SAN DIEGO (CNS) - One San Diego County tax preparer was arrested Friday, while another plead guilty to charges of stealing millions of dollars in purported tax payments and tax refunds checks, according to the U.S. Attorney's office.
Steve Martinez, 49, of Ramona, a former revenue agent with the Internal Revenue Service turned tax preparer, was arrested Friday and charged with mail fraud, procuring false tax returns, aggravated identity theft and money laundering, U. S. Attorney Laura Duffy said.
A 34-count indictment charges Martinez with stealing more than $11 million in tax payments that should have been sent to the IRS.
The other suspect, John Leonard Camilo, of Carlsbad, pleaded guilty Friday to aiding and assisting the preparation and filing of various United States Federal Income Tax Returns for his friends, associates and acquaintances.
According to his plea, between 2004 and 2010, the 32-year-old Camilo used a variety of methods to defraud the IRS out of approximately $800,000, including: creating false businesses which allegedly suffered losses; creating false educational expenses utilized to claim educational tax credits; improperly claiming individuals as dependents who - although they were real people - were not dependents of the taxpayers; and inflating "Schedule A" itemized deductions (such as medical expenses) that had no basis in reality.
According to the indictment against Martinez, he presented his clients with completed tax returns indicating they owed a significant amount of tax. The indictment alleges Martinez then persuaded his clients to write checks payable for the amount of taxes due to an alleged client trust account, instead of directly to the IRS or California Franchise Tax Board.
Rather than deposit the checks into an actual trust account, Martinez deposited them into several bank accounts in the names of fictitious entities, according to the indictment.
The indictment further alleges that after disguising the nature of the funds in the accounts, Martinez used millions of dollars in tax payments to fuel his extravagant lifestyle which included a multimillion dollar home, an airplane, boat, motor home, trips to the Super Bowl and vacations in Mexico.
The indictment also alleges Martinez, in an attempt to conceal his fraud, filed a different set of false tax returns indicating his clients owed little or no income tax.
Martinez is scheduled to be arraigned Monday in federal court.
"The IRS-Criminal Investigation takes violations of tax law by return preparers very seriously," said Leslie P. DeMarco, special agent in charge of the IRS-Criminal Investigation, Los Angeles Field Office. "(This includes) return preparers who choose to prepare and file false tax returns, steal payments or refunds, misuse clients' identity or in any other manner undermine the honesty and integrity of our tax system risk prosecution."
Camilo is scheduled to be sentenced July 25 by U.S. District Judge Larry Burns.
As a further part of his plea, Camilo admitted he devised a separate scheme to obtain money from 14 of the 91 taxpayers by providing them with different returns than the ones he filed with the government. Camilo admitted that as part of the scheme, he gave the 14 taxpayers returns that indicated they were not due a refund.
He also admitted that instead of filing the tax forms, he prepared a different set of returns falsely indicating the taxpayers were due a refund.
The false set of returns utilized two different mailing addresses, which Camilo controlled and where he received refunds totaling $120,107, according to prosecutors.
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