Prison Tax Fraud Ringleader Sentenced to Seven Years in Prison
SACRAMENTO, CA—Edwin Ludwig IV, 34, currently an inmate in an Oklahoma state prison, was sentenced today to seven years in prison for conspiring to defraud the United States and for filing false claims for federal tax refunds, United States Attorney Benjamin B. Wagner announced. Ludwig was ordered to pay over $219,000 in restitution.
According to court documents, beginning in March 2011, Ludwig and three fellow inmates in the California Correctional Center in Susanville obtained personal identification information of other inmates at the correctional center. Ludwig then provided the information to co-defendants on the outside who prepared and filed false income tax returns with the Internal Revenue Service, claiming refunds to which the inmates were not entitled. False tax returns also were filed in some of the defendants’ own names. The defendants caused the false refund checks to be deposited to various bank accounts they controlled. According to the indictment, the investigation into the conspiracy began on January 11, 2012, when a correctional officer found some records behind Ludwig’s personal locker.
According to court documents, the refunds were used for personal expenditures, and included the purchase of prepaid debit cards, and adding money to inmates’ commissary accounts. At sentencing, Ludwig stated that some of the proceeds had been used to purchase drugs. In all, the conspiracy resulted in at least 247 false claims for income tax returns in tax years 2008 through 2011. Although the IRS stopped some of the refunds, approximately 138 fraudulent refunds totaling approximately $219,984 were issued.
Charges against six co-defendants are pending. A status conference for them is scheduled for September 2, 2015. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
This case is the product of an investigation by the Internal Revenue Service, Criminal Investigation, the Federal Bureau of Investigation, and the Investigative Service Unit at the California Correctional Center. Assistant United States Attorney Sherry D. Hartel Haus is prosecuting the case.