Miguel Martinez, a 39-year-old Mexican national residing in Bakersfield, California, has been sentenced to six years in prison for orchestrating a $25 million fraud against the IRS. He is facing a total of 10 years in prison.
He was one of two individuals from the Bakersfield area charged with conspiracy to defraud the United States and submitting false claims to the IRS. Additionally, he was charged with identity theft.
IRS Criminal Investigation special agents conducted an investigation into the criminal enterprise that targeted taxpayers.
Martinez, who pleaded guilty in June, was the mastermind behind a scheme that spanned from November 2019 to June 2023. During this time, hundreds of fraudulent tax returns were filed, enabling Martinez to claim millions of dollars in refunds.
To carry out his fraudulent activities, Martinez stole identities, established fake businesses, reported fictitious wages, and withheld crucial business information from the IRS. He also submitted numerous individual income tax returns to the IRS using stolen identities, falsely claiming that these individuals were employed by his bogus businesses and reporting fake wages. Martinez did not act alone.
Martinez enlisted the help of several individuals to execute the scheme. This included his co-defendant, Victor Cruz, a 38-year-old who prepared tax returns in Bakersfield and allegedly assisted in filing some of the fraudulent tax returns.
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He also engaged a former IRS tax examiner who provided Martinez with guidance on evading the IRS’s fraud detection systems. In return, Martinez compensated them with substantial sums of money and extravagant dinners, as per the report.
As a result of the fraudulent scheme, the IRS disbursed $2.3 million in tax refunds. Upon Martinez’s arrest by federal agents and the subsequent search of his three residences, authorities discovered $750,000 in fraudulent tax refund checks, over 200 individuals’ identification cards, and multiple firearms and ammunition that Martinez, being an illegal resident in the U.S., was not permitted to possess.
Initially, during the investigation’s outset, Martinez denied any involvement in tax preparation for others, claiming he solely dealt in gold sales and operated a party rental business. He asserted no knowledge of other individuals participating in the scheme and disclaimed possessing any incriminating text messages or evidence. However, these statements were contradicted by his subsequent conviction.
He further commented, “This sentencing epitomizes the collaborative dedication between IRS-CI and the U.S. Attorney’s Office to safeguard our communities, uphold a fair tax system, and bring offenders to justice.”
Both Martinez and Cruz were indicted in October 2023, with Victor Cruz currently awaiting trial.
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