Superseding Indictment Charges Two Brothers with Filing 30 Fraudulent Tax Returns Seeking Refunds of More Than $200 Million
A federal grand jury has returned a superseding indictment against two brothers late yesterday, adding conspiracy to commit wire fraud, mail fraud, aggravated identity theft and money laundering charges arising from a scheme in which they filed 30 fraudulent tax returns seeking refunds of more than $204 million, announced U.S. Attorney Rod J. Rosenstein of the District of Maryland, Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and Special Agent in Charge Thomas J. Kelly of the Internal Revenue Service-Criminal Investigation (IRS-CI) Washington, D.C., Field Office.
“As millions of U.S. taxpayers prepare to honestly file their returns, the Tax Division, working with its law enforcement partners, remains committed to prosecuting those individuals who seek to abuse and manipulate our nation’s tax system for personal gain,” said Principal Deputy Assistant Attorney General Ciraolo.
“The IRS allegedly sent $16 million to two criminals who filed bogus tax returns claiming ‘refunds’ that were not owed,” said U.S. Attorney Rosenstein. “Federal agents and prosecutors have a duty to pursue perpetrators of such fraud schemes and try to recover money stolen from the United States Treasury.”
“The American tax system is designed to fund vital government services to people in this country,” said Special Agent in Charge Kelly. “It is not a slush fund for thieves and fraudsters. Those who illegally target our nation’s tax dollars for personal financial gain could face criminal prosecution and lengthy prison sentences."
The six-count superseding indictment alleges that Sean Aude Gallman, 38, of Upper Marlboro, Maryland, and Eric Maurice Gallman, 41, of Huntersville, North Carolina, established trusts and business entities, and used mailboxes at numerous private commercial postal carrier stores in Maryland and North Carolina as the addresses for the trusts and business entities. The defendants, acting as trustees and agents, mailed fraudulent tax returns to the IRS in the names of the trusts and businesses requesting refunds.
The indictment alleges that in January 2013, Sean Gallman mailed to the IRS a fraudulent 2012 tax return in the name of the Gallman Charitable Trust, requesting a refund of $8,218,930. Also around this time, the defendants mailed to the IRS a fraudulent 2012 tax return in the name of LEA Group Holdings Trust, requesting a refund of $8,293,562. The defendants knew that the trusts were not entitled to the tax refunds. After receiving refund checks in these amounts, on Feb. 15 and March 11, 2013, the defendants deposited the two refunds in bank accounts they controlled. To hide their receipt of these refunds, the defendants used cashier’s checks and other financial instruments to transfer a portion of the money to third parties and other bank accounts.
The indictment further alleges that from January 2013 to March 23, 2014, Sean Gallman filed an additional 19 fraudulent tax returns for 2012 or 2013, in the name of numerous purported trusts and business entities, seeking $200,924,949 in refunds. On March 16, 2014, Eric Gallman filed a fraudulent tax return for 2013 in the name of a business entity, seeking a refund of $275,548. And from February 2013 to March 2014, the defendants together filed eight fraudulent tax returns for 2012 or 2013 in the name of purported trusts and business entities, seeking $42,091,389 in refunds.
Altogether, the defendants are alleged to have filed a total of 30 fraudulent tax returns seeking refunds totaling $204,971,904, for which the IRS paid two refunds totaling $16,512,492.
The indictment seeks forfeiture of the two refunds paid by the IRS; $11,529,954 seized from numerous bank accounts; foreign currency and gold and silver coins seized from a residence in Upper Marlboro; nine residential properties located in Upper Marlboro and Laurel, Maryland, North Carolina and South Carolina; and two Mercedes-Benz vehicles and one Hyundai vehicle.
The defendants each face a statutory maximum sentence of 20 years in prison for each count of conspiring to commit mail and wire fraud, conspiring to commit money laundering, and mail fraud. Sean Gallman also faces a statutory maximum sentence of 20 years in prison for an additional count for mail fraud and for money laundering, and a statutory mandatory minimum sentence of two years in prison consecutive to any other sentence imposed for aggravated identity theft.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.
U.S. Attorney Rosenstein praised the Tax Division and IRS-Criminal Investigation for its work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Thomas P. Windom and Trial Attorney Erin Pulice of the Department of Justice Tax Division, who are prosecuting the case.