Rudolph Johnson, Frantz Pasteur, and Frederick Anderson, all of Irvington, New Jersey, are each charged with one count of conspiracy to file false claims exploiting COVID-19 related employment tax credits. Money laundering charges were filed against them too, but money laundering is a given here when you try to steal $2.9 billion in refunds from the U.S. taxpayer. The question is, how did these three get any money considering they weren’t even business owners.
In response to the COVID-19 pandemic and its economic impact, Congress authorized an employee retention tax credit (ERC) that a small business could use to reduce the employment tax it owed to the IRS. A few stipulations were set. The business had to have been in operation in 2020 and to have experienced at least a partial suspension of its operations because of a government order related to COVID-19 or a significant decline in profits. The credit was an amount equal to a set percentage of the wages that the business paid to its employees during the relevant time period, subject to a maximum amount. Johnson, Pasteur, and Anderson had some work to meet these stipulations since they didn’t own any companies to file refunds for.
From June 2021 to November 2023, Johnson, Pasteur, and Anderson established a slew of sham entities and filed fraudulent IRS forms in the names of these entities claiming fraudulent entitlement to tax refunds, including the ERC. These entities had limited tax histories, never paid any W-2 wages, and made only nominal, if any, payments to the IRS. In total, the defendants claimed $2.9 billion in tax benefits. As a result of the claims by Johnson, Pasteur, and Anderson, the IRS issued $1.03 million in refunds. Luckily, some people in the U.S. Treasury were doing their job. It is still a million too much for phone businesses. It was enough for these three fraudsters. Johnson, Pasteur and Anderson deposited the falsely claimed refunds into their personal bank accounts and used the money to purchase various items such as luxury cars for their own benefit.
Excellent job by the COVID-19 Fraud Enforcement Strike Force in this case.
Today’s Fraud of The Day is based on article “Irvington Township Trio Charged in $2.9 Billion COVID-19 Tax Fraud Scheme” published by RLS Media on March 15, 2024
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.
