9 Defendants Charged In Manhattan Federal Court With Massive Tax And Identity Fraud Scheme

Press Release 9 Defendants Charged In Manhattan Federal Court With Massive Tax And Identity Fraud Scheme Wednesday, November 14, 2018 Share FacebookLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. XLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. LinkedInLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. Email For Immediate Release U.S. Attorney's Office, Southern District of New York Co-Conspirators Used the Stolen Identities of Children to Assist Their Clients to Fraudulently Claim Refunds Totalling Tens of Millions of Dollars Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and James D. Robnett, Special Agent in Charge, Internal Revenue Service-Criminal Investigations (“IRS-CI”), announced charges today against nine individuals for their participation in a long-running scheme to file thousands of fraudulent tax returns using the stolen identities of children, resulting in millions of dollars in estimated loss to the United States Treasury. Eight of the defendants were arrested this morning and will be presented before U.S. Magistrate Judge Barbara C. Moses today. MARCOS DE JESUS PANTALEON remains at large. Manhattan U.S. Attorney Geoffrey S. Berman said: “As alleged, these defendants used their experience as tax preparers to skirt U.S. tax laws by using the stolen identities of children to help increase their clients’ tax returns. All told, the defendants’ years’ long scheme resulted in tens of millions of dollars in questionable credits. Now the defendants’ businesses are shut down – literally – and the defendants face significant time in prison for tax fraud.” IRS-CI Special Agent in Charge James D. Robnett said: “Stealing the identities of children to file false tax returns is reprehensible. These individuals allegedly demonstrated a blatant disregard of the integrity of the United States tax system and caused immeasurable hardship to innocent victims. IRS-CI special agents are determined to investigate these crimes and protect the honest taxpayers.” According to the allegations in the Complaint[1] unsealed this morning and information in the public record: Under federal law, taxpayers may be entitled to claim certain tax credits, including the Earned Income Tax Credit (“EITC”) available to qualifying low and moderate income working individuals and families. If the individual claims the EITC based on having a child, the individual must list the name and Social Security Number (“SSN”) of the child on his or her tax return, along with completing a separate schedule that contains the child’s name, SSN, year of birth, relationship to the taxpayer, and how many months the child lived with the taxpayer during the tax year. Starting in 2009, and continuing for multiple years, ARIEL JIEMENEZ, a/k/a “Melo,” IRELINE NUNEZ, ANA YESSENIA JIMENEZ, EVELIN JIMENEZ, LEYVI CASTILLO, CINTHIA FEDERO, GUILLERMO ARIAS MONCION, MARCOS DE JESUS PANTALEON, a/k/a “Junior,” and JOSE CASTILLO, a/k/a “Jairo,” abused the EITC program with their knowledge of the tax system by using the stolen identities of numerous children to file thousands of fraudulent tax returns for their clients. These clients were not supporting, residing with, or related to the children they claimed as a dependent. Rather, they paid the defendants between $1,000 and $1,500 for each child falsely added to their returns. The inclusion of these false dependents allowed clients to claim tax refunds they were not entitled to, chiefly the EITC. All of the defendants initially worked together at the same tax-preparation business. In approximately 2013, MONCION, PANTALEON, and JOSE CASTILLO started their own tax-preparation business. In approximately 2014, JOSE CASTILLO left to start his own, third tax-preparation business. All three businesses engaged in the same conduct of possessing stolen identities of children and adding those identities to clients’ tax returns in exchange for a fee. The tax returns filed by the defendants’ associated businesses indicate markedly high rates of returns seeking the EITC. For example, for returns filed from tax year 2010 through 2017, between 56 percent and 74 percent of all returns prepared by the defendants’ businesses claimed the EITC. In contrast, between 34 percent and 39 percent of all tax returns filed in the Bronx, New York, and between 18 percent and 21 percent of all tax returns filed nationwide for the same time period sought the EITC. In total, between 2009 and the present, the returns filed by the defendants’ businesses claimed more than $44 million in the EITC. In addition to the fraud described above, EVELIN JIMENEZ, LEYVI CASTILLO, FEDERO, MONCION, and JOSE CASTILLO each fraudulently claimed dependents on their own personal tax returns. * * * A chart listing the defendants, and the charges and maximum penalties they face is attached. The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge. Mr. Berman praised the outstanding investigative work of IRS-CI. He also thanked the New York City Department of Investigation for its assistance. This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Daniel G. Nessim, Ni Qian, and Daniel C. Richenthal are in charge of the prosecution. The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty. Defendant Charges Maximum Penalties Ariel Jimenez, a/k/a “Melo” (34, of New York, New York) Conspiracy to defraud the United States with respect to claims Conspiracy to commit wire fraud Aggravated Identity Theft 32 years in prison Mandatory minimum of two years in prison to be imposed consecutively to any other sentence Ireline Nunez (36, of New York, New York) Conspiracy to defraud the United States with respect to claims Conspiracy to commit wire fraud Aggravated Identity Theft 32 years in prison Mandatory minimum of two years in prison to be imposed consecutively to any other sentence Ana Yessenia Jimenez (36, of New York, New York) Conspiracy to defraud the United States with respect to claims Conspiracy to commit wire fraud Aggravated Identity Theft 32 years in prison Mandatory minimum of two years in prison to be imposed consecutively to any other sentence Evelin Jimenez (32, of New York, New York) Conspiracy to defraud the United States with respect to claims Conspiracy to commit wire fraud Aggravated Identity Theft Subscribing to a false return 35 years in prison Mandatory minimum of two years in prison to be imposed consecutively to any other sentence Leyvi Castillo (35, of New York, New York) Conspiracy to defraud the United States with respect to claims Conspiracy to commit wire fraud Aggravated Identity Theft Subscribing to a false return 35 years in prison Mandatory minimum of two years in prison to be imposed consecutively to any other sentence Cinthia Federo (31, of New York, New York) Conspiracy to defraud the United States with respect to claims Conspiracy to commit wire fraud Aggravated Identity Theft Subscribing to a false return (two counts) 38 years in prison Mandatory minimum of two years in prison to be imposed consecutively to any other sentence Guillermo Arias Moncion (32, of New York, New York) Conspiracy to defraud the United States with respect to claims (two counts) Conspiracy to commit wire fraud (two counts) Aggravated Identity Theft Subscribing to a false return (four counts) 74 years in prison Mandatory minimum of two years in prison to be imposed consecutively to any other sentence Marcos De Jesus Pantaleon, a/k/a “Junior” (28, of New York, New York) Conspiracy to defraud the United States with respect to claims (two counts) Conspiracy to commit wire fraud (two counts) Aggravated Identity Theft 62 years in prison Mandatory minimum of two years in prison to be imposed consecutively to any other sentence Jose Castillo, a/k/a “Jairo” (42, of New York, New York) Conspiracy to defraud the United States with respect to claims (three counts) Conspiracy to commit wire fraud (three counts) Aggravated Identity Theft Subscribing to a false return 95 years in prison Mandatory minimum of two years in prison to be imposed consecutively to any other sentence [1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation. Updated November 14, 2018 Topic Tax Component USAO - New York, Southern Press Release Number: 18-399

Press Release 9 Defendants Charged In Manhattan Federal Court With Massive Tax And Identity Fraud Scheme Wednesday, November 14, 2018 Share FacebookLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. XLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. LinkedInLinks to other government and non-government sites will typically appear with the “external link” icon to indicate that you are leaving the Department of Justice website when you click the link. Email For Immediate Release U.S. Attorney's Office, Southern District of New York Co-Conspirators Used the Stolen Identities of Children to Assist Their Clients to Fraudulently Claim Refunds Totalling Tens of Millions of Dollars Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and James D. Robnett, Special Agent in Charge, Internal Revenue Service-Criminal Investigations (“IRS-CI”), announced charges today against nine individuals for their participation in a long-running scheme to file thousands of fraudulent tax returns using the stolen identities of children, resulting in millions of dollars in estimated loss to the United States Treasury. Eight of the defendants were arrested this morning and will be presented before U.S. Magistrate Judge Barbara C. Moses today. MARCOS DE JESUS PANTALEON remains at large. Manhattan U.S. Attorney Geoffrey S. Berman said: “As alleged, these defendants used their experience as tax preparers to skirt U.S. tax laws by using the stolen identities of children to help increase their clients’ tax returns. All told, the defendants’ years’ long scheme resulted in tens of millions of dollars in questionable credits. Now the defendants’ businesses are shut down – literally – and the defendants face significant time in prison for tax fraud.” IRS-CI Special Agent in Charge James D. Robnett said: “Stealing the identities of children to file false tax returns is reprehensible. These individuals allegedly demonstrated a blatant disregard of the integrity of the United States tax system and caused immeasurable hardship to innocent victims. IRS-CI special agents are determined to investigate these crimes and protect the honest taxpayers.” According to the allegations in the Complaint[1] unsealed this morning and information in the public record: Under federal law, taxpayers may be entitled to claim certain tax credits, including the Earned Income Tax Credit (“EITC”) available to qualifying low and moderate income working individuals and families. If the individual claims the EITC based on having a child, the individual must list the name and Social Security Number (“SSN”) of the child on his or her tax return, along with completing a separate schedule that contains the child’s name, SSN, year of birth, relationship to the taxpayer, and how many months the child lived with the taxpayer during the tax year. Starting in 2009, and continuing for multiple years, ARIEL JIEMENEZ, a/k/a “Melo,” IRELINE NUNEZ, ANA YESSENIA JIMENEZ, EVELIN JIMENEZ, LEYVI CASTILLO, CINTHIA FEDERO, GUILLERMO ARIAS MONCION, MARCOS DE JESUS PANTALEON, a/k/a “Junior,” and JOSE CASTILLO, a/k/a “Jairo,” abused the EITC program with their knowledge of the tax system by using the stolen identities of numerous children to file thousands of fraudulent tax returns for their clients. These clients were not supporting, residing with, or related to the children they claimed as a dependent. Rather, they paid the defendants between $1,000 and $1,500 for each child falsely added to their returns. The inclusion of these false dependents allowed clients to claim tax refunds they were not entitled to, chiefly the EITC. All of the defendants initially worked together at the same tax-preparation business. In approximately 2013, MONCION, PANTALEON, and JOSE CASTILLO started their own tax-preparation business. In approximately 2014, JOSE CASTILLO left to start his own, third tax-preparation business. All three businesses engaged in the same conduct of possessing stolen identities of children and adding those identities to clients’ tax returns in exchange for a fee. The tax returns filed by the defendants’ associated businesses indicate markedly high rates of returns seeking the EITC. For example, for returns filed from tax year 2010 through 2017, between 56 percent and 74 percent of all returns prepared by the defendants’ businesses claimed the EITC. In contrast, between 34 percent and 39 percent of all tax returns filed in the Bronx, New York, and between 18 percent and 21 percent of all tax returns filed nationwide for the same time period sought the EITC. In total, between 2009 and the present, the returns filed by the defendants’ businesses claimed more than $44 million in the EITC. In addition to the fraud described above, EVELIN JIMENEZ, LEYVI CASTILLO, FEDERO, MONCION, and JOSE CASTILLO each fraudulently claimed dependents on their own personal tax returns. * * * A chart listing the defendants, and the charges and maximum penalties they face is attached. The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge. Mr. Berman praised the outstanding investigative work of IRS-CI. He also thanked the New York City Department of Investigation for its assistance. This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Daniel G. Nessim, Ni Qian, and Daniel C. Richenthal are in charge of the prosecution. The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty. Defendant Charges Maximum Penalties Ariel Jimenez, a/k/a “Melo” (34, of New York, New York) Conspiracy to defraud the United States with respect to claims Conspiracy to commit wire fraud Aggravated Identity Theft 32 years in prison Mandatory minimum of two years in prison to be imposed consecutively to any other sentence Ireline Nunez (36, of New York, New York) Conspiracy to defraud the United States with respect to claims Conspiracy to commit wire fraud Aggravated Identity Theft 32 years in prison Mandatory minimum of two years in prison to be imposed consecutively to any other sentence Ana Yessenia Jimenez (36, of New York, New York) Conspiracy to defraud the United States with respect to claims Conspiracy to commit wire fraud Aggravated Identity Theft 32 years in prison Mandatory minimum of two years in prison to be imposed consecutively to any other sentence Evelin Jimenez (32, of New York, New York) Conspiracy to defraud the United States with respect to claims Conspiracy to commit wire fraud Aggravated Identity Theft Subscribing to a false return 35 years in prison Mandatory minimum of two years in prison to be imposed consecutively to any other sentence Leyvi Castillo (35, of New York, New York) Conspiracy to defraud the United States with respect to claims Conspiracy to commit wire fraud Aggravated Identity Theft Subscribing to a false return 35 years in prison Mandatory minimum of two years in prison to be imposed consecutively to any other sentence Cinthia Federo (31, of New York, New York) Conspiracy to defraud the United States with respect to claims Conspiracy to commit wire fraud Aggravated Identity Theft Subscribing to a false return (two counts) 38 years in prison Mandatory minimum of two years in prison to be imposed consecutively to any other sentence Guillermo Arias Moncion (32, of New York, New York) Conspiracy to defraud the United States with respect to claims (two counts) Conspiracy to commit wire fraud (two counts) Aggravated Identity Theft Subscribing to a false return (four counts) 74 years in prison Mandatory minimum of two years in prison to be imposed consecutively to any other sentence Marcos De Jesus Pantaleon, a/k/a “Junior” (28, of New York, New York) Conspiracy to defraud the United States with respect to claims (two counts) Conspiracy to commit wire fraud (two counts) Aggravated Identity Theft 62 years in prison Mandatory minimum of two years in prison to be imposed consecutively to any other sentence Jose Castillo, a/k/a “Jairo” (42, of New York, New York) Conspiracy to defraud the United States with respect to claims (three counts) Conspiracy to commit wire fraud (three counts) Aggravated Identity Theft Subscribing to a false return 95 years in prison Mandatory minimum of two years in prison to be imposed consecutively to any other sentence [1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitute only allegations, and every fact described should be treated as an allegation. Updated November 14, 2018 Topic Tax Component USAO - New York, Southern Press Release Number: 18-399