LOS ANGELES– An Oxnard-based tax return preparer was convicted yesterday afternoon of conspiracy to file false tax refund claims and for having signed tax returns claiming more than $53 million in fraudulent tax refunds. Before the IRS was able to identify and stop the scheme, it had already paid out more than $23 million of refunds to the defendant and his co-conspirators.
Rodrigo Pablo “Paul” Lozano, also known as “El Profe,” 61, was convicted Thursday after a two-week jury trial.
According to the evidence presented in the trial, Lozano's scheme was based on his applying for Individual Tax Identification Numbers (“ITINs”), which are issued in lieu of a social security number to undocumented workers in the United States to allow them to file tax returns. The evidence demonstrated that co-conspirators provided Lozano with fake identification documents, such as Matricula cards supposedly issued by the Mexican government and birth certificates, which Lozano used to obtain ITINs in the names shown on the fake identification documents. Lozano would then use the ITINs to file three years' of income tax returns based on wage and withholding information contained in fake W-2s, and listed 3 or 4 fictitious dependents in whose names Lozano also applied for ITINs. All of the scheme's tax returns requested refunds, with most in the $3,000 to $4,000 range, which they requested by claiming the Additional Child Tax Credit (“ACTC”). The number of dependents and wage amounts on the tax returns were falsified to maximize the amount of the ACTC.
“As a tax preparer by trade, this defendant had a greater duty to ensure that the tax returns he filed were accurate,” said United States Attorney Eileen M. Decker. “Instead, by filing for fraudulent returns, Mr. Lozano cheated the IRS and indirectly stole from every law-abiding taxpayer.”
Lozano submitted more than 12,000 false tax returns in an 18-month period in 2011 and 2012. During that time, his employees told him at least five times that the identity and W-2 documents looked suspicious, and the IRS sent hundreds of warning notices to Lozano stating that the tax returns and W-2s were invalid. Despite the repeated warnings, Lozano continued to direct his employees to file the fraudulent tax returns.
Lozano would divide up the tax refunds with his co-conspirators, including having employees count out tens of thousands of dollars in cash in a bathroom located next to his office space. Lozano operated his tax-return business, which he called Ayuda (“help” in Spanish), by renting space from businesses that catered to Hispanic clients, such as a meat market on Hueneme Road in Oxnard. He went by the name “El Profe,” as he was a teacher before he began preparing tax returns.
“Yesterday's guilty verdict is an important victory for America's return preparers who play by the rules and have no tolerance for those who make up their own rules,” stated Acting Special Agent in Charge Anthony J. Orlando for IRS Criminal Investigation. “This conviction is a powerful reminder that there is no such thing as free money and there are no rewards or incentives for creativity when it comes to filing fraudulent tax returns.”
The investigation of Lozano was conducted by IRS Criminal Investigation in Camarillo.
Topic: Financial Fraud Updated July 8, 2016
Central District of California DOJ / 16-152 / July 08, 2016