Sentencing Hearings Completed In $600,000 Stolen Identity Tax Refund Fraud Scheme

PROVIDENCE, R.I. – Five individuals involved in a tax refund fraud scheme which used stolen and fraudulent identifying information of hundreds of individuals and businesses to defraud the Internal Revenue Service of nearly $600,000 have been sentenced in U.S. District Court in Providence, announced United States Attorney Peter F. Neronha.

Government reports indicate that losses due to Stolen Identity Refund Fraud – commonly referred to as SIRF – totals in the billions of dollars. In the last fiscal year alone (2014), the Department of Justice and U.S. Attorney’s offices have charged approximately 896 defendants for their alleged involvement in SIRF schemes.

This SIRF investigation began in January 2013, when Homeland Security Investigations (HSI) agents in Boston conducted a routine border search of Jairo Morales, 29, of Providence, who was flying in from the Dominican Republic.  In a laptop computer, HSI agents identified evidence consistent with a tax refund fraud scheme.

According to court records and information presented to the court, an investigation by agents from Internal Revenue Service Criminal Investigation, U.S. Secret Service and HSI determined that Morales and Julianna Martins, 45, of Providence, orchestrated a stolen identity tax refund scheme which resulted in the filing of false federal income tax returns using stolen personal identity information of hundreds of individuals from Puerto Rico and fictitious W-2 forms from various companies. Fraudulently obtained tax refund checks, ranging from approximately $3,000 to $10,000, were sent to multiple Providence addresses under the control of Morales and Martins.

The investigation revealed that Morales, Martins, Lucia Morales, 55, of Providence, and Casimiro Santos, 36, of Providence, and others, deposited United States Treasury checks totaling in excess of $596,000 into various bank accounts controlled by the defendants.

Additionally, according to court documents and information presented to the court, Maria Paulino, 25, of Providence, a bank teller, assisted Martins in opening bank accounts using fraudulent identity information and negotiated checks on behalf of Morales, Martins, and their associates.

Jairo Morales and Julianna Martins pleaded guilty in March 2014 to conspiracy, theft of government property and aggravated identity theft. They were sentenced by U.S. District Court Judge John J. McConnell, Jr., to 48 months in federal prison to be followed by 3 years supervised release, and ordered to pay restitution in the amount of $385,533.58. Morales was sentenced on June 24, 2014. Martins was sentenced on September 29, 2014.

Casimiro Santos pleaded guilty on May 12, 2014, to theft of government property and aggravated identity theft. Santos was sentenced on Wednesday by U.S. District Court Judge John J. McConnell, Jr., to 24 months and one day in federal prison to be followed by 3 years supervised release, and ordered to pay restitution in the amount of $211,141.71.

Maria Paulino pleaded guilty on January 19, 2013 to theft of government property. She was sentenced by U.S. District Court Judge John J. McConnell, Jr., on June 24, 2014, to 3 years probation – the first 6 months to be served in home confinement with electronic monitoring, and ordered to pay restitution in the amount of $92,970.14.

Lucia Morales pleaded guilty on March 31, 2014 to theft of government property. Morales was sentenced by U.S. District Court Judge John J. McConnell, Jr., on June 26, 2014, to 3 years probation and ordered to pay restitution in the amount of $82,183.10.

The cases were prosecuted by Assistant U.S. Attorneys Sandra R. Hebert and John P. McAdams.

This law enforcement action is part of President Barack Obama’s Financial Fraud Enforcement Task Force.  The President established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. 

The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

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