Feds: Scammers bilked IRS of $10.8M using program for undocumented immigrants
Jamie Satterfield knoxnews.com
Deportation did not stop a Honduran citizen from allegedly helping head up a $10.8 million scam to rip off an Internal Revenue Service program designed to allow illegal immigrants to collect income tax refunds, an indictment unsealed Thursday showed.
Assistant U.S. Attorney Frank Dale Jr. revealed at a hearing before U.S. Magistrate Judge Clifford Shirley on Thursday an indictment charging at least six people, including undocumented immigrant Amado Valdez-Morales, and four businesses he alleges defrauded the IRS in a two-year scheme.
The indictment has been redacted because a Guatemalan citizen listed as a chief organizer in the alleged scheme has not yet been arrested.
Valdez was deported from Texas back to Honduras six months into the alleged scheme but quickly found his way back, according to the indictment. Details of his deportation are not included. He was caught by the U.S. Department of Homeland Security on Dec. 16, 2014, in Oak Ridge — the same day the indictment states the alleged fraud scheme was discovered.
Also arrested so far and named in the indictment are: Mayra Edith Blair, a naturalized U.S. citizen and owner of Mayra Moreno Insurance Inc. in Louisville; Aurora Carvajal, a naturalized citizen and owner of Servicios Latinos in Lenoir City; her husband, Luis Carvajal; Bertha Del Pilar Vargas, a permanent resident, and her husband, Martin Ayala, a naturalized citizen, both of whom operate La Ranchera, a check-cashing business in Oak Ridge, and Martino’s Pizza and More in Crossville.
Dale wrote in the indictment the IRS in 1996 began issuing what’s known as “taxpayer identification numbers” for use by illegal immigrants “to comply with federal law by filing tax returns.” The program allowed illegal immigrants to take advantage of a “child tax credit” similar to the earned income credit offered single parents who are legal citizens. To take advantage of the program, the illegal immigrants are supposed to provide a legitimate “foreign birth certificate or national identification card,” Dale wrote.
In 2012, Dale alleges, Valdez, the unidentified Guatemalan fugitive and other co-conspirators, some of whom have not been identified in this particular indictment, launched a scheme to “steal as much money as possible from the United States Treasury and the U.S. taxpayers through exploiting” this program.
First, they filed fake applications and bogus Mexican, Honduran and Guatemalan identification, “frequently using the names of persons who did not even exist,” the indictment stated. Blair and her employees “prepared false and fraudulent income tax returns” that typically spanned three tax years and claimed child dependents, Dale wrote.
When checks arrived in the mail, Valdez and a band of recruits, including some from North Carolina, would cash them at the businesses owned by Carvajal, Ayala and Vargas using “poorly designed and obviously fake” foreign identification, the indictment stated. The trio of business owners took a 14 percent cut of each check as did Valdez. It’s not clear how much the recruits received. The unidentified fugitive presumably got the rest.
According to the indictment, the scammers cashed 2,400 refund checks between January 2012 and November 2014 totaling $10.8 million. The feds so far have only recovered a half million in seizures.