Fourteen Individuals Charged in Tax Fraud Scheme
|U.S. Attorney’s Office April 13, 2010|
SAN JUAN—A 65-count indictment was unsealed today charging Flor Hernandez-Nieves, a resident of Puerto Rico, and 13 others with conspiracy to present fraudulent income tax returns to the Internal Revenue Service (IRS), and preparing and assisting in the preparation and presentation of fraudulent tax returns to the IRS. The indictment also charges Hernandez-Nieves and co-conspirator Felix Rodriguez-Martinez with wire fraud and money laundering charges. Additionally, Hernandez-Nieves was charged with mail fraud violations. The announcement was made by United States Attorney for the District of Puerto Rico Rosa Emilia Rodriguez Velez.
According to the indictment, the fraudulent scheme orchestrated by Hernandez- Nieves and others involved the filing of fraudulent tax returns with the IRS which typically claimed the earned income tax credit and/or the additional child tax credit. These credits were claimed in order to fraudulently cause the IRS to issue large income tax refunds.
The Earned Income Tax Credit (EITC) is a federal income tax credit for low-income working individuals and families and is claimed via the filing of federal income tax returns with the IRS. To qualify for the EITC taxpayers must meet certain requirements and file a tax return. Residents of Puerto Rico do not qualify for this credit.
The Additional Child Tax Credit ("ACTC"), is a federal tax credit designed to provide relief to low and middle income families. Bona fide residents of Puerto Rico with three or more qualifying children may, in some cases, receive a refund from the federal government by filing a tax return with the IRS.
As alleged in the indictment, Hernandez-Nieves and others recruited defendants Felix Rodriguez-Martinez, Daniel Rodriguez-Serpa, Angelica Pagan-Hernandez, Janet Pagan, José Velez-Class, Iris Rivera-Rodriguez, Maria Rivera-Ayala, Efren Echevarria-Melendez, Wanda Ramirez-Seda, Nydia Hernandez-Muñoz, Jose Hernandez-Mulero, Gloria Rivera, and Felix Vazquez-Rodriguez, and would pay them between fifty ($50) and three hundred dollars ($300) to obtain their personal information, which was then utilized to prepare and file fraudulent paper returns with the IRS for tax years 2005 and 2006. The personal information obtained and subsequently used by the defendants included the name and social security number of the resident of Puerto Rico and their dependents’ complete names and social security numbers.
The indictment further alleges that Hernandez-Nieves and Rodriguez-Martinez and others, employed recruiters to purchase the personal identification information of bona fide residents of Puerto Rico for the purpose of filing federal tax returns. Those recruiters were paid between two hundred ($200) and three hundred dollars ($300) for obtaining said information and providing it to defendants Hernandez-Nieves and Rodriguez-Martinez.
The indictment states that all of the false tax returns were computer generated. The false returns were then printed and subsequently mailed to the IRS. The envelopes in which these false returns were mailed reflected a New York return address, yet they were postmarked in San Juan, Puerto Rico. The indictment further states that defendant Gloria Rivera leased an apartment unit in Bronx, New York in order for defendant Hernandez-Nieves to use that address to file false federal tax returns with the IRS.
According to the indictment, defendants Hernandez-Nieves and Rodriguez-Martinez and others used three (3) personal bank accounts in which they received federal tax refunds pertaining to the scheme. The tax fraud schemes perpetrated by these defendants involved the filing with the IRS of over 132 fraudulent income tax returns which ultimately resulted in income tax refund claims totaling over $693,791.
The indictment charges Hernandez-Nieves and Rodriguez-Martinez each with (5) five counts of wire fraud in violation of Title 18, United States Code, Section1343 and three (3) counts of money laundering, in violation of Title 18, United States Code, Section 1957. Hernandez-Nieves is further charged with five counts of mail fraud in violation of Title 18, United States Code, Section 1341.
U.S. Attorney Rosa Emilia Rodriguez-Velez stated, “The fraudulent scheme put in place by these individuals targeted tax credits intended to benefit low and middle class tax payers. We commend the work of the IRS Criminal Investigation Division, in collaboration with the FBI’s White Collar Crime Task Force, which uncovered this scheme.”
Daniel W. Auer, Special Agent in Charge of the IRS, Criminal Investigation Division stated, “The integrity of the tax revenue system is of paramount importance. Together with our law enforcement partners, we will aggressively investigate those who defraud the United States Treasury in order to illegally enrich themselves.
Luis Fraticelli, Special Agent in Charge of the Federal Bureau of Investigation (FBI), San Juan Division stated, “The individuals who perpetrated this illegal scheme have contributed to the financial debacle which is affecting Puerto Rico.”
If convicted, the maximum statutory term of imprisonment is 10 years as to the conspiracy count; five years as to each of the fraudulent claims counts; 10 years as to each money laundering count; and 20 years as to each count of mail or wire fraud.
The case is being prosecuted by Assistant U.S. Attorney Ernesto G. Lopez Soltero. The lead agency investigating this case is the IRS, Criminal Investigation Division, with the assistance of the Federal Bureau of Investigation (FBI) and the Puerto Rico Police Department.
Criminal indictments are only charges and not evidence of guilt. A defendant is presumed to be innocent until and unless proven guilty.