Miguel Martinez, a 39-year-old Mexican national living in Bakersfield, California, was sentenced on Thursday to six years in prison for leading a $25 million fraud against the IRS. He faces 10 years in prison.
He was one of two Bakersfield-area men charged with conspiracy to defraud the United States and submission of false claims to the IRS. He was also charged with identity theft.
IRS Criminal Investigation special agents investigated the crime ring, which targeted taxpayers.
Martinez, who pleaded guilty in June, was in charge of a scheme that lasted from November 2019 to June 2023 in which hundreds of fraudulent tax returns were filed, allowing Martinez to claim millions of dollars in refunds.
In order to carry out his crime, Martinez stole identities and created fake businesses, reported fake wages, and withheld business information from the IRS. Martinez also submitted hundreds of individual income tax returns to the IRS based on stolen identities, reporting that the individuals worked for his phony businesses, and reporting their fake wages. Martinez did not act alone.
Martinez used several people to help him carry out the scheme. This included Martinez’s co‑defendant, Victor Cruz, a 38-year-old who prepared tax returns in Bakersfield and is alleged to have helped to file some of the fraudulent tax returns.
It also included a former IRS tax examiner who gave Martinez advice on how to avoid the IRS’s fraud detection systems. In exchange, Martinez “paid them thousands of dollars and took them out to lavish dinners,” according to the release.
As a result of the scheme, the IRS paid out $2.3 million in tax refunds. When federal agents arrested Martinez and searched his three homes, they found $750,000 in fraudulent tax refund checks, the identification cards of more than 200 individuals, and multiple firearms and ammunition that he could not lawfully possess due to his illegal status in the United States.
In the beginning of the investigation, Martinez initially told government agents that he had no knowledge of, or involvement in, tax preparation for others, and that he just sold gold and ran a party rental business. He also said that he did not know others who were involved in the scheme and that he did not have any relevant text messages or other evidence. Those statements, however, were later contradicted by his conviction in this case.
He added: “[The] sentencing is a true reflection of the collaborative commitment between IRS-CI and the U.S. Attorney’s Office to protect the people in our communities, uphold a fair tax system, and bring justice to light.”
Both Martinez and Cruz were indicted in October 2023. Victor Cruz is awaiting trial.
