Federal Jury Finds Stockton Woman Guilty On All Counts In Criminal Tax Case

SACRAMENTO, Calif. — Terrylyn McCain, 67, of Stockton, was found guilty today by a federal jury of a scheme to defraud the United States by filing false tax returns and buying gold with the proceeds of the fraud, United States Attorney Benjamin B. Wagner announced.

The jury found McCain guilty of four counts of mail fraud in the fraud scheme for mailing false tax returns, four counts of making false claims against the United States by falsifying personal income tax returns for tax years 2005 to 2008, and three counts of money laundering for buying gold with proceeds of the fraud. After a five-day trial, the jury deliberated less than two hours.

According to court documents and evidence introduced at trial, McCain mailed tax returns to the IRS and claimed that banks, tow truck companies, department stores, interior designers and even her gardener had withheld income due to her. To support her scheme, she utilized false documents that indicated significant tax withholdings, including 1099–OID forms that were purportedly issued by financial institutions such as Bank of Stockton and national retailers such as Costco and Target. In reality, funds were never withheld, the 1099–OID forms were fraudulent, and McCain’s tax returns were falsely inflated by hundreds of thousands of dollars.

In total, McCain filed at least 12 fraudulent returns that sought nearly $3 million in tax refunds. In just one instance, early in the scheme, the IRS refunded $156,373 to McCain. Within the month, she had used the refund money to purchase approximately $62,000 in gold coins, forming the basis for the money laundering charges.

According to documents and evidence introduced at trial, the IRS attempted to collect the money it mistakenly paid McCain in response to one of her fraudulent tax returns. The trial evidence revealed that McCain refused to return the mistaken payment, going so far as to fraudulently prepare a counterfeit cashier’s check using an IRS payment voucher to satisfy her tax debt.

U.S. Attorney Wagner said: “As millions of Americans prepare to file their tax returns in the coming weeks, the jury’s swift guilty verdict on all counts in this case is a reminder that these few who attempt to cheat their country should expect little sympathy from federal law enforcement or from the citizens who are called to serve their civic duty as jurors.”

This case is the product of an investigation by the Internal Revenue Service-Criminal Investigation. Assistant United States Attorneys William S. Wong and Kevin Khasigian are prosecuting the case.

McCain is scheduled to be sentenced by United States District Judge Troy L. Nunley on June 4, 2015. She was ordered detained in custody pending sentencing. She faces a maximum sentence of 20 years in prison for the mail fraud counts, five years in prison for the false claims against the United States counts, and 20 years in prison for the money laundering counts. The actual sentence, however, will 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.