Illegal immigrant who cooked up $10.8 tax-fraud scheme confesses guilt
4:42 pm
By Jamie Satterfield of the Knoxville News Sentinel
A Honduran who helped craft a $10.8 million scam to rip off an IRS program designed to allow illegal immigrants to collect income tax refunds pleaded guilty Tuesday.
Amado Valdez-Morales, an illegal immigrant already deported once, entered guilty pleas Tuesday in U.S. District Court to charges of conspiracy to defraud the U.S., conspiracy to commit money laundering and illegal re-entry by a previously deported alien.
He is one of two illegal immigrants Assistant U.S. Attorney Frank Dale has said hatched a plan to use a special IRS program in which undocumented workers are given individual tax identification numbers to file income taxes — and in the lion's share of cases to collect hefty refunds — to make a fortune off the U.S. government. The second leader of the group, also a Honduran, fled the U.S. before his capture in the case and has not been identified in court records.
Also charged in the scheme, which began in 2012, are several naturalized citizens who operated either check-cashing businesses catering to Hispanics and took a cut from every falsely-obtained tax return check cashed, or, in the case of insurance agent Mayra Edith Blair, prepared the bogus tax returns. Of the 11 defendants charged last year after a probe by IRS Criminal Investigation Division agents Danielle Barto and Brian Grove, six have struck deals to plead guilty.
The IRS in 1996 began issuing tax identification numbers for use by illegal immigrants. The program allowed illegal immigrants to take advantage of a child tax credit similar to the earned income tax credit offered single parents who are legal citizens.
Under the scheme hatched by Valdez and the Honduran fugitive, fake Mexican, Honduran and Guatemalan identification documents were obtained for use by Blair, whose employees prepared false tax returns that typically spanned three tax years and claimed several child dependents. Valdez provided addresses and passed out the checks to various co-conspirators, who were paid a cut to cash the checks. The indicted store owners also took a cut. Valdez and his fugitive partner took the rest.
In one day alone, a co-conspirator cashed roughly $500,000 in falsely-obtained tax returns. An indictment in the case put the total of refund checks cashed during the conspiracy at 2,400 between January 2012 and November 2014, totaling $10.8 million.
Chief U.S. District Judge Tom Varlan set a Sept. 14 sentencing date for Valdez. Among those who also have struck deals and are expected to enter guilty pleas this week are Luis Carvajal and his wife, Aurora Carvajal. The pair owned Servicios Latinos in Lenoir City and, according to prior court testimony, kept meticulous records on who cashed the bogus tax return checks and when. Those records helped Barto and Grove track down others involved in the case.
Prosecutors indicate the pair, both in the U.S. legally, will be held accountable under federal sentencing guidelines for as much as $9.5 million in loss to the federal government. The figure will be used to set their penalty ranges once pleas are entered.
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