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Guilty Plea in Manhattan Federal Court in Multimillion-Dollar Tax Refund and Theft of Mail Scheme
PREET BHARARA, the United States Attorney for the
Southern District of New York, announced today that JOSE FRANKLIN
DUARTE pleaded guilty late yesterday before United States
District Judge HAROLD BAER, JR., to his role in a scheme to
fraudulently obtain millions of dollars in federal tax refund
checks and then to steal the checks from U.S. mail.
According to the Superseding Information filed
yesterday in federal court, statements made during DUARTE's
guilty plea, and a criminal Complaint unsealed on Wednesday,
February 25, 2009:
The fraudulent scheme involved the electronic filing of
thousands of tax returns using Social Security numbers assigned
to residents of the Commonwealth of Puerto Rico. Residents of
Puerto Rico are issued Social Security numbers, but typically do
not file federal tax returns with the Internal Revenue Service
("IRS") because, in general, such filing is not required as long
as all of the Puerto Rico resident's income is derived from
Puerto Rican sources. The fraudulent tax returns falsely claimed
that the filer resided in one of the fifty states of the United
States. The use of Puerto Rican Social Security numbers
minimized the risk that a legitimate federal tax return was
already filed by the legitimate holder of the Social Security
number.
From August 2008 to February 2009, DUARTE's coconspirators
filed over 9,000 U.S. Individual Income Tax Returns
and Forms 1040 for tax years 2007 and 2008 with the IRS that
contained information connected to the stolen Social Security
numbers of Puerto Rican residents. The false returns and forms
all sought refunds totaling over $91 million dollars to be sent
in the form of U.S. Treasury checks via U.S. mail. One of
DUARTE's co-conspirators ("CC-1") was a letter carrier employed
by the U.S. Postal Service who delivered mail in the Bronx. In November 2008, DUARTE and his co-conspirator paid CC-1 cash in
exchange for the mail containing the fraudulently-obtained U.S.
Treasury checks addressed to the buildings on CC-1's route. The
actual amount of tax refund checks stolen by DUARTE and his coconspirators
during tax year 2008 was over $750,000.
DUARTE, 37, of the Bronx, New York, pleaded guilty to
one count of conspiracy to steal mail, one count of theft of
mail, and one count of conspiracy to defraud the Government with
respect to claims. He faces a maximum of 20 years in prison: five
years in prison on the conspiracy to steal mail count; five years in
prison on the theft of mail count; and 10 years on the conspiracy
to defraud the government with respect to claims count. On each
count, he faces a fine of the maximum of $250,000 or twice the
gross pecuniary gain or twice the gross pecuniary loss resulting
from the offenses. DUARTE also faces restitution to be paid to
the IRS.
DUARTE is scheduled to be sentenced by Judge BAER on
January 7, 2010, at 12:30 p.m.
Mr. BHARARA praised the work of IRS Criminal
Investigation Division, the Federal Bureau of Investigation, the
United States Postal Inspection Service, and the United States
Postal Service Office of Inspector General, and thanked them for
their work in this case.
Mr. BHARARA also thanked the Dominican National Police,
the Attorney General of the Dominican Republic, and Prosecutor of
the Judicial District of Santiago, Dominican Republic, for their
assistance and cooperation in this investigation.
This case is being prosecuted by the Office's Major
Crimes Unit. Assistant United States Attorney DANIEL W. LEVY is
in charge of this prosecution.
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