By: Richard L. Smith
U.S. Attorney Philip R. Sellinger announced today that three Irvington, New Jersey residents have been charged for their involvement in a fraudulent scheme seeking over $2.9 billion in refunds from the IRS.
The charges stem from the submission of 131 false tax forms, exploiting COVID-19-related employment tax credits.
The accused, Rudolph Johnson, Frantz Pasteur, and Frederick Anderson, face charges including conspiracy to file false claims against the government and conspiracy to commit wire and mail fraud.
Additionally, charges of money laundering were brought against each individual, with Johnson and Anderson facing three counts and Pasteur two counts.
U.S. Attorney Sellinger said Johnson and Pasteur have already made court appearances before U.S. Magistrate Judge Michael A. Hammer in Newark federal court and have been released on bail, while Anderson is expected to appear at a future date.
The fraudulent activities took place between June 2021 and November 2023, during which the trio established numerous fictitious entities to claim unwarranted tax refunds, including the employee retention tax credit (ERC) introduced by Congress to mitigate the economic fallout from the COVID-19 pandemic.
These entities, lacking in significant tax history or W-2 wage payments, were used to illegitimately claim $2.9 billion in tax benefits, leading the U.S. Treasury to issue $1.03 million in refunds.
The ill-gotten gains were then deposited into personal bank accounts and used to purchase luxury items, thereby enriching the defendants fraudulently.
The alleged offenses carry severe penalties, including up to 10 years in prison and a $250,000 fine for the conspiracy to file false claims, up to 20 years in prison and a $250,000 fine for the conspiracy to commit wire and mail fraud, and up to 10 years in prison plus a fine for the money laundering charges.
This case underscores the ongoing efforts of law enforcement agencies to tackle fraudulent activities exploiting government relief measures introduced during the COVID-19 pandemic.