Preparer accused of stealing clients' tax payments - CBS News 8 - San Diego, CA News Station - KFMB Channel 8

Preparer accused of stealing clients' tax payments

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SAN DIEGO (CBS 8) - As many people rush to file their tax returns by midnight Monday, a tax preparer is facing a judge.

Former IRS agent and current CPA Steve Martinez is accused of stealing more than $11 million of his clients' tax payments -- payments that should have gone to the IRS.

The irony of the timing of his arrest and court appearance was not lost on anyone. It's tax deadline day, and most of the suspect's clients will probably have to get an extension because their accountant is behind bars on $350,000 bond.

"I think the indictment speaks for the $11 million or so that he stole from his clients," Assistant U.S. attorney Joe Orabona said.

Martinez, a father of three, pleaded not guilty to mail fraud charges, procuring false tax returns, Social Security fraud, money laundering and aggravated identity theft during his arraignment in federal court before U.S. Magistrate Judge Mitchell Dembin.

The judge also placed several restrictions on the Ramona resident, who has lived in San Diego County for 25 years and has been a licensed accountant since 1994.

"A curfew at his residence between the hours of 9 p.m. and 5 a.m.; he also can't go to Mexico or leave San Diego county. He's got to surrender his passport and he is active on GPS," Orabona said.

The U.S. Attorney's Office has been investigating Martinez for two years. His practice has been based out of an Oberlin Drive building in Sorrento Valley.

Authorities say Martinez, whose wife Cynthia and attorney David Demergian didn't want to speak on camera outside court, used his clients' cash to pay for a lavish lifestyle.

The alleged perks included his $1.5 million, 6,500-square-foot, five-bedroom, five-bathroom home off Mussey Grade Road, plus an airplane, a boat, a motor home and expensive trips to Mexico and the Super Bowl.

"You should be very careful when you're choosing a tax return preparer," IRS Special Agent-in-Charge Felicia McCain said.

McCain says it's important that taxpayers are also aware of who they are making their checks out to when they're filing returns.

"Martinez was asking clients to write checks to someone other than the Internal Revenue Service. Make sure you write your checks directly payable to the Internal Revenue Service or the Department of Treasury. The public should feel comfortable that the IRS criminal investigation takes these types of crimes very seriously," McCain said.

Martinez will be back in court May 31, when a judge sets his trial date.

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