As the industry keeps changing, it's important to know a company's "pedigree."
Jan. 22--Four Allentown residents used the stolen identities of people from Puerto Rico to file more than $700,000 in fraudulent tax refund requests with the Internal Revenue Service, federal prosecutors allege.
Florentina Peralta, Jose Peralta, their father Liberado Peralta and Fayez Antonios are each charged with conspiring to defraud the government and aggravated identity theft. Additionally, Jose Peralta is charged with making false statements to obtain a federally insured loan, according to court documents.
The scheme, as described in two court filings last week, capitalizes on a provision of the tax code under which residents of Puerto Rico are required to file tax returns only when they earn income in the mainland United States.
The Peraltas and Antonios recognized that by using the stolen identities of Puerto Rican residents, who do not typically file tax returns with the IRS, they were less likely to be detected, the court filings say.
Florentina Peralta is scheduled to appear in court Thursday before U.S. District Judge Harvey Bartle III. A spokeswoman for the U.S. attorney's office said prosecutors would not discuss the case.
According to a 2013 audit by the U.S. Treasury inspector general's office, tax refund fraud around the country cost taxpayers about $3.6 billion in 2011, down from $5.2 billion in 2010.
Prosecutors allege the Peraltas and Antonios worked together with others not named in the court documents to obtain the identities, including the names, birth dates and Social Security numbers, of Puerto Rico residents.
Using the stolen identities, the Peraltas and Antonios then prepared tax returns with Allentown addresses, requesting that income tax refunds be mailed to those addresses, court documents allege.
Between June 2011 and April 2012, the three Peraltas, Antonios and others prepared 111 false tax returns seeking refunds totaling $702,583. The IRS actually issued at least 40 refund checks with a value of about $255,704, prosecutors say.
The Peraltas and Antonios had provided some of the addresses where the refund checks were mailed, and were paid $500 per check to retrieve them and forward them to the unnamed co-conspirators who deposited them, the court filings say.
Prosecutors also allege that Jose Peralta, Florentina Peralta and Antonios funneled fraudulent refund checks and refund anticipation loan checks through businesses they and friends owned, including Ace Home Sales and Catty Check Cashing in Catasauqua, Alta Check Cashing in Emmaus and Xpress Auto Sales in Allentown.
The charges have a link to a widening mortgage fraud case also being prosecuted by the U.S. attorney's office in Philadelphia. In that case, Florentina Peralta is charged with conspiracy to commit bank fraud and making false statements to obtain insurance.
The mortgage fraud case stems from a federal investigation of loans to buy Allentown homes obtained through the now defunct Madison Funding, after the buyer of the properties defaulted and the lender filed an insurance claim with the U.S. Department of Housing and Urban Development.
The buyer and loan officer in that case pleaded guilty in 2012, and the investigation led to the indictment in May of six additional people who worked at Madison Funding, including Florentina Peralta.
In December, federal prosecutors charged three others in a related mortgage fraud case, including two Allentown real estate agents and a banker with ties to Madison Funding, who allegedly profited by helping city home buyers get loans they couldn't afford.
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