Owner Of Mchenry Tax Preparation Business And Seven Others Arrested On Federal Charges In Alleged $600,000 Tax Fraud Scheme
ROCKFORD — The owner of a McHenry, Ill., tax preparation business, together with three employees and four clients, were arrested today after being indicted on federal charges alleging they participated in a $600,000 mail fraud scheme by preparing and filing over 200 false personal federal income tax returns for tax years 2006-2011. The defendants were also charged with conspiring with each other between March 2009 and May 2012 to defraud the United States by making false claims for tax refunds and obtaining payment.
A seven-count indictment returned by a federal grand jury last week was unsealed today following the arrests of PATTY CORDOBA, 42, of Crystal Lake, the owner of Patty’s Tax Service (PTS); three of its employees including Patty Cordoba’s husband, MARIO CORDOBA, 47, of Crystal Lake; LUISA CARBAJAL, 52, of Marengo; and ALICIA ARVALO, 48, of Poplar Grove; and four clients, OLGA LIDIA DIAZ-HERNANDEZ, 45, of McHenry; VICTOR HERNANDEZ, 41, of McHenry; VERONICA SANCHEZ-BARRADAS, 39, of McHenry; and CESAR BESICHE, 48, of McHenry.
All of the defendants pleaded not guilty at their arraignments today before U.S. Magistrate Judge Iain D. Johnston in Federal Court in Rockford. The defendants were ordered to remain in custody pending detention hearings before Magistrate Johnston on Friday for Patty Cordoba, Mario Cordoba and Carbajal, next Tuesday for Hernandez, and next Wednesday for Arevalo, Diaz-Hernandez, Sanchez-Barradas, and Besiche.
All eight defendants were each charged with one count of conspiracy to defraud the United States by obtaining the payment of false claims for tax refunds and at least one count, or more, of mail fraud. The indictment also seeks forfeiture of $642,514 from Patty and Mario Cordoba, Carbajal, Arevalo, Hernandez, and Sanchez-Barradas.
According to the indictment, Patty Cordoba, and her employees, Mario Cordoba, Carbajal and Arevalo, prepared more than 200 fraudulent personal federal income tax returns for Diaz-Hernandez, Hernandez, Sanchez-Barradas, Besiche and others, claiming materially false amounts of income and credits for tax years 2006-2011. The fraudulent tax returns were filed with the IRS and falsely claimed over $600,000 in tax refunds. As part of the scheme, Patty and Mario Cordoba, Carbajal and Arevalo allegedly prepared fraudulent returns for other filers using information provided by Diaz-Hernandez, Hernandez, Sanchez-Barradas, Besiche and others.
It was further part of the scheme that the defendants created and caused others to create fraudulent Individual Taxpayer Identification Number applications for taxpayers and dependents to accompany the fraudulent tax returns in order to increase the number of dependents listed on particular taxpayers’ return, thus increasing the amount of fraudulent tax refunds claimed on those returns. As part of the scheme, Patty and Mario Cordoba, Carbajal and Arevalo falsely represented that Diaz-Hernandez’s, Hernandez’s, Sanchez-Barradas’, Besiche’s, and others filers’ dependents were not residing in Mexico and fraudulently claimed that those dependents were qualifying children for the Child Tax Credit and Additional Child Tax Credit in order to fraudulently increase the amounts of the refunds claimed in those returns, the indictment alleges.
Patty and Mario Cordoba, Carbajal and Arevalo allegedly prepared returns for themselves and Diaz-Hernandez, Hernandez, Sanchez-Barradas, Besiche, and other filers, using false information to make it appear that they were entitled to substantial tax refunds. Further, Patty and Mario Cordoba, Carbajal and Arevalo allegedly prepared letters to the IRS on behalf of Diaz-Hernandez, Hernandez, Sanchez-Barradas, Besiche, and others, when the IRS requested additional information regarding income claimed on the returns that they had prepared, that falsely stated that Diaz-Hernandez, , Sanchez-Barradas, Besiche, and others had earned wages from an employer. PTS’s fees for preparing tax returns reporting cash wages were more than three times its fee for preparing returns reporting wages on a Form W-2, according to the indictment.
Each count of mail fraud carries a maximum penalty of 20 years in prison, a maximum fine of $250,000 fine, or an alternate fine totaling twice the loss or twice the gain derived from the offense, whichever is greater. Conspiracy to defraud the United States by obtaining payment of false claims carries a maximum penalty of 10 years in prison and a maximum fine of $250,000. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory United States Sentencing Guidelines, and restitution is mandatory.
The indictment was announced today by Zachary T. Fardon, United States Attorney for the Northern District of Illinois, James C. Lee, Special Agent-In-Charge of the Chicago Field Office of Internal Revenue Service Criminal Investigation Division; Tony Gómez, Inspector in Charge of the Chicago Division of the United States Postal Inspection Service; and Gary Hartwig, Special Agent-In-Charge of the Chicago Field Office of Homeland Security Investigations.
The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt of each defendant beyond a reasonable doubt.
The government is represented by Assistant U.S. Attorney Joseph C. Pedersen.