Inmate Prepared False Tax Returns for Other Prisoners

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An inmate in a New Jersey prison has pleaded guilty to scamming the Internal Revenue Service out of nearly $215,000 by recruiting his fellow prisoners and filing false tax returns for them.

Jerry Julian pleaded guilty June 27 in connection with his scheme to defraud the Internal Revenue Service by obtaining false tax refunds on behalf of himself and fellow inmates of a New Jersey state prison, according to the U.S. Attorney’s Office in New Jersey.

Julian, 47, of Seaside Heights, N.J., pleaded guilty to an information charging him with one count of aiding and assisting in the preparation of false and fraudulent tax returns. He entered his guilty plea before U.S. District Judge Noel L. Hillman in Camden federal court.

Julian admitted that from approximately September 2006 through early 2007, while he was held at Riverfront State Prison in Camden, he operated a scheme to defraud the IRS by helping other inmates at the prison prepare and file false tax returns designed to trigger tax refunds for tax years 2003, 2004, and 2005, to which they were not entitled.

Julian told his fellow inmates that the federal government paid the prison minimum wage for the prisoners’ labor, that employment taxes were withheld from those amounts, and that the prisoners were entitled to claim a refund of the amounts withheld. In reality, prisoners were paid no more than $5 per day from which no taxes were withheld.

Julian admitted that the filing of the false returns generally resulted in refunds, and that he assisted in preparing and filng approximately 110 tax returns for more than 60 inmates. The scheme resulted in a total tax loss to the IRS of nearly $215,000.

Julian faces up to an additional three years in prison and a $250,000 fine at sentencing, which is scheduled for Oct. 14, 2011.

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