Feds nab Honduran in $10.8M tax refund scam

Jamie Satterfield knoxnews.com

Excellent record-keeping by the owner of a Lenoir City business accused in a $10.8 million scam to rip off an IRS program designed to allow illegal immigrants to collect income tax refunds has led to another arrest.

Nery Irrael Grande Jiminez of Honduras made it easy for IRS Criminal Investigation Division agents to find him by showing up earlier this month on the door step of Servicios Latinos, where he cashed more than a half-million in refund checks, court records stated.

What he didn’t know was IRS Agents Danielle Barto and Brian Grove were surveilling the parking lot after a monthslong search to find him, according to a criminal complaint filed in U.S. District Court. Nor was he aware Servicios Latinos owner Aurora Carvajal kept detailed files on those for whom she cashed refund checks. The feds seized those files in December.

The scam in which Jiminez is accused began in 2012, the brainchild of an unidentified fugitive Guatemalan and Honduran citizen Amado Valdez-Morales, according to court records.

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. Vargas and Ayala operate La Ranchera, a check-cashing business in Oak Ridge, and Martino’s Pizza and More in Crossville.

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.

In the scheme to collect bogus refunds, the co-conspirators 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, the indictment stated.

When checks arrived in the mail, Valdez and a band of recruits, including Jiminez, would cash them at the businesses owned by Carvajal, Ayala and Vargas, the indictment stated. The trio of business owners took a 14 percent cut of each check, as did Valdez, according to court records. 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 recovered only a half-million in seizures.