A local tax preparer accused of stealing millions of dollars from trusting customers in the form of bogus tax payments and phony tax refund checks pleaded not guilty at an arraignment on this tax day.
The Internal Revenue Service (IRS) arrested tax preparer Steven Martinez Friday on 49 separate charges including mail fraud, procuring false tax returns, social security fraud, aggravated identity theft, making false tax returns, money laundering, and criminal forfeiture, according to U.S. Attorney Laura Duffy.
Martinez stole $11 million in tax payments that should have been turned over to the IRS, according to the indictment.
Martinez would allegedly tell his clients they owed a significant amount of tax and then persuade his clients to write the check payable to a client trust account instead of the IRS or California Franchise Tax Board, investigators said. Martinez would then allegedly deposit the check into several different bank accounts.
Martinez used the funds to pay for a multi-million dollar home in Ramona, an airplane, a boat, a motor home, trips to the Super Bowl, and vacations in Mexico, investigators said.
A second preparer, John Leonard Camilo, pled guilty on Friday to defrauding the IRS out of nearly $800,000.
Camilo prepared returns for family and friends and used a variety of methods to defraud the government, officials said. Camilo allegedly created false businesses which suffered losses, created false educational expenses and improperly claimed dependents, investigators said.
A part of his plea, Camilo admitted he defrauded 14 of his 91 clients out of their tax return by telling them they were not due a refund and giving them falsified documents, keeping the returns for himself which totaled $120,107.39.
Camilo will be sentenced on July 25, 2011.