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Imaginary Clients

business woman working with documents
Senior Director of Strategic Alliances
LexisNexis Risk Solutions - Government

If an accountant wants to be known to have integrity, they must not only being willing to ethically do the right thing, but also maintain all the skills to ensure to do the best job possible. The benefits being customer confidence and loyalty. Stephen Jake McGonigle had the skills. But integrity was another matter. No need to strive for integrity when financial gain can be made with imaginary clients. With more than a decade of tax preparation experience under his belt, McGonigle used his knowledge to lead a $10 million fraudulent income tax scheme across three countries without one single client.

To perpetrate the massive fraud that began in 2013 and lasted until McGonigle’s arrest in 2019, McGonigle sent one co-conspirator to Thailand to obtain fake identification documents that used stolen victim identities. A duty-free shopping spree. He then directed other co-conspirators to use those fake identifications to obtain prepaid debit cards, as well as numerous commercial mailboxes in various cities in Southern California. McGonigle then filed fraudulent tax returns using the identity theft victims’ Social Security numbers.

Those fraudulent tax returns sought millions of dollars in tax refunds to be deposited into the prepaid debit cards or bank accounts that he controlled. Many of the returns were traced to Costa Rica, where law enforcement surveillance and travel records confirmed that McGonigle had opened an office and hired employees to help file additional fraudulent returns.

McGonigle’s scheme fraudulently sought more than $10 million from federal and state tax authorities. On March 18, 2024, he was sentenced to 10 years in prison along with full restitution of $1,230,175.
Excellent job by the Internal Revenue Service.

Today’s Fraud of the Day is based on article “Victorville man sentenced to 10 years in federal prison for massive tax fraud scheme” published by Victorville Daily Press on March 18, 2024

A Victorville man was sentenced to 10 years in federal prison for leading multi-year tax fraud conspiracies across three countries, Internal Revenue Service officials reported.

The actions by Stephen Jake McGonigle, a former Orange County tax preparer, claimed more than $10 million from the IRS and dozens of state tax authorities in fraudulent tax refunds and led them to lose more than $1.2 million, according to the U.S. Attorney’s Office in the Central District of California.
McGonigle of Victorville was sentenced by U.S. District Judge James V. Selna, who also ordered him to pay $1,230,175 in restitution, the IRS reported Monday.

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