Providence Resident Pleads Guilty In Alleged $1.8 Million Dollar Fraudulent Tax Return Scheme
PROVIDENCE, R.I. – Julian Balbi, 22, of Providence, pleaded guilty in federal court in Providence today to participating in a scheme in which personal identifying information of more than 1,200 individuals was collected, of which many were used to file fraudulent tax returns with the IRS totaling more than $1.8 million dollars. Balbi pleaded guilty to four counts of aggravated identity theft and one count each of conspiracy and theft of government property.
Balbi, and a co-defendant in this matter, Richard Lara, 22, of Providence, were arrested by Rhode Island State Police on January 2, 2012, on an unrelated matter during a routine traffic stop. During a court authorized search of the vehicle, State Police discovered 87 U.S. Treasury checks made out to third parties totaling $596,646.46 allegedly generated by fraudulent tax returns. Also seized were several ledgers and notebooks containing the personal identity information, including Social Security numbers and dates of birth, of hundreds of individuals; ledgers containing employer information such as Employee Identification Numbers and addresses; and a USB flash drive containing numerous spreadsheets detailing taxpayer information and fraudulent tax returns that were allegedly filed with the IRS.
Balbi’s guilty plea is announced by United States Attorney Peter F. Neronha, Colonel Steven G. O’DonnellSuperintendent of the Rhode Island State Police, William P. Offord, Special Agent in Charge of IRS Criminal Investigation, and Ted A. Arruda, Resident Agent in Charge of the Providence Office of the U.S. Secret Service
According to information presented to the court, Rhode Island State Police executed a court authorized search of Balbi’s Providence residence where they seized numerous computers and USB flash drives. A forensic examination of the computers and flash drives allegedly revealed a number of spreadsheets containing ledgers identical to those on the flash drives allegedly seized from Mr. Balbi’s vehicle. A court authorized search of Richard Lara’s residence resulted in the seizure of another ledger which allegedly contains personal identity information which matched information contained on the flash drive allegedly seized from Balbi’s vehicle.
According to information presented to the court, IRS and U.S. Secret Service agents interviewed 17 individuals listed as payees on the treasury checks seized from Balbi’s vehicle. All 17 stated they did not file the tax return in question, and that they did not know Balbi or Lara. The IRS conducted an analysis of all of the information associated with the 1,258 individuals listed on the various ledgers and computers allegedly seized from Balbi and Lara. The investigation revealed that between April 2011 and January 2012, 823 fraudulent tax returns seeking refunds totaling $1,854,438.46 were allegedly filed with the IRS.
Julian Balbi is scheduled to be sentenced by U.S. District Court Judge Mary M. Lisi on September 18, 2014.
Conspiracy to commit a crime against the U.S. Government is punishable by statutory penalties of up to 5 years in federal prison, a fine of up to $250,000 and a term of supervised release of up to 3 years. Theft of government property (treasury checks) is punishable by statutory penalties of up to 10 years in federal prison and a fine of up to $250,000. Aggravated identity theft is punishable by statutory mandatory sentence of 2 years imprisonment, to be served consecutive to the sentence imposed for theft of government property, and a fine of $250,000.
Richard Lara is awaiting trial on an indictment returned by a federal grand jury on February 26, 2014, which charges him with four counts of aggravated identity theft and one count each of conspiracy and theft of government property
An indictment is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The cases are being prosecuted by Assistant U.S. Attorney John P. McAdams.
To assist the media and the public, a glossary of federal judicial terms and procedures is available at http://www.justice.gov/usao/justice101/