Bakersfield Men Indicted for $25 Million Tax Refund Fraud Scheme Using Stolen Identities
For Immediate Release
U.S. Attorney's Office, Eastern District of California
FRESNO, Calif. — On Sept. 21, 2023, a federal grand jury returned an 11-count indictment charging Bakersfield residents Miguel Martinez, 39, and Victor Cruz, 38, for their involvement in a $25 million tax refund fraud scheme, U.S. Attorney Phillip A. Talbert announced today.
Martinez and Cruz were each charged with conspiracy to defraud the United States and submission of false claims to the Internal Revenue Service. Martinez was also charged with identity theft. He has been in custody since his arrest in June 2023 on a criminal complaint. Cruz was arrested Monday at the Los Angeles airport upon his arrival from Mexico.
According to court documents, between November 2019 and June 2023, the defendants and others participated in a scheme to file hundreds of fraudulent individual federal income tax returns that claimed over $25 million in refunds. The defendants used stolen identities to create fake businesses and reported phony wage and withholding information to the IRS that the businesses never actually paid. The purported owners of the businesses listed on these documents were unaware that the businesses even existed. The defendants then submitted hundreds of individual income tax returns to the IRS in the names of the individuals whose identities they had stolen, claiming tax refunds based on the income and withholding information. Cruz was a tax preparer in Bakersfield who filed a significant number of the fraudulent returns. In many cases, the fraudulent tax returns resulted in tax refunds being paid out through checks issued by the IRS. The checks were primarily cashed at businesses in Kern County.
According to court documents, at arrest, Martinez was in possession of more than $750,000 in fraudulent tax refund checks and identification cards for more than 200 people.
This case is the product of an investigation by the Internal Revenue Service Criminal Investigation. Assistant U.S. Attorneys Joseph D. Barton and Henry Z. Carbajal III are prosecuting the case.
If convicted, Martinez and Cruz each face a statutory maximum of 10 years in prison and a $250,000 fine for the conspiracy count, and five years in prison and a $250,000 fine for each of the false claims counts. Martinez also faces a statutory maximum of five years in prison and a $250,000 fine for the identity theft count. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
Updated October 10, 2023