Pennington Gap Man Sentenced on Conspiracy to Defraud the IRS

ABINGDON, VIRGINIA – United States Attorney John P. Fishwick Jr. announced today the sentence of a Pennington Gap man who previously pled guilty in the United States District Court for the Western District of Virginia in Abingdon.

William Ziehler, 38, of Pennington Gap, Va., previously pled guilty to one count of conspiracy to defraud the government. Yesterday in District Court, Ziehler was sentenced to 51 months in prison, to be followed by three years of supervised release.

“It is the duty of this Department of Justice to ensure the integrity of that tax paying system,” United States Attorney John P. Fishwick Jr. said today. “Prosecuting individuals who attempt to defraud that system maintains public trust and serves as example to what happens to those who willfully attempt to defraud the system.”

According to evidence presented in District Court, Ziehler and others participated in a sophisticated conspiracy to defraud the federal government.  The scheme began when an inmate at a Tennessee state prison gathered personally identifiable information (including birth dates and social security numbers) belonging to other inmates, which he then used to complete Internal Revenue Service (IRS) Form 1040s.  These Form 1040s contained false information, including false addresses outside of prison and false claims that the inmates were due a tax refund based on wages never earned by those inmates.  Subsequently, these Form 1040s were sent to persons outside of the prison who then forwarded the Form 1040s to the IRS for processing.  Based on these Form 1040s, the IRS issued tax refund checks in the names of these inmates.  Many of these tax refund checks were cashed at banks throughout Southwest Virginia by persons using fraudulent power-of-attorney forms.   Among other conduct, Ziehler has admitted to mailing false tax returns to the IRS and cashing the resulting tax refund checks using fraudulent power-of-attorney forms.  

The investigation of the case was conducted by the Internal Revenue Service Criminal Investigation and United States Postal Inspection Service.  Special Assistant United States Attorney Kevin Jayne prosecuted the case for the United States.