Victorville man sentenced to 10 years in federal prison for massive tax fraud scheme
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.
Selna also ordered that the $300,000 McGonigle previously paid to be free on bond, in this case, be applied to the restitution order.
Thailand, Costa Rica connection
After an eight-day trial, a jury in November 2023 found McGonigle guilty of one count of conspiracy to defraud the United States, one count of conspiracy to commit wire fraud, and one count of aggravated identity theft, the IRS stated.
McGongile was 66 at the time of his conviction.
McGonigle had more than a decade of experience in tax preparation in Southern California. He recruited others to help convince the IRS and dozens of state governments to issue millions of dollars in fraudulent tax refunds, the IRS stated.
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.
He then directed other co-conspirators to use those fake identifications to obtain prepaid debit cards, as well as numerous commercial mailboxes across Orange County and elsewhere, the U.S. Attorney's Office said in its new release.
After having the prepaid debit cards sent to these untraceable mailboxes, McGonigle and his co-conspirators 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 these prepaid debit cards or other bank accounts that they controlled," the news release said.
Knowledgeable tax preparer
According to the U.S. Attorney's Office, the IP addresses used to file the fraudulent returns were traced to some cities in Southern California, including McGonigle’s home in Fallbrook and some office spaces leased in Lake Forest, Costa Mesa, Fountain Valley, and Carlsbad.
"Some IP addresses were traced back to Costa Rica, where law enforcement surveillance and travel records confirmed that McGonigle and his co-conspirators opened an office and hired employees to help file additional fraudulent returns," the office said.
Two co-defendants, who pleaded guilty, are also scheduled to be sentenced in the coming months.
The U.S. Attorney's Office did not identify the two people.
Joint investigation
IRS Criminal Investigation, Homeland Security Investigations, and the U.S. Postal Inspection Service investigated the case.
The Missouri Department of Revenue and the U.S. Secret Service also assisted during the investigation.
Assistant U.S. Attorneys Sue Bai of the Terrorism and Export Crimes Section and Colin Scott of the General Crimes Section prosecuted this case.
CI is the criminal investigative arm of the IRS. It is responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money laundering, public corruption, health care fraud, identity theft, and more.
This article originally appeared on Victorville Daily Press: Victorville man sentenced to 10 years in prison for tax fraud scheme
