Prosecutors: Man spared prison term for role in tax refund scheme, receives probation term



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NEWARK, New Jersey — Federal prosecutors in New Jersey say a North Carolina man won't have to serve a prison term for his role in one of the nation's largest and longest running stolen identity refund fraud schemes.

Luis Martinez, a 49-year-old Matthews resident, was instead ordered Tuesday to serve three years of probation and pay more than $750,000 in restitution.

Martinez had pleaded guilty to conspiracy to defraud the United States and theft of government property.

Prosecutors say the conspiracy caused more than 8,000 fraudulent U.S. income tax returns to be filed, which sought more than $65 million in tax refunds. That resulted in losses to the United States of more than $12 million.

Members of the conspiracy obtained personal identifiers, such as dates of birth and Social Security numbers, belonging to Puerto Rican citizens, prosecutors said. They used those identifiers to create fake 1040s, which falsely reported wages purportedly earned by the "taxpayers" and taxes purportedly withheld, to create the appearance that the "taxpayers" were entitled to tax refunds.

The returns were filed electronically. But law enforcement officers learned just a handful of IP addresses created many of the fraudulent forms that led to the issuance of tax refund checks.

Martinez and the other members of the conspiracy gained control of checks, prosecutors said, sometimes bribing mail carriers to intercept checks and deliver them to other members of the conspiracy. Investigators identified certain "hot spots" of activity and intercepted more than $22 million in fraudulently-applied for refund checks before they were delivered.

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