LOS ANGELES– A former Pico Rivera businessman pleaded guilty late this afternoon in relation to a stolen identity refund fraud scheme in which he conspired to use stolen identities to file fraudulent tax returns with the Internal Revenue Service that fraudulently generated approximately $550,000 in tax refunds.
Frank Ruben Candelaria, 53, of Los Angeles, pleaded guilty to one count of conspiracy to defraud the United States and two counts of making false claims against the United States by filing fraudulent tax returns in his own name.
According to the plea agreement filed in the case, beginning in December 2008 and continuing through September 2009, Candelaria and co-conspirator Edgar Rene Nunez, 61, caused at least 143 fraudulent income tax returns to be filed with the IRS. As a result of the fraudulent tax returns that sought well over $1 million in refunds, the IRS issued approximately $548,447 in fraudulent tax refund checks.
“Stolen identity refund fraud, known as SIRF, victimizes both the United States and the individuals who have had their identities stolen,” said United States Attorney Eileen M. Decker. “The Department of Justice will continue to prosecute aggressively criminals seeking to profit from the identities of others.”
In executing the scheme, Nunez and others obtained the names and Social Security numbers of individuals without their knowledge and consent. The co-conspirators created bogus Forms W-2 (IRS Wage and Tax Statements) in the names of the identity theft victims that reported false employment and income information, as well as false tax withholding amounts. Using the falsified information reported on the Forms W-2, fraudulent individual income tax returns were prepared and filed claiming false tax refunds. The tax returns were filed without the knowledge or consent of the identity theft victims.
The fraudulent tax refunds were then either mailed to addresses that Candelaria and Nunez, as well as others, controlled or directly deposited to bank accounts that Nunez and others controlled.
“IRS Criminal Investigation has declared investigating refund fraud and identity theft a top priority,” stated Special Agent in Charge Erick Martinez of the Los Angeles Field Office. “Filing fraudulent tax returns in the names of other individuals creates irreparable harm to those individuals whose identities were stolen, as well as a monetary loss against the U.S. Treasury.”
In addition to the tax fraud scheme outlined above, Candelaria filed fraudulent tax returns in his own name for the 2006 and 2007 tax years claiming false refunds of $9,955 and $9,720, respectively.
When sentenced by U.S. District Court Judge Michael W. Fitzgerald on February 1, Candelaria faces a statutory maximum sentence of 20 years in federal prison and a fine of $750,000. Candelaria has agreed to pay full restitution to the IRS in the amount of $568,152.
Nunez pleaded guilty on March 31, 2015 to one count of conspiracy to submit false claims, nine counts of submitting false claims against the U.S. government, two counts of mail fraud, and one count of identity theft. When he is sentenced on February 22, Nunez faces a statutory maximum sentence of 97 years in federal prison and a fine of $3,250,000.
The investigation into Candelaria and Nunez was conducted by IRS Criminal Investigation and the Federal Bureau of Investigation.
USAO – California, Central Financial Fraud Updated November 10, 2015
Central District of California DOJ / 15-128 / November 10, 2015