The founder of a business called Uncle Sams Tax Service has pleaded guilty to stealing the identities of dead people and using them to file tax returns.
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Adrian Espiridion Lugo pleaded guilty Wednesday to two felony counts, including conspiracy to defraud the government through false claims and aggravated identity theft.
Lugo, 29, was indicted in January on 104 counts by a federal grand jury in Phoenix. According to the indictment, while a resident of Buckeye, Ariz., Lugo operated a tax preparation business called Uncle Sams Tax Service. Between 2008 and 2009, Lugo allegedly used stolen names and Social Security numbers of deceased individuals from California that he obtained from the Internet and filed false tax returns fraudulently claiming tax refunds in the names of the deceased.
On the tax returns, Lugo allegedly falsified the deceased individuals’ wages, income tax withholdings, dependents, tax credits and other deductions, in order to maximize the tax refund. Some of the tax credits used by Lugo included the First-Time Homebuyer Credit, the Child Tax Credit and the Earned Income Tax Credit.
Lugo allegedly had the fraudulent refunds delivered to him or deposited into accounts that he controlled. He registered a business called Uncle Sam’s Tax Service and opened bank accounts under its name. According to prosecutors, Lugo directed the IRS to deposit tax refunds into accounts at M & I Bank, Credit Union West and Green Dot Corporation. In addition, he and an unindicted co-conspirator allegedly agreed to direct several of the tax refunds into the co-conspirator’s bank account at US Bank.
Lugo allegedly filed approximately 34 income tax returns and claimed over $279,000 in federal tax refund payments. The IRS distributed approximately $186,000 to bank accounts controlled by Lugo.
“All over our country, individuals stealing identities and filing bogus tax returns are being prosecuted and sentenced to prison," said IRS special agent Brian Watson. "This is another successful case against someone who stole from the U.S. Treasury.”
Lugo faces up to five years in prison for the false claims count and two years for the identity theft count. He is also subject to fines and mandatory restitution if convicted. Sentencing is scheduled for January in Phoenix.
The investigation was conducted by agents of the Internal Revenue Service’s Criminal Investigations Division. The prosecution was handled by Assistant U.S. Attorney Raymond Woo.