April 15, 2003

OFFICE OF THE UNITED STATES ATTORNEY
SOUTHERN DISTRICT OF CALIFORNIA
San Diego, California

United States Attorney
Carol C. Lam

For Immediate Release

NEWS RELEASE SUMMARY

United States Attorney Carol C. Lam announced that Francisca Bray-Lugo, a San Diego tax return preparer, pled guilty to felony charges in federal court today. Bray-Lugo was charged with aiding in the preparation of a false tax return and filing a false income tax return that omitted income she earned from her tax preparation business. Bray-Lugo entered her guilty plea to a two-count Information before United States Magistrate Judge Ruben B. Brooks in San Diego. Bray-Lugo is scheduled to be sentenced on July 22, 2003.

In connection with her plea, Bray-Lugo admitted to intentionally filing a false income tax return which omitted more than $24,000 in taxable income which she earned from her tax preparation business. Bray-Lugo also admitted that she intentionally prepared a federal tax return for a client claiming more than $14,000 in deductions to which the client was not entitled. Bray-Lugo admitted that from 1998 through 2001 she prepared at least 73 individual income tax returns that contained materially false information, resulting in a tax loss to the Government in an amount in excess of $200,000. As part of her guilty plea, Bray-Lugo agreed to cooperate with the IRS and file corrected federal income tax returns.

The Internal Revenue Service examined many returns prepared by Bray-Lugo, and confirmed that the returns claimed expenses that were not tax deductible for Bray-Lugo clients. IRS Criminal Investigation Special Agent in Charge Denise L. Rubin said, "Taxpayers should be careful when hiring a tax preparer. The majority of return preparers are honest and reputable. Unfortunately, the IRS is identifying more abusive tax preparers who prepare false returns for clients, often for their own personal gain. Abusive tax return preparers can cause considerable financial and legal problems for their clients. It is important to remember that the taxpayer is ultimately the one responsible for all the information on their tax return."

Anyone who suspects tax fraud or knows of an abusive return preparer should call the IRS Criminal Investigation at 619-557-6100. More information on tax preparer fraud can be found on the IRS Criminal Investigation Web site at www.ustreas.gov/irs/ci.

DEFENDANT

Francisca R. Bray-Lugo
Chula Vista, California

SUMMARY OF CHARGES

Title 26, U.S.C., Section 7206(1) - Filing a False Tax Return
Maximum penalty per count: three years; fine of $100,000

Title 26, U.S.C., Section 7206(2) - Aiding in the Preparation of a False Tax Return
Maximum penalty per count: three years; fine of $100,000

AGENCY

Internal Revenue Service, Criminal Investigation