1099-OID Tax Fraud Scheme
Perdido and the other conspirators utilized 1099-Original Issue Discount forms as part of their scheme.
These forms are legitimately used by tax filers who must pay taxes on income they receive from the interest on their bond investments. Tax on certain bonds must be paid as income accrues. Bond holders receive annual forms, called 1099-Original Issue Discount (OID), from the debt issuers. Bond holders then file these OID forms with the IRS, along with their income tax forms.
However, the scheme to which Perdido pleaded guilty today utilized the 1099-OID forms in a nonsensical manner. Clients of the conspirators, working with their branch managers, assembled financial documents such as mortgage and loan statements, car payments, foreclosure records, bank statements, credit card statements, and other records of debt and spending. This debt information – rather than any actual bond income – was used to prepare and/or finalize false tax returns and improperly calculated Forms 1099-OID.
Perdido’s 2007 income tax return listed his debts as if they were OID income. In reality, Perdido knew that he had not received any OID interest income.
On Feb. 6, 2009, Perdido received a U.S. Treasury check for $805,749.44, which he deposited on Feb. 11. Perdido and his wife signed the check with “by:” in front of their names, a Sovereign Citizen practice.
More than $500,000 was quickly removed from Perdido’s bank accounts, with four wire transfers to the Philippines of $100,000 each that were used to purchase a car and a house in Batung. Perdido also bought an $11,000 Rolex watch, paid off his credit cards, and invested $200,000 in a private company (Helios).
Before he received his refund, Perdido expressed concerns about the process’s legality. After getting the refund, he was concerned about cashing or depositing the check because the IRS might prosecute him. Even after expressing concerns about his potential prosecution for getting the refund check, Perdido became an affiliate in the scheme.
By pleading guilty, Perdido agreed to forfeit to the government $805,749. Under federal statutes, Perdido is subject to a sentence of up to 10 years in federal prison without parole, plus a fine up to $250,000. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
OID Fraud Web Site
A Web site has been established to provide updated information about the status of this investigation. Updates about this investigation and related cases will be posted at www.justice.gov/usao/mow/divisions/OIDfraud.html
These cases are being prosecuted by Assistant U.S. Attorneys Daniel M. Nelson and Thomas Larson. They were investigated by IRS-Criminal Investigation and the Treasury Inspector General for Tax Administration (TIGTA).
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