Home New York Press Releases 2012 Four Individuals Charged for Participating in Tax Refund Fraud Schemes Involving Nearly $1.5 Million

Four Individuals Charged for Participating in Tax Refund Fraud Schemes Involving Nearly $1.5 Million
Three Former Bank Tellers Allegedly Cashed Numerous Fraudulent Refund Checks That Were Generated Using Stolen Puerto Rican Identities

U.S. Attorney’s Office October 10, 2012
  • Southern District of New York (212) 637-2600

Preet Bharara, the United States Attorney for the Southern District of New York; Toni Weirauch the Acting Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation Division (“IRS-CI”); and Mary Galligan, the Acting Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), today announced charges against three former employees of a bank (“the Bank”), along with one other individual, for participating in a tax refund scheme that used the identities of Puerto Rican citizens to fraudulently obtain tax refund checks. RONALD ESPINAL, JURI SANTOS, ANAIS MUNOZ—former employees of the Bank—and KENNY GRULLON are charged in a scheme that defrauded the Internal Revenue Service (“IRS”) and New York State out of nearly $1.5 million. GRULLON, MUNOZ, and SANTOS were arrested this morning and will be presented and arraigned in Manhattan federal court before U.S. District Judge John F. Keenan at 3:00 p.m. ESPINAL remains at large.

Manhattan U.S. Attorney Preet Bharara said: “These alleged stolen identity tax refund schemes are on the rise and must be stopped. They deprive the IRS of much-needed tax revenue and violate the privacy of the individuals whose identities are stolen. We will continue bringing these cases and prosecuting those responsible.”

IRS-CI Acting Special Agent in Charge Toni Weirauch said: “Protecting taxpayer money is something that IRS-Criminal Investigation takes seriously. One of the ways we demonstrate this is by stopping complex tax refund schemes, such as the one in this indictment. Our special agents are skilled in identifying and investigating the architects of such schemes and the participants that enable them to operate.”

FBI Acting Assistant Director in Charge Mary Galligan said: “The scheme used stolen identities to generate bogus tax refunds. But the payoff was accomplished only when the corrupt bank employees cashed the intercepted checks. They were the insiders in this inside job.”

According to the indictment which was unsealed today in Manhattan federal court:

Participants in the tax fraud scheme would unlawfully obtain identification information—including names, dates of birth, and Social Security numbers—of Puerto Rican citizens. These Puerto Rican identities would then be used to file fraudulent tax returns, which claimed large refunds from New York state and the federal government. Participants in the scheme had the resulting tax refund checks directed to addresses they controlled, or along specific mail routes assigned to a U.S. Postal Service employee who would be paid to pull the checks from the mail. The checks were then cashed at a branch of the Bank at which one or more employees had been bribed to facilitate the transactions.

GRULLON, MUNOZ, ESPINAL, and SANTOS conspired to cash, and share in the proceeds of, more than $1.5 million in fraudulently issued tax refund checks. Between 2008 and 2010, MUNOZ, a supervising bank teller at the Bank’s branch in the Bronx, New York, along with ESPINAL and SANTOS, who worked as regular tellers at the same branch, cashed numerous tax refund checks provided to them by GRULLON. GRULLON and ESPINAL paid cash bribes of more than $1,000 to one or more bank tellers whom they directed to cash the checks in furtherance of the scheme.

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MUNOZ, 27, and SANTOS, 27, both of New York, New York, are each charged with one count of conspiracy and one count of theft of government funds. They each face a maximum sentence of 15 years in prison. GRULLON, 23, of New York, New York, and ESPINAL, 24, of Brooklyn, New York, are each charged with one count of conspiracy, one count of theft of government funds, and one count of bank bribery. They each face a maximum sentence of 45 years of in prison.

Mr. Bharara praised the outstanding investigative work of IRS-CI and the FBI.

This case is being handled by the Office’s General Crimes Unit. Assistant U.S. Attorney Christopher J. DiMase is in charge of the prosecutions.

The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.