Three People Admit Roles In Extensive Tax Refund Check Scam

NEWARK, N.J. — A Bronx, N.Y., man today admitted his role in conspiring to steal government funds through his involvement in an extensive scheme to fraudulently obtain income tax refund checks issued by the United States, U.S. Attorney Paul J. Fishman announced.

Luis Pena, 31, was the third member of the conspiracy to plead guilty this week; Gloria Rivera, 43, of Bronx, also pleaded guilty today and Lourdes Ortiz, 41, of Bronx, pleaded guilty March 10, 2014. Each defendant pleaded guilty before U.S. Magistrate Judge Michael A. Hammer in Newark federal court to separate informations charging them with conspiracy to commit theft of government property.

Stolen Identity Refund Fraud

Stolen Identity Refund Fraud (SIRF) is a common type of fraud committed against the United States government that results in more than $2 billion in losses annually to the United States Treasury. SIRF schemes generally share a number of hallmarks:

• SIRF perpetrators obtain personal identifying information, including Social Security numbers and dates of birth, from unwitting individuals, who often reside in the Commonwealth of Puerto Rico.
   
• Participants complete Individual Income Tax Return 1040 Forms using the fraudulently obtained information, falsifying wages earned, taxes withheld and other data and always ensuring the fraudulent form generates a tax refund check from the U.S. Treasury.
   
• They direct the U.S. Treasury Department to mail the fraudulently obtained checks to locations the perpetrators control or can access. In some cases, SIRF perpetrators bribe mail carriers to remove the checks from their mail routes.
   
• With the checks in hand, they generate cash proceeds by depositing the Fraudulent Treasury Checks into bank accounts that they control.

According to documents filed in these cases and statements made in court:

Pena, Rivera, and Ortiz, each admitted that they knew that the U.S. Treasury checks involved in the conspiracy had been generated by conspirators filing false and fraudulent income tax returns with the IRS in order to obtain refunds to which they were not entitled. All three stated that they knew that the tax refund scheme was intended to, and did, defraud the IRS and the U.S. Treasury.  At the time of the conspiracy, Rivera and Ortiz were employed as mail carriers by the U.S. Postal Service.

In 2011, Pena approached Rivera and arranged to direct fraudulent tax refund checks to Rivera’s mail route and have those checks intercepted and retrieved by Rivera in exchange for a cash payment to Rivera of at least $400 per check. After directing the checks to Rivera’s mail route, Pena provided Rivera with identifying information for the fraudulent treasury tax refund checks that he directed to her mail route. 

Rivera, however, became unable to work due to illness in September 2011 and was replaced by mail carrier Ortiz on the Flushing, Queens, N.Y., mail route. Rivera approached Ortiz and asked Ortiz to intercept the fraudulent checks in exchange for approximately $200 per fraudulent check.  Ortiz agreed.
 
Using the information provided by Pena, from September 2011 through May 2012, Rivera – or Ortiz on Rivera’s behalf – intercepted from the Flushing mail route the fraudulent checks that corresponded to the information given to Rivera by Pena.  In exchange for the intercepted checks, Pena gave Rivera cash payments, which Rivera passed along – in part – to Ortiz. 

The fraudulently obtained tax refund checks stolen by Pena, Ortiz, and Rivera totaled $336,647. 
Once the stolen checks were returned to Pena, he passed the checks on to other conspirators, many of whom were in Newark, N.J.  They cashed the checks, primarily by using bank accounts controlled by conspirators.

The charge to which the defendants pleaded guilty carries a maximum penalty of five years in prison and a fine of up to $250,000, or twice the gross amount of any pecuniary gain or loss. Sentencing for Ortiz is scheduled for July 7, 2014; for Rivera, July 8, 2014, and for Pena, July 9, 2014

U.S. Attorney Fishman credited special agents of the IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen; special agents of the U.S. Postal Inspection Services, under the direction of Inspector in Charge Maria Kelokates; special agents of the U.S. Secret Service, under the direction of Special Agent in Charge James Mottola; and special agents of the U.S. Postal Service - Office of the Inspector General, under the direction of Special Agent in Charge Rafael Medina.
The government is represented by Assistant U.S. Attorney Sara F. Merin of the U.S. Attorney’s Office General Crimes Unit in Newark.

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Defense counsel:
Ortiz: Olubukola Adetula Esq., Irvington, N.J.
Rivera: Elizabeth Smith, Esq., Mendham, N.J.
Pena: Patrick Brackley Esq., New York

Pena Information
Ortiz Information
Rivera Information