October 31, 2001
TWO SOUTHLAND MEN ARRESTED IN TAX FRAUD SCHEME
INVOLVING NONEXISTENT WINNINGS FROM HORSE TRACKS
The owner of a Van Nuys tax preparation business and the owner
of a computer software business were arrested this morning on federal charges
related to a scheme in which they allegedly filed false tax returns that
sought large refunds related to taxes supposedly withheld on gambling winnings.
Carlos Alvarez, 40, and Manuel Zajdman, 64, were charged Tuesday
afternoon in a nine-count indictment that accused them of conspiring to
defraud the United States and causing false tax refund claims to be presented
to the Internal Revenue Service.
The defendants were arrested this morning without incident, and
they are both expected to make their initial appearances this afternoon
in United States District Court.
According to the Indictment, Alvarez, the owner of a Van Nuys
tax preparation business called A&B Professional Services, and Zajdman,
the owner of Mavix International Trading Corporation, conspired to defraud
the United States by filing false, fictitious and fraudulent tax refund
claims to the Internal Revenue Service in 1998 and 1999. The scheme used
nonexistent gambling winnings as the basis of the false income tax returns.
The indictment alleges that the conspirators obtained the names
and Social Security numbers of various individuals and then filed false
returns in their names. The tax returns claimed that the taxpayers had
won large sums at Southern California racetracks. The tax returns also
claimed substantial gambling losses. The returns claimed that the taxpayers
were entitled to large refunds based on withholdings by the racetracks.
In fact, the Forms W-2G submitted by the conspirators were bogus,
and the tax returns, which showed winnings and withholdings from the racetracks,
were false.
As part of the scheme, the conspirators also allegedly used various
false addresses, including commercial mailbox addresses, to receive the
tax refunds sent out by the IRS based on the false returns. The indictment
alleges that the claimed refunds ranged in amount from approximately $25,000
to approximately $70,000.
The indictment also alleges that defendant Alvarez subsequently
approached a potential witness in the case and attempted to persuade her
not to give information about him to the law enforcement authorities investigating
the matter.
The charges filed Tuesday carry a maximum potential sentence
of 40 years imprisonment for Alvarez and 30 years imprisonment for Zajdman.
This case is the result of an investigation by Internal Revenue
Service Criminal Investigation.
Release No. 01-164
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