Results tagged “Santa Ana” from The Court Reporter

San Clemente Man Pleads Guilty to Tax Evasion and Drug Trafficking

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        SANTA ANA -  A San Clemente man, who admitted that he earned about $25 million from marijuana sales over the course of six years, pleaded guilty today to tax offenses and drug trafficking in relation to a string of nine illegal marijuana storefronts that generated millions in profits, according to the U.S. Attorney's Office.

        John Melvin Walker, also known as "Pops," 56,  pleaded guilty to one count of conspiring to distribute well over a ton of marijuana and to maintain  drug-involved premises. He also pleaded guilty to a tax evasion count in a second case that was filed in February.

            Federal authorities allege that Walker specifically admitted that he earned $11.4 million in 2009, but reported to the IRS income of only $200,180 and that he owed $2,656 in taxes. 

            Walker admitted in the plea agreement that he owed the IRS $944,133 in relation to the 2009 tax year alone, officials stated.

           Walker was one of 14 people indicted in October.

            Walker owned and operated at least nine marijuana stores in cities across Los Angeles and Orange counties.

            He has two prior felony drug-trafficking convictions from state court. Walker admitted that he directed the managers of his marijuana stores to shred records as part of his effort to conceal from tax authorities income earned from the sale of marijuana. Accordingly, it was routine for Walker's managers to destroy sales records.

            Walker will be sentenced in July and is facing up to life in prison and a mandatory minimum sentence of 10 years.

        The remaining defendants in this case are scheduled to go on trial in September.

 

Two Men Convicted of Concocting a Tax Fraud Scheme To Get $250 Million in Tax Refunds

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          SANTA ANA - Two Inland Empire men who ran the Fontana-based Old Quest Foundation have been convicted of running a tax fraud scheme that resulted in more than 400 fraudulent federal income tax returns being filed with the IRS that cumulatively sought more than $250 million in fraudulent refunds, according to federal officials.

       

Arturo S. Ruiz, 55, of Moreno Valley, who was the chief executive officer of Old Quest, was found guilty Wednesday of one count of conspiracy to defraud the United States and 41 counts of filing false claims against the United States, including four of his own federal tax returns.

       

Francisco J. Mendoza, 51, of San Bernardino, who was the president of Old Quest, was also found guilty of one count of conspiracy to defraud the United States and 37 counts of filing false claims against the United States, according to officials.

           

Ruiz is facing a  maximum sentence of 215 years in federal prison, and Mendoza faces a statutory maximum sentence of 195 years.

 

            This is how Ruiz and Mendoza did business, according to authorities.

           

            Ruiz and Mendoza fraudulently told Old Quest clients they each could receive tax refunds of hundreds of thousands of dollars by accessing "secret government accounts" through a process that included the filing of IRS forms, federal authorities stated.

           

            During presentations in the Southland, members of Old Quest promoted the secret account theory and other anti-tax arguments.

 

            Ruiz and Mendoza falsely told clients who attended seminars that they had employees who were attorneys, accountants, CPAs and former IRS employees to give their scheme the appearance of legitimacy.

           

            Taxpayers who signed up were required to pay fees as high as $10,000, and were made to promise to "donate" to Old Quest 25 percent of any tax refunds they received, federal authorities stated.

 

            Old Quest filed false income tax returns that routinely sought hundreds of thousands of dollars, and sometimes, millions in income tax refunds, federal officials stated.

        Bank records showed that Old Quest received approximately $1.9 million from clients who used the fraudulent scheme, a figure that includes kickbacks from tax refunds erroneously issued by the IRS.

 

        When customers received IRS letters warning that their tax returns were frivolous, Old Quest employees assured customers that the IRS sent letters only to "intimidate" them because the "IRS did not want to pay," according to authorities.

 

After several refund checks were erroneously issued and the IRS froze the bank accounts of the customers who had received them, Ruiz and Mendoza instructed their employees to open new accounts for customers at different banks in an attempt to avoid further IRS scrutiny, authorities stated. 

 

Prior to the tax refund scheme,  federal officials stated that Ruiz and Mendoza had promoted a "land patent" program to many of the same clients, according to the evidence at trial. Under this program, Ruiz and Mendoza promised to eliminate the clients' mortgages through an obscure and mysterious process, again in exchange for substantial fees, authorities state. The land patent program quickly failed, and dozens of clients lost their homes to foreclosure.

       

In addition to selling the fraudulent schemes to customers across the Southland, Ruiz and Mendoza failed to report to the IRS hundreds of thousands of dollars of their own income, and they filed their own false federal income tax returns that fraudulently sought refunds, officials stated.

 

The evidence at trial showed that Ruiz bragged about not paying taxes for more than 25 years, federal officials stated.

       

 

The Court Reporter
Raul Hernandez has spent years writing stories about the drama that unfolds in the courtroom. Here he answers common questions, share some insights on the judicial system and passes along some of the little things that make the Ventura County courts an interesting place to be. You can contact him at rhernandez@vcstar.com.