August 15, 2002

SAN FERNANDO VALLEY MAN PLEADS GUILTY IN TAX SCHEME
INVOLVING NONEXISTENT WINNINGS FROM HORSE TRACKS

 The owner of a Van Nuys tax preparation business has pleaded guilty to federal charges related to a scheme in which he and another man filed false tax returns that sought large refunds related to taxes supposedly withheld on gambling winnings.
 Carlos Alvarez, 41, pleaded guilty yesterday to conspiring to defraud the United States by filing false tax refund claims with the Internal Revenue Service. Alvarez pleaded guilty to the felony count before United States District Senior Judge William J. Rea.
 A second defendant in the case, Manuel Zajdman, 64, is charged in an indictment with nine felony counts and is scheduled to go on trial before Judge Rea on October 8.
 Alvarez, the owner of a Van Nuys tax preparation business called A&B Professional Services, pleaded guilty to conspiring with Zajdman, the owner of Mavix International Trading Corporation, to defraud the United States by filing false, fictitious and fraudulent tax refund claims with 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 a scheme in which 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. In his plea agreement, Alvarez admits that he intended to cause losses of $322,939.
 At sentencing, Alvarez faces a maximum possible sentence of 10 years in federal prison.
 This case is the result of an investigation by IRS-Criminal Investigation.

 Release No. 01-123

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