Lemon Grove Woman Sentenced to 14½ Years in Prison for Using Stolen IDs to File Fraudulent Returns Seeking More than $2 Million in Refunds

Assistant U. S. Attorney Christopher P. Tenorio (619) 546-8413

 

NEWS RELEASE SUMMARY – July 12, 2017

 

SAN DIEGO – Cynthia Lozano of Lemon Grove was sentenced in federal court today to 175 months in prison in connection with two complex frauds involving identity theft, false tax returns and hundreds of unwitting victims. The second fraud scheme was committed while she was awaiting sentencing for the first one. In total, Lozano sought over $2 million in refunds from false tax returns

 

Lozano, who appeared before U.S. District Court Judge Anthony J. Battaglia, was also ordered to pay $1,479,134.77 in restitution to the Internal Revenue Service and Department of Housing and Urban Development (“HUD”). In all, the defendant was sentenced for 84 counts of mail and wire fraud, false claims and aggravated identity theft.

 

In April 2013, Lozano was charged in a 33-count indictment (13CR1354-AJB) for filing false tax returns in the names of persons who were often unaware that she used their names and Social Security numbers to defraud the IRS. Lozano directed the IRS to deposit tax refunds via electronic transfer into bank accounts opened under the names of her relatives and associates. For some actual tax-preparation clients, Lozano claimed a larger refund from the IRS than she represented to her clients. She directed the IRS to deposit the excess amounts in one of the bank accounts under her control without her clients’ knowledge.

 

On February 13, 2015, Lozano pleaded guilty to aggravated identity theft and participation in her fraudulent scheme. In total, Lozano used the identities of over 200 victims to file over 400 federal tax returns, resulting in her receipt of over $1.5 million in fraudulently-obtained tax refunds between 2008 and 2013. Lozano used the majority of the funds obtained from her initial scheme to purchase 20 properties in and around Phoenix, Arizona. But her criminal conduct did not stop.

 

In June 2015, while Lozano was awaiting sentencing, agents from the Internal Revenue Service - Criminal Investigations (“IRS-CI”) and Department of Treasury, Inspector General for Tax Administration (“TIGTA”) discovered that Lozano filed additional federal tax returns in a manner similar to her previous scheme. Lozano was subsequently charged in a second indictment (16CR1332-AJB) with 51 additional counts, including false claims to the IRS, wire and mail fraud, and aggravated identity theft.

 

Some of the victims of Lozano’s 2015 scheme were actual or prospective tenants at the Arizona properties purchased by Lozano with funds from her earlier scheme. After Lozano purchased the properties, she transferred titles to the name of her mother, who does not live in the United States. Using her mother’s name as an alias, Lozano obtained authorization to rent some of the Arizona properties under the Section 8 Tenant-Based Assistance Housing Choice Voucher Program (“Section 8 program”) administered by the Department of Housing and Urban Development (“HUD”). Through the Section 8 program, a local Public Housing Authority supplements rent to a qualifying property owner on behalf of qualifying tenants. Lozano submitted false documents under her alias to HUD, under penalty of perjury, to qualify for supplemental rental payments under the Section 8 program.

 

For the 2015 scheme, Lozano obtained the names and Social Security numbers from her Section 8 tenants, and others who submitted rental applications to Lozano. She used their names and numbers to submit additional false federal tax returns. Lozano then directed the IRS to deposit the tax refunds into new bank accounts she opened with the assistance of two co-conspirators, Gerardo Baker and David Hernandez. Baker and Hernandez have since pleaded guilty and been sentenced for their participation in the conspiracy.

 

Lozano pleaded guilty to two counts of the first indictment (13CR1354-AJB) on February 13, 2015, and the remaining 31 counts on August 31, 2016. She pleaded guilty to all 51 counts of the second indictment (16CR1332-AJB) on November 15, 2016.

 

At sentencing, Judge Battaglia took special account of the fact that Lozano committed additional criminal conduct while out on bail. He said it was “a unique case that needs to be treated uniquely.” As part of the sentence, Judge Battaglia ordered that the restitution include $107,194 to HUD for the supplemental rental payments that Lozano she received as a result of her false statements. A status hearing regarding forfeiture of the properties Lozano purchased with the proceeds from the original scheme is scheduled for August 25, 2017.

 

Acting U.S. Attorney Robinson said, “The lying, cheating defendant went on a white-collar crime spree that continued even after she got caught. It is astounding that she committed a second major fraud while awaiting sentencing for the first. Her greed-fueled rampage ends today, with a sentence that recognizes the significant losses suffered by her victims, including U.S. taxpayers.”

 

“Using stolen identities, Cynthia Lozano filed hundreds of fraudulent tax returns, cheating the U.S. Treasury out of more than $1.5 million,” said Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division. “She preyed on low income individuals, ripping off their personal information to file bogus tax returns and brazenly continued her criminal conduct even while awaiting sentencing in federal court on tax fraud and identity theft charges. Her 14 1/2 year sentence sends a clear message that the Department and IRS will aggressively investigate and prosecute those who steal taxpayer identities and file fraudulent claims for refund.”

 

“Individuals who commit refund fraud and identity theft of this magnitude and with this degree of trickery, dishonesty and deceit, deserve to be punished to the fullest extent of the law,” stated IRS Criminal Investigation Special Agent in Charge R. Damon Rowe. “IRS Criminal Investigation, along with our law enforcement partners and the United States Attorney’s Office and the Justice Department’s Tax Division, remain vigilant in identifying, investigating and prosecuting those individuals who seek to willfully defraud the United States Treasury and blatantly disregard the victims of their schemes.”

 

“This is a case about the irresistibility of greed,” said Rod Ammari, Special Agent in Charge, San Francisco Field Division, TIGTA Office of Investigations. “Even though Ms. Lozano had pleaded guilty and awaited sentencing on 51 counts of aggravated identity theft, wire and mail fraud, she could not resist the temptation of engaging in additional criminal illegal schemes to steal more identities and file additional fraudulent tax returns -- 69 new fraudulent tax returns to be exact.

 

“Fortunately, we were able to bring this individual to justice for the additional crimes she committed. We wish to thank our law-enforcement partners at the Justice Department and IRS Criminal Investigation for their outstanding collaboration and teamwork during this long and complicated investigation.”

 

DEFENDANT

 

Cynthia Lozano                                    Age: 35

 

SUMMARY OF CHARGE             

 

Case Number: 13CR1354-AJB

 

30521237. 1-13: Title 18, United States Code, Section 287 (false claims)

Maximum penalty: 5 years of custody; $250,000 Fine

 

Counts 14-25: Title 18, United States Code, Section 1343 (wire fraud)

Maximum penalty: 20 years of custody; $250,000 Fine

 

Count 26: Title 18, United States Code, Section 1341 (mail fraud)

Maximum penalty: 20 years of custody; $250,000 Fine

 

Counts 27-33 Title 18, United States Code, Section 1028A (aggravated identity theft)

                        Minimum penalty: 2 years of custody, consecutive to sentence for other crimes; No Probation; Fine same as for underlying offense

 

 

Case Number: 16CR1332-AJB

 

Count 1: Title 18, United States Code, Section 371 (conspiracy)

Maximum penalty: 5 years of custody; $250,000 Fine

 

Counts 2-15: Title 18, United States Code, Section 287 (false claims)

Maximum penalty: 5 years of custody; $250,000 Fine

 

Counts 16-17: Title 18, United States Code, Section 1343 (wire fraud)

Maximum penalty: 20 years of custody; $250,000 Fine

 

Count 18-29: Title 18, United States Code, Section 1341 (mail fraud)

Maximum penalty: 20 years of custody; $250,000 Fine

 

Counts 30-37: Title 18, United States Code, Section 641 (theft of government property)

Maximum penalty: 10 years of custody; $250,000 Fine

 

Counts 38-51: Title 18, United States Code, Section 1028A (aggravated identity theft)

Minimum penalty: 2 years of custody, consecutive to sentence for other crimes; No Probation; Fine same as for underlying offense

 

AGENCIES

 

Internal Revenue Service - Criminal Investigations (“IRS-CI”)

Department of Treasury, Inspector General for Tax Administration (“TIGTA”)