A Lemon Grove, California woman was sentenced to serve 175 months in prison for her role in two stolen identity refund fraud schemes, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department's Tax Division and Acting U.S. Attorney Alana W. Robinson of the Southern District of California.
In April 2013, Cynthia Lozano was charged in a 33-count indictment for using stolen identities to file fraudulent tax returns with the Internal Revenue Service (IRS). According to the indictment as well as documents and information provided to the court, Lozano directed the IRS to deposit the refunds into bank accounts in the names of her relatives and associates. For some actual tax-preparation clients, Lozano claimed a larger refund from the IRS than she represented to her clients. She directed the IRS to deposit the excess amounts into a bank account she controlled without her clients' knowledge.
On Feb. 13, 2015, Lozano pleaded guilty to aggravated identity theft and participation in her fraudulent scheme. In total, Lozano used the identities of over 200 victims to file over 400 returns, resulting in her receipt of approximately $1.5 million in fraudulently obtained refunds between 2008 and 2013.
In June 2015, while Lozano was awaiting sentencing, agents from the IRS Criminal Investigation (CI) and Department of Treasury, Inspector General for Tax Administration (TIGTA) discovered that Lozano filed additional fraudulent returns in a manner similar to her previous scheme. Lozano was subsequently charged in a second indictment with 51counts, including filing false claims for refund, wire and mail fraud, and aggravated identity theft.
Some of the victims of Lozano's 2015 scheme were actual or prospective tenants of properties she purchased and titled in the name of her relative, who does not live in the United States. Using her relative's name as an alias, Lozano obtained authorization to rent some of the Arizona properties under the Section 8 Tenant-Based Assistance Housing Choice Voucher Program (Section 8 program) administered by the Department of Housing and Urban Development (HUD). Through the Section 8 program, a local Public Housing Authority (PHA) supplements rent to a qualifying property owner on behalf of eligible tenants. Lozano submitted false documents under her alias to HUD, under penalty of perjury, to qualify for supplemental rental payments under the Section 8 program.
For the 2015 scheme, Lozano stole the names and social security numbers from her Section 8 tenants, and others who submitted rental applications to Lozano and used them to file additional false returns. Lozano then directed the IRS to deposit the refunds into bank accounts she opened with the assistance of two co-conspirators, Gerardo Baker and David Hernandez. Baker and Hernandez have since pleaded guilty and been sentenced for their participation in the conspiracy.
“Using stolen identities, Cynthia Lozano filed hundreds of fraudulent tax returns, cheating the U.S. Treasury out of more than $1.5 million,” said Acting Deputy Assistant Attorney General Goldberg. “She preyed on low income individuals, ripping off their personal information to file bogus tax returns and brazenly continued her criminal conduct even while awaiting sentencing in federal court on tax fraud and identity theft charges. Her 14 1/2 year sentence sends a clear message that the Department and IRS will aggressively investigate and prosecute those who steal taxpayer identities and file fraudulent claims for refund.”
“The lying, cheating defendant went on a white-collar crime spree that continued even after she got caught,” said Acting U.S. Attorney Robinson. “It is astounding that she committed a second major fraud while awaiting sentencing for the first. Her greed-fueled rampage ends today, with a sentence that recognizes the significant losses suffered by her victims, including U.S. taxpayers.”
“Individuals who commit refund fraud and identity theft of this magnitude and with this degree of trickery, dishonesty and deceit, deserve to be punished to the fullest extent of the law,” said Special Agent in Charge R. Damon Rowe of IRS-CI. “IRS Criminal Investigation, along with our law enforcement partners and the U.S. Attorney's Office and the Justice Department's Tax Division, remain vigilant in identifying, investigating and prosecuting those individuals who seek to willfully defraud the U.S. Treasury and blatantly disregard the victims of their schemes.”
“This is a case about the irresistibility of greed,” said Special Agent in Charge Rod Ammari of TIGTA Office of Investigations San Francisco Field Division. “Even though Ms. Lozano had pleaded guilty and awaited sentencing on 51 counts of aggravated identity theft, wire and mail fraud, she could not resist the temptation of engaging in additional criminal illegal schemes to steal more identities and file additional fraudulent tax returns — 69 new fraudulent tax returns to be exact.”
In addition to the terms of prison imposed, U.S. District Court Judge Anthony J. Battaglia ordered Lozano to serve three years of supervised release, to pay $1.479 million in restitution to include the IRS and HUD. Lozano is alleged to have used illegal proceeds from the first scheme to purchase properties in and around the Phoenix, Arizona area. A forfeiture hearing will be scheduled at a later date. Lozano pleaded guilty to two counts of the first indictment on Feb. 13, 2015, and the remaining 31 counts on Aug. 31, 2016. She pleaded guilty to all 51 counts of the second indictment on Nov. 15, 2016.
Acting Deputy Assistant Attorney General Goldberg and Acting U.S. Attorney Robinson commended special agents of IRS–CI and TIGTA, who conducted the investigation, and Trial Attorney Thomas Flynn of the Tax Division and Assistant U.S. Attorney Christopher Tenorio, who prosecuted this case.
Additional information about the Tax Division and its enforcement efforts may be found on the division's website.
Stole IDs from Section 8 Tenants
Press Release Number: 17-764Updated July 12, 2017
Southern District of California DOJ / 17-764 / July 12, 2017