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Justice News

Department of Justice
U.S. Attorney’s Office
District of Minnesota

FOR IMMEDIATE RELEASE
Wednesday, November 12, 2014

Pine City Couple Sentenced To A Total Of 70 Months In Federal Prison For Tax Fraud

United States Attorney Andrew M. Luger today announced the sentencing of MARK ALLEN GARCIA, 60, and PATRICIA ANN MCQUARRY, 56, for conspiracy to defraud the United States by filing false individual income tax returns. On May 20, 2014, following a one-week trial, a federal jury found the two defendants guilty of all charges. United States District Court Judge Patrick J. Schiltz sentenced GARCIA to 30 months in prison and MCQUARRY to 40 months in prison. Both defendants were also ordered to pay $226,000 in restitution.

As proven at trial, beginning in 2007, GARCIA and MCQUARRY engaged in a scheme to obstruct foreclosure proceedings on their house, avoid responsibility for repaying loans, and steal money from the United States Treasury by filing false individual income tax returns. In 2007, GARCIA and MCQUARRY were several months behind on their mortgage payments and attempted to obstruct foreclosure proceedings by sending a host of frivolous documents to their bank. The documents included fake tax forms and a “Bonded Promissory Note” for $10,000,000, along with instructions that the financial institution should use the document to pay off their $266,000 mortgage and keep the remaining funds.

For tax years 2007 and 2008, both defendants filed self-prepared tax returns falsely claiming to have received hundreds of thousands of dollars in 1099-OID income and that the entire amount had been withheld and paid over to the IRS on their behalf. Although the defendants filled out their tax returns in a way that made them appear legitimate, GARCIA and MCQUARRY knew that their claims for large refunds were frivolous and were based on the fraudulent 1099-OID tax defier scheme.

Both defendants created fake 1099s showing false interest income and withholding from various financial institutions, going so far as to include the banks’ tax identification numbers on the forged documents. In total, the defendants sought more than $500,000 in false refunds. GARCIA and MCQUARRY attempted to hide the proceeds of their fraud scheme by purchasing real estate near Pine City, Minn., and then transferring the property to a private Trust called “POKE-A- BOTTOM.” The defendants also used the stolen money to purchase gold coins and a motorhome.

This case resulted from an investigation conducted by the Internal Revenue Service-Criminal Investigations. It was prosecuted by Assistant U.S. Attorneys Kimberly A. Svendsen and Timothy C. Rank.

Defendant Information:

MARK ALLEN GARCIA, 60
Pine City, Minn.

Convicted:
• Conspiracy to Defraud the United States, 1 count
• False Claims Against the United States, 2 counts

Sentenced:
• 30 months in prison
• 3 year term of supervised release

PATRICIA ANN MCQUARRY, 56
Pine City, Minn.

Convicted:
• Conspiracy to Defraud the United States, 1 count
• False Claims Against the United States, 2 counts

Sentenced:
• 40 months in prison
• 3 year term of supervised release

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Updated April 30, 2015