Seven Defendants Convicted for Their Roles in $33 Million Tax Refund Scheme
FRESNO, Calif. — After a three-and-a-half week trial, a federal jury in Fresno has found four defendants guilty of participating in a tax refund scheme claiming more than $33 million in federal tax refunds, United States Attorney Benjamin B. Wagner announced.
Fresno residents Gaylene Lynette Bolanos,58; and Leroy Donovan Combs, 74; Madera County resident Charles Wayne Uptergrove, 57; and Ladonna Lee Moon, 55, of Texas, were convicted of submitting false claims against the United States. Bolanos was also found guilty of conspiracy to defraud. The jury was unable to reach a verdict as to Rodney Edwin Moon, of Texas.
Prior to trial, co-defendants James Karam Schwartz, 60, and Louie Calles, 65, pleaded guilty to submitting false claims against the United States. Another co-defendant, Oswald Georgner, 66, of Fresno, pleaded guilty to the conspiracy to defraud. Each of the defendants is awaiting sentencing.
According to court documents and testimony at trial, between August 2008 and October 16, 2008, Bolanos and Georgner conspired to submit false claims for income tax refunds. Bolanos and Georgner worked with others, including Combs, Uptergrove, Calles, Schwartz, and Ladonna Lee Moon to submit false tax returns in an attempt to eliminate their debts and receive sizable tax refunds by submitting their tax returns with false claims of interest income and withholding citing IRS Form 1099-OID.
As part of the scheme, the defendants submitted false tax returns to the IRS seeking more than $33 million in fraudulent tax refunds. As a result of these fraudulent tax refund claims, the IRS issued approximately $400,000 in fraudulent refunds. 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.
“These defendants went well beyond cheating on their taxes to avoid paying their fair share,” said U.S. Attorney Wagner. “They sought to steal millions in taxpayer funds meant to provide services for us all. We are pleased by the jury’s verdict and we will continue our efforts to bring to justice those who would plunder the public fisc.”
“Plain and simple, this was fraud,” said Acting Special Agent in Charge Thomas McMahon, IRS Criminal Investigation. “Today’s conviction should send a clear message that those involved in these schemes will not go undetected. It is more important than ever that the American people feel confident that everyone is playing by the rules and paying the taxes they owe.”
This case is the product of an investigation by the Internal Revenue Service‑Criminal Investigation. Assistant United States Attorneys Grant B. Rabenn and Henry Z. Carbajal III are prosecuting the case with assistance from Trial Attorney Karen J. Sharp, of the Department of Justice, Antitrust Division.
The four defendants convicted at trial are scheduled to be sentenced my United States District Judge Anthony W. Ishii on March 7, 2016. They face a maximum statutory penalty of five years in prison on each false claims charge. Bolanos and Georgner face a maximum statutory penalty of 10 years in prison for the conspiracy charge. The actual sentences, 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.