Two Clinton Women Plead Guilty To Stolen-Identity Tax Fraud | Eastern North Carolina Now

    Publisher's note: The author of this post is Don Carrington, who is executive editor for the Carolina Journal, John Hood Publisher.

    Each could face 10-year prison terms when sentenced

    NEW BERN  -  Clinton residents Angela Christina Lainez-Flores, 44, and her daughter Karen Mejia, 23, both citizens of Honduras, pleaded guilty as charged in a conspiracy to defraud the federal government through the filing of false income tax refunds.

    Each signed a plea agreement with the federal prosecutor following hearings July 22 at the federal courthouse in New Bern. Lainez - Flores also pleaded guilty to a separate charge of aggravated identity theft.

    Their scheme involved the filing of multiple tax returns using fabricated identities, phony W-2 earnings statements, and the listing of dependents that do not exist.

    Their arrests in May followed an IRS undercover operation conducted with the assistance of an unnamed cooperating witness who prepared the fraudulent tax returns with information provided by the two women.

    The federal government's criminal complaint stated that seven fraudulent returns claiming a total of $60,784 in refunds, signed by Lainez-Flores or Mejia, were prepared for tax year 2012.

    But at a probable cause hearing in May, IRS special agent Bennett Strickland stated the women were involved in much more, filing fraudulent federal tax returns for refunds totaling $1.4 million involving tax years 2006-12.

    Their sentencing hearing is scheduled for Oct. 28 and each is facing up to 10 years in prison for the conspiracy to defraud charge. They remain in custody because they "represent a substantial risk of flight as they are in the U.S. from Honduras," according to the criminal complaint.

    This type of crime often is referred to as Stolen Identity Refund Fraud, or SIRF, and the IRS has described it as the No. 1 tax fraud scheme for 2013. It affects an untold number of innocent taxpayers, costing the federal government billions. It relies on two weaknesses in the operations of the Internal Revenue Service: its desire to get returns to taxpayers quickly, and a timing gap in how it deals with employees and employers.

    The complaint stated that Lainez-Flores and Mejia, with the help of a tax preparer, conspired to file numerous false tax returns beginning in 2009. They obtained identification documents of people who do not reside in the United States and used those IDs to make fraudulent applications for Individual Tax Identification Numbers.

    They generated fake W-2 earnings statements from companies that did not employ them. On the returns, they included exemptions for multiple dependents that didn't exist. One return filed in 2010 under the name Jose Garcia claimed 11 dependents.

    They requested that the year 2012 returns be mailed to a post office box in Clinton. They had been paying the tax preparer $100 for each false form, but for forms filed this year, the tax preparer raised the fee to $400.

    The fate of the tax preparer is unclear and no one else has been charged publicly in this particular scheme. The court records of cooperating witnesses - such as the tax preparer in this instance - often are sealed for a period of time.

    Other reports

    Over the past several months, Carolina Journal has reported on a SIRF scheme involving five other Hondurans who tried to cash fraudulent refund checks in Sampson County, and separate schemes at which fraudsters used mailboxes on a street in Durham to collect illegitimate tax refund checks.

    Another CJ report involved a Long Island, N.Y., woman who has spent nearly two years trying to convince the IRS and the U.S. Postal Service that people with Hispanic-sounding surnames are using her address to obtain tax refunds from the IRS as part of a fraud scheme.