Central Valley Defendants Sentenced to Prison for $33 Million Tax Refund Scheme

FRESNO, Calif. — United States District Judge Anthony W. Ishii sentenced four defendants today after being found guilty in a November 2015 trial for a tax refund scheme that claimed over $33 million in refunds, United States Attorney Benjamin B. Wagner announced.

• Gaylene Lynnette Bolanos, 58, of Fresno, was sentenced to 10 years in prison and ordered to pay $429,300 in restitution;

• Leroy Donovan Combs, 74 of Fresno, was sentenced to three years and nine months in prison;

• Charles Wayne Uptergrove, 57 of Madera County; was sentenced to three years and three months in prison; and

• Ladonna Lee Moon, 55, of Texas, was sentenced to one year and nine months in prison. All four defendants were convicted of submitting false claims against the IRS and conspiracy.

Prior to trial, three co-defendants pleaded guilty to submitting false claims to the IRS and were sentenced. On February 29, 2016, Judge Ishii sentenced Louis Calles, 67, of Fresno to 16 months in prison and James Schwartz, 61, of Fresno, to one year and a day of in prison. On January 11, 2016, Oswald Georgner, was sentenced to 18 months in prison.

According to court documents and testimony at trial, between August 2008 and October 16, 2008, Bolanos and Georgner, with the assistance of their co-defendants submitted false tax returns utilizing IRS Form 1099-OID in an attempt to eliminate their debts and receive sizable tax refunds. Specifically, the tax returns were fraudulent because the defendants listed their debts, bills, and other non-income items as interest income. The defendants then claimed that almost all of that interest income had been withheld and paid to the IRS, even though none of the purported interest income was ever withheld. Based on the reported withholdings, the defendants claimed they were owed millions of dollars in refunds by the IRS.

In all, the defendants submitted false tax returns to the IRS seeking more than $33 million in fraudulent tax refunds, and in response the IRS issued approximately $400,000 in unearned refunds

U.S. Attorney Wagner stated: “These defendants submitted bogus tax forms to the IRS claiming enormous unearned refunds. Through their fraud, they sought to enrich themselves and victimize American taxpayers. The U.S. Attorney’s Office will continue to work with IRS Criminal Investigation to enforce our nation’s tax laws and stop fraud and abuse.”

“With more than $33 million in federal tax refunds claimed, this was not your typical false claims case against the government — it exceeded most salaries of hard-working, tax-abiding citizens,” said Special Agent in Charge Michael T. Batdorf, IRS Criminal Investigation. “Plain and simple, this was fraud. Today‘s sentencings reflect the seriousness of these crimes, promotes respect for the law and provides just punishment.”

This case was the product of an investigation by the Internal Revenue Service‑Criminal Investigation. Assistant United States Attorneys Grant B. Rabenn and Henry Z. Carbajal III prosecuted the case with assistance from Trial Attorney Karen J. Sharp, of the Department of Justice, Antitrust Division.