A New York man has pleaded guilty to leading one of the largest and longest-running tax refund fraud schemes associated with identity theft ever perpetrated in the U.S.
Jose Torres, 47, of Bronx, N.Y., pleaded guilty Tuesday before U.S. District Judge Claire C. Cecchi in a Newark, N.J., federal court to an information charging him with conspiracy to defraud the United States, theft of government property and aggravated identity theft.
The scheme caused more than 8,000 fraudulent U.S. income tax returns to be filed, which sought more than $65 million in tax refunds and resulted in losses to the United States of more than $12 million. Torres, who is also known as “Jose Quilestorres” and “Carlos Jose Luis,” admitted that the fraudulently obtained tax refund checks in which he was personally involved totaled $9.9 million.
According to prosecutors, Torres and others obtained personal identifiers, such as dates of birth and Social Security numbers, belonging to Puerto Rican citizens. He then directed the others to use the information to create fraudulent 1040 forms that they filed electronically.
They gained control of the tax refund checks by bribing mail carriers to intercept the checks and deliver them to other conspirators. In exchange for cash payments, the mail carriers gave the checks to the conspirators, who sold the checks to other conspirators.
Torres and others also purchased “mail routes,” lists of addresses covered by a single mail carrier. He and his fellow conspirators applied for tax refunds, inserted addresses along the mail route as the purported home addresses of the taxpayers, and obtained the refund checks sent to the addresses. In other instances, the conspirators applied for checks using addresses otherwise controlled by, or accessible to, certain conspirators, and collected the checks after they were delivered to those addresses.
By tracing the specific IP addresses that submitted the electronically filed 1040s, law enforcement officers learned that only a handful of IP addresses created many of the fraudulent 1040 forms. The New Jersey task force also identified certain “hot spots” of activity, with millions of dollars in tax refund checks directed to just a few towns and cities in and around New Jersey, including Nutley, Somerset and Newark, N.J., and Shirley, N.Y. The task force members then interacted with U.S. Postal Service employees in these hot spots and identified the characteristics of refund checks connected to the scheme. As a result of these efforts, more than $22 million in fraudulent tax refund checks that had been issued by the U.S. Treasury were not delivered to the conspirators or others, but were stopped by law enforcement officers.
Torres previously pleaded guilty in the Southern District of New York to charges arising out of the same scheme. He will be sentenced in the Southern District of New York on the charges from both states at a date to be determined.
The conspiracy count is punishable by up to five years in prison and up to a $250,000 fine. The count of theft of government property is punishable by up to 10 years in prison and up to a $250,000 fine. The aggravated identity theft count is punishable by a statutory mandatory minimum sentence of two years in prison, which must run consecutively with any other sentence.
U.S. Attorney Paul J. Fishman praised special agents of IRS-Criminal Investigation, under the direction of special agent in charge Shantelle P. Kitchen; and inspectors of the U.S. Postal Inspection Service, under the direction of Maria L. Kelokates, with the investigation leading to the guilty pleas. He also thanked the special agents of the U.S. Secret Service, under the direction of Special Agent in Charge James Mottola; the Drug Enforcement Administration, under the direction of Special Agent in Charge Carl J. Kotowski; and HSI-ICE, under the direction of Special Agent in Charge Andrew M. McLees, for their roles.
The government was represented by Assistant U.S. Attorneys Mala Ahuja Harker, Lakshmi Srinavasan Herman, Zach Intrater, and Danielle Walsman of the U.S. Attorney’s Office Criminal Division in Newark. One of Torres’s attorneys declined to comment and the other did not immediately respond to a request for comment.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access