Thread: Wallace Couple Pleads Guilty in $12 Million IRS Fraud

From 2016. Added for Archive.

Wallace Couple Pleads Guilty in $12 Million IRS Fraud

Court records show couple filed fraudulent tax returns using names of more than 300 real or fake people

The retail store in Wallace owned by Walda Luna, where some of the illegal tax refund activity took place. (CJ Photo by Don Carrington)

Don Carrington
Don Carringtonin CJ Exclusives


June 22, 2016

Wallace, N.C.. residents Walda Lorena Luna and her husband, Perfecto Ruano, pleaded guilty on June 20 in U.S. District Court in Wilmington, to charges associated with a tax fraud scheme in which they illegally obtained more than $12 million from the Internal Revenue Service.

Carolina Journal first reported the couple’s activities in January.

According to court documents, Luna is a native of Honduras who obtained temporary protective status in November 2006. She entered the United States illegally in 1993. Ruano is a native of Guatemala, who obtained legal permanent resident status in 1988. Both required the services of a Spanish interpreter to participate in the court proceeding.

The activity took place between January 2009 and May 2012. During that time, 2,760 U.S. Treasury refund checks with a total face value of $12,104,825 were deposited in a business bank account maintained by the couple.

Luna and Ruano were arrested Jan. 11 and have remained in jail since that time. They are scheduled to be sentenced on Sept. 26 in federal court in Raleigh.

The IRS calls this type of crime Stolen Identity Refund Fraud, or SIRF. More recently it has labeled the crime Identity Theft tax refund fraud, or IDT refund fraud. The IRS has been aware of this type of fraud at least since 2011 and recently stepped up efforts to catch it.

But IRS computers did not detect the couple’s activities. Instead, the agency first learned of the tax fraud as the result of a May 2014 a traffic stop in Arkansas.

The Arkansas State Police stopped the couple for an unspecified reason and found them carrying $1.8 million in cash. The police notified the Duplin County, N.C., Sheriff’s Department and within days law enforcement officials seized tax fraud evidence from the couple’s North Carolina home and business.

Ruano’s plea agreement involves one count of participating in a conspiracy to commit mail fraud offenses against the United States. He could receive a maximum prison sentence of five years.

Luna’s plea agreement involved three counts. The first is identical to Ruano’s. The second is the filing of a false personal income tax return in which she claimed as dependents two children who were not her relatives in order to reduce her tax bill. The third count is aggravated identity theft in which she used the Social Security numbers of those children. She could receive a maximum sentence of 10 years.

They agreed to pay restitution to the IRS in the amount of $2,944,799 and also to assist the government in the recovery and forfeiture of any assets that were acquired through their illegal activities. The government already filed a forfeiture notice stating that the couple would have to give up four parcels of real estate in Wallace.

The scheme

According to court documents, Luna and Ruano obtained Individual Taxpayer Identification Numbers for at least 300 names that may represent real or fictitious people. The IRS issues ITINs instead of Social Security numbers to foreign individuals working in the United States, giving them a means of filing income tax returns and paying taxes on income earned.

Luna and Ruano allegedly fabricated W-2 wage and tax statements for each name using the names of real employers, then prepared tax returns and submitted refund claims to the IRS. The refund checks were sent to post office boxes rented by Luna or Ruano. The average refund check was $4,385. The checks all were deposited in a First Bank business account that Luna had opened in 2006. Luna withdrew $11,888,300 in cash by writing 252 checks for cash.

Since February 2010, Luna operated a small convenience store named Beverly Tienda, located on North Norwood Street in Wallace. For the 2009 through 2012 calendar years, Luna reported annual incomes from the store of $16,000, $18,000, $17,481 and $24,915, respectively. She reported no other income.

For 2009 through 2012 Ruano reported business income from several sources for a total of $18,560, $26,204, $27,002 and $59,123, respectively. He reported no other income.

Duplin County birth records show they are the parents of three children. The oldest, a daughter, was in court to see her parents enter guilty pleas.

https://www.carolinajournal.com/news...ion-irs-fraud/

IRS Charges Couple With $12 Million Fraud

Arkansas traffic stop led to investigation, arrest

Don Carrington
Don Carringtonin CJ Exclusives
February 1, 2016
Wallace home of Perfecto Ruano and Walda Luna

The Internal Revenue Service Criminal Investigation Division’s Raleigh office filed a criminal complaint on Jan. 8 in federal court against a Wallace couple, Walda Lorena Luna and her husband Perfecto Ruano, claiming the couple used identity fraud to obtain 2,760 illegal U. S. Treasury refund checks with a total value of $12.1 million.

The activity took place between January 2009 and May 2012. Luna and Ruano were arrested Jan. 11 and taken to the New Hanover County jail in Wilmington.

The IRS calls this type of crime Stolen Identity Refund Fraud, or SIRF. More recently it has labeled the crime Identity Theft tax refund fraud, or IDT refund fraud. The IRS has been aware of this type of fraud at least since 2011 and recently stepped up efforts to catch it.

“The critical thing for taxpayers to know is that new protections will be in place by the time they have to file their taxes in 2016,” said IRS Commissioner John Koskinen in June. Carolina Journal began reporting on the issue in April 2013.

Luna and Ruano made their first court appearance Jan. 19 at the federal courthouse in Wilmington. Each had a court appointed attorney and a Spanish translator served both defendants. The attorneys filed motions to withdraw from the case because they said Luna and Ruano were in the process of hiring their own attorneys. U.S. Magistrate Judge Robert Jones Jr. approved the motions and will continue with the case when the new attorneys are secured.

It was not IRS computers that detected the couple’s alleged activities. Instead, the agency first learned of the alleged tax fraud because of a traffic stop in Arkansas two years earlier, according to the complaint. In May 2014, Arkansas State Police stopped the couple and found them carrying $1.8 million in cash. The police notified the Duplin County Sheriff’s Department and within days law enforcement officials seized tax fraud evidence from the couple’s North Carolina home and business.

According to the complaint, Luna and Ruano obtained Individual Taxpayer Identification Numbers for at least 300 names that may represent real or fictitious people. The IRS issues ITINs instead of Social Security Numbers to foreign individuals working in the United States, giving them a means of filing income tax returns and paying taxes on income earned.

Luna and Ruano allegedly fabricated W-2 wage and tax statements for each name using the names of real employers, then prepared tax returns and submitted refund claims to the IRS. The refund checks were sent to post office boxes rented by Luna or Ruano. The average refund check was $4,385. The checks all were deposited in a First Bank business account that Luna had opened in 2006. Luna withdrew $11,888,300 in cash by writing 252 checks for cash.

Background

Luna is a native of Honduras who obtained temporary protective status in November 2006. She entered the United States illegally in 1993. Since February 2010, she operated a small convenience store named Beverly Tienda, located on North Norwood Street in Wallace. For the 2009 through 2012 calendar years, Luna reported annual incomes from the store of $16,000, $18,000, $17,481 and $24,915, respectively. She reported no other income.

Ruano is a native of Guatemala, who obtained legal permanent resident status in 1988. For 2009 through 2012 he reported business income from several sources for a total of $18,560, $26,204, $27,002 and $59,123, respectively. He reported no other income.

Duplin County birth records show they are the parents of three children. On Jan. 18, CJ visited the family home at 413 North Duplin Street. There were three vehicles in the yard and driveway. There was also a large Nativity scene in the front yard.

Searches produced evidence

Members of the Duplin County Sheriff’s Office, accompanied by a federal agent from the Department of Homeland Security, first visited the family home on May 2, 2014, the day after the Arkansas traffic stop. Their adult daughter, Beverly Ruano, consented to a search. The officers saw a business ledger consistent with use for documenting tax preparation services.

After about 30 minutes, the complaint states, Beverly Ruano advised the officers she needed to leave to attend school. The officers left the residence and went to Beverly Tienda, the retail business owned by Luna. They spoke with Luna’s sister, Dunia Mejia Lopez, who said she was operating the business while Luna and Ruano were on the way to Los Angeles to visit another sister. Lopez permitted the officers to search the business premises. The officers saw photocopies of tax preparation documents and computers.

The officers then obtained warrants to search both properties for evidence of filing fraudulent income tax returns. The officers seized more than 300 ITIN letters issued by the IRS, 179 wage and tax statements issued to names other than Luna or Ruano, and handwritten ledgers appearing to detail the flow of tax refunds sought and checks received.

Charlotte-based IRS special agent and agency spokesman Rajender West said the IRS had taken significant steps to combat Stolen Identity Refund Fraud. “The Internal Revenue Service, along with our law enforcement and community partners continue to combat the serious, continuing threat of that identity theft,” said West.

Stopping SIRF

In 2011, IRS officials began testifying to congressional committees about the growing SIRF problem. Two years later, IRS Inspector General for Tax Administration Russell George called it the “No. 1 tax scam for 2013.”

In March 2015, Koskinen convened a “Security Summit” meeting with IRS officials, the CEOs of the leading tax preparation firms, software developers, and state tax administrators “to discuss common challenges and ways to leverage our collective resources and efforts.” Three working groups were established using the themes of authentication, information sharing, and strategic threat assessment and response.

The groups made several recommendations, but “pre-refund authentication,” by improving IRS computing capabilities in analyzing over 20 data elements to identify suspect refunds appeared to be on of the most important recommendations. The details of the program will not be public. “Extensive public discussion of these new elements would provide a roadmap to the IDT criminal and undermine the effectiveness of these elements to protect taxpayers from IDT refund fraud,” stated the report from the summit.

“As such, this report will not provide extensive details or specifics related to these new elements.”

The report also mentioned a proposal that could prevent fraud significantly: advancing the deadline for employers to submit earnings statements (W-2, 1099, etc.). That would give the IRS more time to compare W-2 earnings statements, like those submitted by Luna and Ruano, with those submitted by an employer before any refund requests were processed.

CJ reporting from 2013

CJ initially reported on SIRF in March 2013, identifying fraud schemes over the course of several months in Durham, Clinton, Union County, and Long Island, N.Y. CJ also reported that the IRS had been aware of the issue for years, but rarely had discussed it publicly.

In July 2012, George’s office issued a report stating that for tax year 2011, the IRS reported that it had detected 938,644 tax returns involving identity theft and prevented the issuance of fraudulent tax refunds totaling $6.5 billion. But the losses from undetected identity fraud are substantial. His office’s analysis of data from the 2010 tax year identified 1.5 million returns, representing $5.2, billion, that likely were filed by identity thieves.

To combat SIRF the report stated, “Access to third-party income and withholding information at the time the tax returns are processed is the single most important tool that the IRS could have to identify and prevent tax refund fraud. However, most of the third-party information is not available until well after tax return filing begins.”

https://www.carolinajournal.com/news...million-fraud/

Couple featured in CJ stories on tax refund fraud get federal jail terms

Rick Henderson
Rick Hendersonin Quick Takes
November 16, 2016
11:39AM

Perfecto Ruano and his wife Walda Luna, both of Wallace, were sentenced Tuesday in federal court to prison terms of 57 months and 81 months, respectively, for operating a fraudulent federal income-tax refund scheme using fake identities. The couple was featured in three Carolina Journal news stories earlier this year (here, here, and here) as part of our continuing coverage of Stolen Identity Refund Fraud, which has included reports from North Carolina, Pennsylvania, and New York.

(The press release from the U.S. Attorney’s Office for the Eastern District of North Carolina is here.)

Ruano and Luna also must forfeit nearly $1.8 million in cash seized from their car during a traffic stop in Arkansas along with four Duplin County properties the couple own. They also are required to pay nearly $3 million in restitution to the Internal Revenue Service.

The couple created hundreds of false identities and filed income tax returns claiming refunds due to those phony “taxpayers.” They also used a convenience store they owned to launder money through a licensed check-cashing service they operated. All in all, they were charged with more than $12 million in refund fraud.

Luna is not a U.S. citizen, so she will be subject to deportation after serving her prison sentence.

https://www.carolinajournal.com/news...al-jail-terms/