Justice Department Reports 76 Defendants in Nationwide Tax Fraud Enforcement Surge

The Justice Department announced Wednesday that a nationwide tax enforcement operation involved 76 defendants and more than $490 million in estimated intended tax losses. The department said the effort included new charges against 31 people accused of schemes targeting American taxpayers.

The operation, described by the department as its first National Tax Enforcement Surge, lasted about six weeks and brought together 35 U.S. attorneys’ offices and IRS Criminal Investigation personnel. Officials reported 23 new charging actions involving more than $350 million in alleged intended losses. Another 45 defendants were connected to trials, guilty pleas or sentencings in cases involving nearly $140 million in estimated intended losses.

Those totals concern alleged or estimated losses, rather than funds recovered. At a news conference, Assistant Attorney General Colin McDonald said fraudulent proceeds can be spent before investigators are able to seize them. He said the department is forming an asset forfeiture and recovery team to pursue property allegedly bought with fraud proceeds, including luxury cars and real estate. McDonald did not give a recovery total and said some cases are at an early stage.

Among the cases highlighted was a Texas matter involving four defendants accused of promoting fraudulent trusts. Prosecutors allege the arrangements concealed more than $1.5 billion in income and resulted in over $200 million in estimated tax losses.

In a separate Georgia case, three Mexican citizens were indicted in an alleged tax-refund scheme. Prosecutors say it involved more than 16,000 U.S. Treasury checks and about $74 million. The indictment alleges that the defendants used identification documents belonging to other people to obtain IRS taxpayer identification numbers and submit fraudulent returns. The allegations have not been proven in court.

Attorney General Todd Blanche said in a department news release that the operation uncovered only part of the suspected fraud and that the department intends to expand investigations. IRS Criminal Investigation chief Jarod Koopman characterized the coordinated effort as a new enforcement approach and said similar operations would follow.

The enforcement push follows the Justice Department’s establishment of its National Fraud Enforcement Division in April. The department’s announcement did not provide a combined amount recovered from the cases. Criminal defendants are presumed innocent unless proven guilty.