A federal grand jury has indicted two Southland tax organizations and dozens of their customers in connection with an alleged income tax fraud scheme.
Prosecutors say this so-called “tax-defiance” scam included a conspiratorial twist.
The firms involved allegedly advised their customers that the United States was bankrupt but that they could claim money from a secret government account. The organizations then allegedly collected fees ranging from $2,500 to $10,000 to file fraudulent income tax returns on their customers’ behalf with the Internal Revenue Service.
A representative of the IRS said it issued $5 million in response to the bogus refund claims after fielding hundreds of false tax returns. The firms being charged with fraud then allegedly counseled customers to ignore warning letters from the agency because it didn’t want to pay.
A federal grand jury indicted 55 people, including the operators of the Fontana-based Old Quest Foundation and De la Fuente and Ramirez and Associates of Rancho Cucamonga. Most allegations linked to those indictments are for conspiracy to defraud the United States.
Federal agents arrested 18 people on Friday; another 10 are at large or have agreed to surrender by the end of Monday. Authorities plan to summon 27 others for arraignment in the coming weeks.