Former Texas Attorney General Employee and Others Head to Prison in Half-Million-Dollar Tax Scheme

LAREDO, TX—A former employee of the Texas Attorney General’s (AG) Child Support Division has been sentenced to federal prison for her role in a sophisticated tax fraud that unfolded over the course of several years, United States Attorney Kenneth Magidson announced today along with Lucy Cruz, special agent in charge of Internal Revenue Service-Criminal Investigations (IRS-CI). Two others involved in the scheme were sentenced last week.

Eloisa Garcia Casso pleaded guilty before U.S. District Judge Diana Saldana February 25, 2011, for concocting and executing a scheme to steal individual taxpayers’ identities and use the information to submit false Form 1040s and Schedule Cs in order to claim tax refunds. Jacqueline Velasquez and Rosa Herrera pleaded guilty to similar charges on December 7, 2010, and February 17, 2011, respectively.

“IRS-CI has made investigating refund fraud and identity theft a top priority,” said Cruz. “Identity theft is a despicable crime that victimizes honest taxpayers and causes immense hardship to those whose identities were stolen. IRS-CI, along with our law enforcement partners, remain vigilant in identifying, investigating, and prosecuting those individuals who seek to willfully defraud the United States Treasury and have a blatant disregard for the victims of their schemes. This sentencing should serve as a strong warning to those considering similar conduct.”

Today, U.S. District Judge George P. Kazen handed Casso, who was deemed a manager/supervisor in the scheme, a 30-month sentence, to be followed by three years of supervised release. In handing down the sentence, Judge Kazen noted the vulnerable state of the victims and the highly sophisticated nature of the conspiracy.

Casso was an employee of the Texas AG’s Child Support Division, while Herrera worked for the Laredo Housing Authority. They used their positions to steal the identities of agency clients, all of whom were vulnerable, low-income residents of Webb County. This information was passed to Velasquez, who falsified tax return documents, which she submitted to the IRS. Eventually, Casso also created and submitted falsified documents. The refunds from the IRS would then be deposited into borrowed bank accounts of friends and associates of the conspirators or the defendants would apply to a bank for refund anticipation loans.

Routine audit processes of the IRS in Austin discovered a number of suspicious returns. At the same time, at least one victim taxpayer, attempting to file a proper tax return, discovered the fraud. At the time of her guilty plea, Casso admitted to receiving or attempting to receive up to $200,000 during the course of the conspiracy, which spanned from January 2001 through March 2005. According to the Office of the Attorney General, Casso left her post in 2002.

Last week, Judge Kazen found Velasquez to be a leader/organizer and sentenced her to 40 months in federal prison. Herrera will serve four years on probation, during which time she will serve eight months of home confinement. She was also ordered to pay a $1,200 fine.

Previously released on bond, Casso and the other defendants were permitted to remain on bond pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.

The charges are the result of an investigation conducted by IRS-CI and the FBI with the cooperation of the Texas AG’s Office. Assistant United States Attorney (AUSA) Josh Ackerman and former Southern District of Texas AUSA Michael Elliott prosecuted the case.