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URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3Ac8216b9cbf087ee4 ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text 2017 ANNUAL REPORT TABLE OF CONTENTS Click to navigate to a specific section 3 5 8 11 13 14 15 16 17 19 20 21 22 24 25 26 28 29 30 Message from the Chief 2017 Snapshot Tax Crimes Non–Tax Crimes Cyber Crimes International Operations International Attaché Locations Narcotics, Counterterrorism, & Transnational Organized Crime (NCT) Specialized Units Nationally Coordinated Investigations Unit Undercover Operations Asset Forfeiture National Forensic Laboratory Electronic Crimes Professional Staff National CI Training Academy Communications & Education (C&E) Equity, Diversity and Inclusion (EDI) Community Outreach 32 Field Office Map 34 36 40 43 47 49 52 55 58 62 66 69 72 75 78 81 84 87 90 93 97 101 104 107 110 114 Seattle Oakland Los Angeles Las Vegas Phoenix Denver Dallas San Antonio Houston St. Paul St. Louis New Orleans Chicago Nashville Detroit New York Cincinnati Newark Philadelphia Boston Charlotte Tampa Atlanta Miami Washington D.C. Appendix Click this menu for navigation shortcuts IRS: Criminal Investigation Annual Report 2017 2 MESSAGE FROM THE CHIEF I am excited to share the FY 2017 IRS Criminal Investigation Annual Report. The report gives us an opportunity to reflect on the many successes we have had as an agency throughout the past year. As the premier financial investigators in the world, and the only federal agency authorized to investigate federal income tax crimes, we have strategically used our resources to bring the most impactful cases to the Department of Justice for prosecution. In addition to fulfilling our criminal tax enforcement mission, we also continue to play a critical role in the broader federal law enforcement community. IRS Criminal Investigation fills a unique niche in federal law enforcement due to our broad jurisdiction on Title 18 and Title 31 crimes, in addition to our primary traditional tax enforcement mission. As a result, we routinely get involved in large, complex investigations that require our financial expertise. Simply put, when there is a sophisticated financial component to an investigation, the first phone call prosecutors make is usually to IRS CI. I am proud of our well-earned reputation as a law enforcement agency; however, resource issues make it impossible to be involved in every investigation in which we are asked to participate. We have the same number of special agents—around 2,200—as we did 50 years ago. Financial crime has not diminished during that time– in fact, it has proliferated in the age of the internet, international financial crimes and virtual currency. Despite these challenges, we continue to do amazing work, investigating some of the most complicated cases in the agency’s history. Criminals would be foolish to mistake declining resources for a lack of commitment in this area. While the size of our organization directly affects the number of cases we open each year, the quality and the complexity of those cases continues to remain at a high level. Publicizing the results of those cases and making better use of the troves DON FORT CHIEF, IRS CRIMINAL INVESTIGATION IRS: Criminal Investigation Annual Report 2017 3 CHIEF'S MESSAGE CONTINUED of data that we have access to are ways we tracing their proceeds around the world attempt to make the best use of our limited and helping to arrest the sites’ owners. resources. • Our participation in a national healthcare This annual report reflects the important fraud takedown with our law enforce- cases the Criminal Investigation Division has ment partners at the FBI, DEA and worked during FY 2017. The case sum- ATF, which resulted in charges for 412 maries in this report touch every field office, individuals and accounted for more than every state and nearly every region of the $1.3 billion in fraud losses. world. Despite focusing most of our time on traditional tax cases, we have also managed These are just a few examples of cases in to maintain a formidable presence in the which CI participated in 2017; many more are areas of tax-related identity theft, money detailed within The field office pages of laundering, public corruption, cybercrime this report. and terrorist financing. A few examples of our successes in FY 2017 include: Since taking over as the Chief of CI this summer, I could not be prouder to lead the • The complex financial investigation and men and women of this organization. As undercover operations we conducted financial crimes—and the way we investigate that helped bring the “Codfather,” a them—continue to evolve, CI continues to commercial fisherman in Massachu- set the standard for financial investigations setts, to justice. worldwide. I am very optimistic about the future of our organization and the innovative • Our major role in taking down several initiatives we have underway to help us of the largest Dark web marketplaces continue to stay one step ahead of selling illegal goods and services, the criminals. t IRS: Criminal Investigation Annual Report 2017 4 IRS:CI 2017 SNAPSHOT 2,159 835 SUPPORT STAFF SPECIAL AGENTS 3,019 INVESTIGATIONS 2,294 2,549 SENTENCED INDICTMENTS IRS: Criminal Investigation Annual Report 2017 5 IRS:CI 2017 SNAPSHOT CLICK A SECTION TO LEARN MORE INTERNATIONAL CYBER CRIMES GENERAL TAX FRAUD PUBLIC CORRUPTION ABUSIVE TAX SCHEMES CORPORATE FRAUD EMPLOYMENT TAX IDENTITY THEFT GENERAL FRAUD 72.5 TAX REFUND FRAUD 14.7 NON-TAX MONEY LAUNDERING NARCOTICS 11.6 OCDETF Organized Crime Drug Enforcement Task Force DIRECT INVESTIGATIVE TIME SPENT* PERCENTAGES *1.2% Uncategorized IRS: Criminal Investigation Annual Report 2017 6 IRS:CI 2017 SNAPSHOT OTHER FINANCIAL CRIMES $2.5B $1.1B 91.5% 1,642 2.19 TAX FRAUD IDENTIFIED PROCEEDS IDENTIFIED CONVICTION RATE WARRANTS EXECUTED DIGITAL DATA SEIZED PETABYTES IRS: Criminal Investigation Annual Report 2017 7 TAX CRIMES CRIMINAL INVESTIGATION’S (CI) primary resource These investigations focused on methods through requirements, layering of transactions and international commitment is to develop and investigate tax crimes, which individuals seek to “launder” their ill-gotten movement of funds. In these types of investigations, both legal and illegal source. Prosecution of these income by making it appear the income is from a CI Special Agents work together with our federal, state cases supports the overall IRS compliance goals and legitimate source. Frequent money laundering tech- and local law enforcement partners, as well as with enhances voluntary compliance with the tax laws. CI niques include the manipulation of currency reporting foreign tax and law enforcement agencies. works some of these investigations with our federal, state and local law enforement partners; and also coordinates with foreign tax and law enforecement agencies. The Illegal Source Financial Crimes Program encompasses tax and tax-related, money laundering and currency violations. These investigations focus on individuals deriving income from illegal sources, such as money obtained through embezzlement, bribery, and frauds. The individuals can be legitimate business owners but obtain their income through illegal means. IRS: Criminal Investigation Annual Report 2017 8 TAX CRIMES also result in the loss of vital funds needed to support GENERAL TAX FRAUD ABUSIVE TAX SCHEMES General tax fraud investigations are the backbone CI focuses on the investigation of promoters and clients the Questionable Refund Program (QRP) and the of CI’s enforcement program and have a direct influ- who willfully participate in domestic and/or offshore tax Abusive Return Preparer Program (RPP). ence on the taxpaying public’s compliance with the schemes to violate the tax laws. Participants in these Internal Revenue Code. Compliance with the tax laws abusive schemes create structures such as trusts, The QRP identifies fraudulent claims for tax refunds. in the United States depends heavily on taxpayer foreign corporations and partnerships to make it appear Generally, these schemes involve individuals filing self-assessment of the amount of tax, voluntary filing a trustee, nominee, non-resident alien or other foreign multiple false tax returns supported by false informa- of tax returns and remittance of any tax owed; this is entity is the owner of the assets and income, when in tion or using the identifiers of other individuals know- frequently termed “voluntary compliance.” Criminal fact the true ownership and control remains with a ingly or unknowingly. Investigation special agents use their financial investi- U.S. taxpayer. government programs. The Refund Fraud Program consists of three parts---Identity Theft Investigations, gative expertise to uncover and quantify many different RPP investigations involve the orchestrated preparation schemes, including deliberately under-reporting or and filing of false income tax returns by corrupt return omitting income (“skimming”), keeping two sets of REFUND FRAUD PROGRAM books or making false entries in books and records, preparers who often claim inflated personal or business expenses, false deductions, excessive exemptions, claiming personal expenses as business expenses, Criminals who attempt to steal government funds by and/or unallowable tax credits. The preparers’ clients claiming false deductions or credits against taxes, or filing fraudulent tax returns affect taxpayer confidence may or may not have knowledge of the falsity of hiding or transferring assets to avoid payment. in the system and voluntary compliance. These crimes the returns. IRS: Criminal Investigation Annual Report 2017 9 TAX CRIMES 1811 INVESTIGATIONS INITIATED 1196 INDICTMENTS 1303 SENTENCED EMPLOYMENT TAX FRAUD IDENTITY THEFT DATA COMPROMISES Employment tax fraud consists of several forms. Some Identity theft-related tax refund fraud occurs when CI continues to investigate data compromises as tax- of the more prevalent methods include employee someone uses the personal information of another related identity theft. Also referred to as data breaches, leasing, paying employees in cash, filing false payroll individual--for example, using the name, Social Security these are linked to compromises targeting detailed tax returns and failing to file payroll tax returns or number or other identifying information (personally financial records that tax professionals and payroll “pyramiding.” Pyramiding is when a business with- identifiable information -PII), without permission, to administrators maintain. There has been a substantial holds taxes from its employees, but intentionally fails to commit fraud or other crimes. The scam usually occurs increase in phishing attempts to acquire payroll records remit payment to the IRS. After a liability accrues, the when an identity thief uses a legitimate taxpayer’s or PII for use in filing false returns or for selling on the individual starts a new business and begins to accrue identity to file a fraudulent tax return and claim a Dark web. t a new liability. Some employers withhold taxes from refund. Generally, the identity thief will use a stolen their employees’ paychecks, but intentionally fail to SSN to file a fraudulent tax return and attempt to get a remit those taxes to the IRS and use the funds for their refund early in the filing season. By filing the fraudulent own personal use. Employment taxes include federal tax return before the legitimate taxpayer, the identity income tax withholding, Social Security taxes and thief usually receives the refund before the victim federal unemployment taxes. sends his or her tax return, and the IRS processes it. IRS: Criminal Investigation Annual Report 2017 10 NON–TAX CRIMES THE IRS CI Illegal Source Financial Crimes Program encompasses tax and tax-related crimes, money MONEY LAUNDERING laundering and currency violations. These investiga- banks and money transmitters to stock brokerage houses, casinos and Bitcoin exchanges. The flow of illegal funds around the world is estimated to be tions focus on individuals deriving income from illegal Money laundering, as defined in the National Money sources, such as embezzlement, bribery, and frauds. Laundering Strategy, is criminal finance. When crimi- These investigations also focus on methods individuals nals or criminal organizations seek to disguise the illicit The movement of money through the financial system use to “launder” their ill-gotten gains by making them nature of their money by introducing it into the stream leaves a trail. If a trail can be uncovered, it identifies appear as if they are from a legitimate source. Frequent of legitimate commerce and finance, they are launder- those who willingly facilitate and finance crime whether money laundering techniques include the manipulation ing money. The common image of money laundering due to willful blindness, negligence or otherwise. The of currency reporting requirements, layering of transac- involves the washing of drug money off the streets trail can also lead back to the criminals whose crimes tions, Black Market Peso and international movement of our cities through transactions that turn it into bank generated the money. IRS CI Special Agents are of funds. The law enforcement community recognizes deposits and other assets. Today, money laundering experts in following the money trail and participate in CI’s special agents as the premier experts in money involves the large-scale movement of criminal funds a wide variety of investigations, financial task forces, laundering investigations. into or through U.S. or foreign financial institutions at narcotics task forces including OCDETF and High the touch of a computer button. Criminals can launder Intensity Drug Trafficking Area (HIDTA). hundreds of billions of dollars. money through a wide variety of enterprises, from IRS: Criminal Investigation Annual Report 2017 11 NON-TAX CRIMES 1208 INVESTIGATIONS INITIATED 1098 INDICTMENTS 1246 SENTENCED PUBLIC CORRUPTION CORPORATE FRAUD GENERAL FRAUDS Criminal Investigation investigates both elected and ap- The Corporate Fraud program concentrates on viola- IRS CI special agents investigate a variety of other pointed individuals who violate the public’s trust. These tions committed by publicly traded or private corpora- frauds including bankruptcy fraud, healthcare and individuals are from all levels of government including tions, and/or their senior executives. Some specific financial institution fraud. Criminal Investigation’s ability local, county, state, federal and foreign officials. Public criminal acts within a corporate fraud include falsifying to bring income tax and money laundering charges corruption investigations encompass a wide variety and fabricating or destroying company records to falsify enhances prosecutors’ effectiveness in combating of criminal offenses including bribery, extortion, tax returns, financial statements or reports to regula- these and other types of frauds. In these types of embezzlement, illegal kickbacks, tax fraud and money tory agencies or investors. It also includes executives investigations, CI special agents work together with laundering. Corruption by public officials results in the who entitle themselves to unauthorized compensation, federal, state, and local law enforcement partners, as loss or waste of many taxpayer dollars. using unapproved payments, bonuses, corporate funds well as with foreign tax and law enforcement agencies or bogus loans to pay for personal expenses. in following the money trail to uncover ill-gotten gains. t In addition, the United States is often a desirable destination for the proceeds of corrupt foreign officials. This undermines democratic institutions and threatens national security. IRS: Criminal Investigation Annual Report 2017 12 CYBER CRIMES IN 2015, CI initiated a Cyber Crimes Program by estab- Below are the types of investigations within As with all types of crimes within CI’s area of responsi- lishing a Cyber Crime Unit (CCU) with locations in Los CI’s purview: bility, special agents working cybercrimes investigations Angeles and Washington D.C. The CCU consists of two operational groups of special agents, professional staff, • Selling/buying and compromise of PII (personally deploy the same “follow the money” methodology identifiable information) data through the internet that made CI’s involvement in complex investigations computer engineers and supervisory special agents • Data intrusion/exfiltration a mainstay since the creation of the agency. Examples (SSA). The respective SSAs report through the Special • Dark web marketplace owners/administrators/ of CI’s involvement in this area include investigations Agents in Charge in Los Angeles and Washington D.C. large vendors stemming from an incident involving the IRS “Get Field Offices. The CCU engages in investigations that • Business email compromise & Phishing schemes Transcripts” web application and various significant Dark involve the Internet and Internet based technologies/ • Bank account takeovers web marketplace investigations. For example, CI and its methodologies that enable criminals to engage in illegal • Terrorist financing including use of virtual currency, law enforcement partners were successful in investigat- activity with anonymity and without a defined physical mesh networking and other online means to raise ing and arresting the individuals behind Silk Road and presence. Their investigative efforts are focused on funds, launder and funnel funds for Mt. Gox, two infamous Dark web marketplaces. As of multi-jurisdictional investigations posing the most terrorist organizations. recent, CI proved instrumental in the investigation and significant threats to the United States tax, financial and economic systems. • Virtual currency based tax & money laundering schemes In 2016, CI began moving towards establishing a CI will continue to focus on tax, tax related and other fi- nationwide footprint by creating an office of Cyber nancial crimes, while expanding their presence into the Crimes within their Headquarters structure and adding cyber environment. The CI definition of cybercrime is Cyber Crimes Coordinator positions within each of their a criminal investigation in which CI has investigative 25 field offices. Field office special agents and profes- authority and the subject is believed to be commit- sional staff working cybercrimes investigations are ting a tax or other financial crime while using the focused primarily on cyber-enabled investigations that Internet as an essential means to commit the involve theft and fraud and are increased in size and crime, remain anonymous, elude law enforce- scale by the use of computers, computer networks or ment and/or to conceal financial transactions, other forms of technology. ownership of assets, or other evidence. take down of AlphaBay and Btc-e, two additional Dark web facilitators. t IRS: Criminal Investigation Annual Report 2017 13 INTERNATIONAL OPERATIONS THE GLOBAL FIGHT against tax and economic Mexico, Colombia, Panama, Barbados, The Nether- the International Law Enforcement Academies (ILEA) in crimes transcends borders and requires innovative lands – Europol, England, Germany, China and Austra- Budapest, Hungary; Bangkok, Thailand; San Salvador, approaches. CI’s Office of International Operations (IO) lia). Attachés continuously build and maintain strong El Salvador; and Gaborone, Botswana. CI IO also works collaboratively in support of agency goals, objec- alliances with foreign governmental, law enforcement conducts training at the International Academy for Tax tives, and activities. IO enhances IRS’s international and industry partners. These strong strategic alliances Crime Investigation at Guardia di Finanza Economic and strategy by combating offshore tax, money laundering, provide CI with the ability to develop international Financial Police School in Ostia, Italy, sponsored by the transnational organized crime, terrorism financing and investigative leads and support domestic investigations Organization for Economic Cooperation and Develop- other financial crimes. IO approaches this global effort that have an international nexus. IRS CI special agent ment (OECD) as well as State Department by uniting with our domestic partners as well as our attachés are vigilant in uncovering emerging schemes sponsored training. foreign tax and law enforcement agency partners. IO perpetrated by promoters, professional enablers, and/or also works with other organizations leveraging bi and/ financial institutions who assist, facilitate, or in any way In FY 2017, IRS CI hosted international delegations or multilateral agreements and resources to vigorously aid U.S. taxpayers with evading their federal from Japan, South Korea, Croatia, Singapore and New confront international tax compliance, narcotics traf- tax obligations. Zealand. These meetings allowed CI to build closer ficking and terrorism wherever it poses a threat to the national and economic security of the United States. investigative relationships, share information including IRS CI IO educates foreign governments and agencies trends they observed and investigative techniques. t on crime detection, investigative techniques, case Internationally, IRS CI has special agent attachés studies, emerging trends, and best practices. CI trains strategically stationed in 10 foreign countries (Canada, foreign governments through collaborative efforts with IRS: Criminal Investigation Annual Report 2017 14 INTERNATIONAL ATTACHÉ LOCATIONS EUROPOL LONDON FRANKFURT OTTAWA WASHINGTON, D.C. MEXICO CITY PANAMA CITY BOGOTA HONG KONG BARBADOS SYDNEY IRS: Criminal Investigation Annual Report 2017 15 NARCOTICS, COUNTERTERRORISM, & TRANSNATIONAL ORGANIZED CRIME (NCT) OVER THE LAST two decades, Transnational Orga- Money Laundering Strategy, and the U.S. Govern- the assignment of CI personnel to the White House nized Crime (TOC) expanded dramatically in size, scope ment’s National Counterterrorism Strategy. IRS CI Office of National Drug Control Policy as well as the and impact—becoming more organized and posing a contributes to the strategies by seeking to reduce or assignment of personnel to multi-agency task forces, significant threat to public safety and national security eliminate the profits and financial gains of individuals, including Organized Crime Drug Enforcement Task in the United States. Combating TOC continues to be entities, and Transnational Criminal Organizations Force (OCDETF), OCDETF Fusion Center (OFC), High a priority for the United States and our domestic and involved in the financing of terrorism, narcotics traffick- Intensity Drug Trafficking Area (HIDTA), High Intensity foreign law enforcement partners. The February 9, ing, and money laundering. IRS Criminal Investigation Financial Crimes Area (HIFCA), Drug Enforcement 2017 Presidential Executive Order on Enforcing Federal is an integral partner in combating the trafficking of Administration Special Operations Division, (SOD), and Law with Respect to Transnational Criminal Organiza- narcotics and the financing of terrorism by investigating the El Paso Intelligence Center (EPIC). IRS CI focuses tions and Preventing International Trafficking directs criminal violations of the Internal Revenue Code, Bank its narcotics investigations on high-priority OCDETF federal law enforcement agencies to give “high priority Secrecy Act and Federal Money Laundering statutes. investigations where its contributions have the greatest and devote sufficient resources to efforts to identify, IRS CI Special Agents use their unique financial inves- impact of dismantling large criminal organizations. interdict, disrupt, and dismantle Transnational tigative expertise to trace profits from an illegal activity Criminal Organizations.” back to an individual or criminal organization with the In 2017, IRS CI implemented a “jump team” to enable intent to dismantle, disrupt, and prosecute the criminal. CI to respond when a terrorist incident occurs. Agents IRS CI Narcotics and Counterterrorism (NCT) program will immediately work financial leads relating to the supports the goals of the President’s Strategy to TOC, NCT supports the National Drug Control Strategy incident under direction and in coordination with the the U.S. National Drug Control Strategy, the National and the National Money Laundering Strategy through local field office. t IRS: Criminal Investigation Annual Report 2017 16 SPECIALIZED UNITS GLOBAL ILLICIT FINANCIAL TEAM (GIFT) laundering networks involved in the movement of its Uzbek subsidiary, Coscom LLC, to resolve charges illegally derived proceeds. These investigations include: arising out of a scheme to pay bribes in Uzbekistan and a former business professor who ammassed a $200 • Illegal money transfer businesses GIFT is a task force lead by IRS CI to investigate organi- • International real estate fraud zations involved in the illicit movement of money used • Financial Institutions concealing and disguising to support international crime organizations. These illegal transactions million fortune in secret foreign accounts. ALCOHOL AND TOBACCO TAX AND TRADE BUREAU (TTB) investigations are conducted with various partner • Identity theft agencies, including Homeland Security Investigations • Public corruption and extortion (HSI) and the Defense Criminal Investigative Service • Government contract fraud You may call this the reunion of Eliot Ness and Elmer (DCIS). An IRS CI supervisory special agent (SSA) • Sale of contraband goods Irey’s T-Men, as IRS-Criminal Investigation Division (CI) oversees the task force, which includes special agents teams up with the Alcohol and Tobacco Tax and Trade and professional staff from CI and partner agencies. Bureau (TTB) to combat illicit tobacco and The SSA reports to the Washington, D.C. Field Office Since the creation of GIFT in 2010, the group has initiat- special agent in charge. ed over 80 cases and seized assets valued at over $4.4 alcohol trade. billion. Recent cases include a global foreign bribery The TTB was created in January 2003, when the The focus of these investigations is to dismantle and resolution and total penalty of more than $965 million Bureau of Alcohol, Tobacco, Firearms and Explosives or prosecute individuals, criminal organizations and money- levied against Stockholm-based Telia Company AB and ATF, was extensively reorganized under the provisions IRS: Criminal Investigation Annual Report 2017 17 SPECIALIZED UNITS of the Homeland Security Act of 2002 and realigned to The average jail sentence in these types of cases attorneys assigned from DOJ. Since the inception the Department of Justice. The act called for the tax ranges between eight and twenty-five months. Most of the SBP, 80 Swiss banks have entered into Non- collection functions to remain with the Department of recently, a defendant in the Los Angeles area entered Prosecution Agreements (NPAs) paying over $1.3 the Treasury, thereby creating TTB. TTB regulates and a guilty plea admitting to the evasion of federal excise Billion in penalties, with about 58 investigative leads collects taxes on trade and imports of alcohol, tobacco, taxes totaling over $7 million and will be sentenced being sent to various CI field offices for investigation firearms and ammunition within the United States. in January 2018. Another defendant in the Miami and action. Additionally, over 18,000 leads that did not area pleaded guilty to evading over $9 million in meet criminal criteria have been forwarded to IRS’ In 2009, TTB entered an Inter-Agency Agreement with federal excise tax through a false invoicing scheme on LB&I Division for civil tax compliance action. As the CI to provide special agents for the enforcement of imported cigars. The defendant was sentenced to 48 SBP winds down and is scheduled to end in 2017, TTB’s criminal provisions. Presently, TTB has contract- months and ordered to pay restitution of $9,389,693. an International Tax group is being ramped up in CI’s ed with CI to provide a group of special agents that are Washington D.C field office. This group’s focus will strategically dispersed across the country and overseen be to dismantle the most significant International Tax by an SSA. This group’s sole focus is combating the SWISS BANK PROGRAM schemes that have been identified as systemic threats to the integrity and fairness of the tax administration. illicit tobacco and alcohol trade. The TTB reports to the Washington D.C. Field Office special agent in charge. In August 2013, IRS CI and DOJ (Department of Investigations initiated by this group will be long-term Since the agreement began, over 139 investigations Justice) Tax Division initiated the Swiss Bank Program in nature and utilize all tools at the Criminal Investiga- have been initiated, with great success. (SBP) by bringing CI special agents from across the tion Division’s disposal. t country into Washington D.C. to work directly with IRS: Criminal Investigation Annual Report 2017 18 NATIONALLY COORDINATED INVESTIGATIONS UNIT ON MAY 1, 2017, CI formally launched the Nationally building and referring investigations from this initiative Coordinated Investigations Unit (NCIU). The NCIU is a to CI field offices. State, and they will partner with agents and analysts In addition, the NCIU will identify and address to supplement the case development activities of emerging threats and pilot innovative ideas. • Educating and training field offices on the program areas NCIU supports • Providing and coordinating targeted training to each field office. As of September 30, 2017, the NCIU was semi-operational and expected to become fully The NCIU relies on a wide range of data to identify and operational during FY 2018. develop areas of non-compliance and will carry out its mission by: agents assigned to NCIU referrals • Identifying emerging threats to the tax administration and financial systems • Working with internal and external partners to The NCIU will pivot CI to a data-driven case selection • Ensuring appropriate geographic coverage to CI that CI’s executive leadership has approved as high investigative priorities and emerging non- impact and national in scope. compliance threats • Building and supporting investigations referred to Listed below are the four initiatives CI’s executive field offices • Serving as a resource to field offices critical component of CI’s contribution to the IRS Future process by developing and managing national initiatives • Promoting bi-lateral accountability for both NCIU and field offices identify, assess and address the next threats to our tax and financial system • Partnering with DOJ tax and other litigation compo nents to support efforts to litigate these investiga tions through prosecution t leadership has approved so far. • Microcap Stock Project • Employment Tax • Biofuel/RIN Tax Credit Scheme • International Bank Project In July 2017, the NCIU and the Securities and Exchange Commission delivered a multi-day microcap stock training to over 60 IRS employees, and the NCIU is analyzing, IRS: Criminal Investigation Annual Report 2017 19 UNDERCOVER OPERATIONS THE CRIMINAL INVESTIGATION Division (CI) has responsible for review, approval, funding and training of Recently, undercover agents played a pivotal role used undercover techniques throughout its history. It personnel who carry out these activities. The initiation in the conviction of Carlos Rafael, also known as is well documented that undercover techniques play a and day-to-day management of the respective opera- the “Codfather,” for tax evasion, falsifying records, significant role in bringing criminals to justice, the case tions are handled by special agents and The field office conspiracy, bulk cash smuggling and false labeling and of public enemy No.1, Al Capone, being one of the leadership team where the activities are fish identification. In another investigation, undercover most famous examples. Since then, these techniques being conducted. agents unraveled the identity of a well-to-do, politically have been used in numerous investigations involving connected British Dark web money launderer, also organized crime, illegal gambling operations, tax shelter In FY 2017, over 450 undercover operations were schemes, illicit money movers, investment scams and conducted. Undercover agents encounter many chal- many others. lenging situations in their roles. CI undercover opera- known as “Bill,” later identified as George Cotrel. t tions handle the full spectrum of activities that seek The Special Investigative Techniques (SIT) unit to conceal and disguise the movement of money for oversees CI's undercover activities. This unit is illegal purposes. IRS: Criminal Investigation Annual Report 2017 20 ASSET FORFEITURE IRS CRIMINAL INVESTIGATION Asset Forfeiture program uses seizure and forfeiture authority as an investigative tool to disrupt and dismantle criminal enterprises. The program seeks to deprive criminals of property used in, or acquired through, illegal activities by directing CI’s financial expertise and resources towards investigations in which CI can take a leading role. In addition, forfeiture provides for restitution for financial harm suffered by victims because of certain criminal activities. IRS CI is the largest contributor to the Treasury Forfeiture Fund (TFF), which is administered by the Treasury Executive Office for Asset Forfeiture. These funds are used to reimburse victims, cover mandatory administrative costs of the forfeiture program, and to pay for law enforcement-related expenses, such as training, equipment and the cost of conducting significant investigations. t IRS: Criminal Investigation Annual Report 2017 21 NATIONAL FORENSIC LABORATORY THE IRS NATIONAL Forensic Laboratory (NFL) continues to support IRS investigations, as it has for more than 40 years. Forensic scientists in a state-of-the-art laboratory help support field investigations by offering forensic testing or technical services in electronics, latent prints, polygraph, questioned documents, ink chemistry, and imaging and trial illustration. Examiners at the NFL report the results of forensic testing or technical services to investigators for use in the investigation of potential criminal violations of the Internal Revenue Code and related financial crimes. Examiners also provide expert testimony in judicial proceedings when needed. Although the NFL is a small branch of CI, its work is critical in ensuring the efficient processing of crucial evidence in our investigations. In FY 2017, the NFL received 262 cases, which resulted in 309 work requests. Approximately 93 percent of the cases the NFL received were submitted by Criminal Investigation. The remaining 7 percent were received from the civil side of IRS. In FY 2017, three forensic scientists testified at trial to the results of forensic examinations they conducted. IRS: Criminal Investigation Annual Report 2017 22 NATIONAL FORENSIC LABORATORY The IRS Standards Ink Library has over 13,000 inks which scientists can use to determine the first date of manufacture of a questioned ink. When scientists match an ink in the library to a questioned ink, they consult the manufacturer files to determine the date the ink was first available. Then they can state whether the questioned ink was available when the document was purportedly prepared. If the ink was not available, it proves the document is backdated. The NFL has proved many documents as backdated because they were written with an ink that was not available when the document was dated. Only two comprehensive ink libraries exist in the United States: one maintained by the IRS NFL and the other maintained by the U.S. Secret Service Laboratory. Through mutual co-operation and exchange of information, the library continues to grow and play a crucial role in the investigation of tax fraud cases. As part of a recent initiative to update the library, the NFL has incorporated ink jet samples into the library to be able to distinguish documents from different types of ink jet printers. This will be of great value in CI's continuing efforts to investigate and prosecute tax cases. t IRS: Criminal Investigation Annual Report 2017 23 ELECTRONIC CRIMES EVERY INVESTIGATION THE Criminal Investigation warrants, court orders and subpoenas. They In FY 2017, Electronic Crimes personnel participated Division (CI) conducts involves digital and multime- travel across the country to participate on search on 350 search warrants, performed at 542 locations; dia evidence of some type. Digital and multimedia warrants and conduct the digital and multimedia seized 2.19 petabytes of data from 3,047 computers/ evidence comes from many sources, such as wit- evidence seizures. laptops/external devices and 1,263 mobile devices; and nesses, subpoenas, personal computers, mobile testified in 16 trials. Electronic Crimes is the premier devices (phones, tablets, etc.), small and large business Types of forensic analysis the SA-CISs and CIFAs source for digital and multimedia evidence computers/servers, server farms, cloud storage or even perform include: in CI. t the Dark net. The proper collection and review of digital evidence requires specialized skills to be admissible in • Digital currency identification (bitcoin wallets, etc.) court proceedings. • Dark web activity • Encryption and password recovery CI Electronic Crimes’ primary function is the forensic • Targeted searches acquisition, analysis and testimony of the digital and • Deduplication of large data sets (such as email) multimedia evidence related to ongoing criminal • Recovery of hidden and deleted data investigations. Electronic Crimes has a presence in 60 • Internet activity and history analysis posts-of-duty across the United States and consists • Data conversion from proprietary formats of five computer investigative forensic analysts, six • Extraction of data from proprietary financial senior analyst computer investigative forensic analysts software (tax preparation, accounting, (CIFA), 73 special agent – computer Investigative payroll, point of sale systems, custom specialists (SA-CIS), four forensic assistant contrac- database, etc.) tors, one evidence custodian, one technical assistance • Website preservations employee, and one administrative support employee. • Taint reviews and segregation The SA-CISs and CIFAs receive advanced training in • Recovery and repair of damaged the proper procedures of collecting, acquiring, analyz- disk drives ing and testifying on digital and multimedia evidence. Additionally, they provide assistance in drafting search IRS: Criminal Investigation Annual Report 2017 24 PROFESSIONAL STAFF IRS CI EMPLOYS 835 professional staff serving in volunteers from the Department of Defense (DoD) and forcement taskforces supporting investigations relating many administrative and investigative capacities. Our Veteran’s Affairs (VA) in FY 2017. Interns were provided to national threats, the opioid crisis, terrorist financing budget analysts, management and program analysts, challenging assignments to include extracting and and other emerging threats. t administrative officers, executive secretaries and analyzing critical information from investigative data- computer support professionals all work tirelessly bases. Through the use of this program, CI provided behind the scenes to support the mission of IRS CI. training and work experience to those who served CI professional staff are also active participants in the our country and have now returned to the civilian Chief’s Advisory Council, providing crucial insight to CI workforce. Additionally, through Veteran Recruitment leadership on relevant issues around the country. Act Hiring Authority, CI hired 13 veterans into Professional Staff positions in FY 2017. Seven were hired as Our investigative professional staff has a tremendous investigative analysts and investigative aids in Refund impact with case development and support. Our 200+ Crimes while six accepted positions in the field offices compliance support assistants (CSA)/tax fraud investi- and TOIS. Seven were disabled veterans. This veteran gative analysts (TFIA) assist special agents with public hiring accounted for 26.5% of CI’s overall hiring, which records research, interviews, bank record scheduling exceeded CI’s FY 2017 veteran hiring goal of 16%. and analysis, and specialized tax and law enforcement database research. Several TFIAs from throughout Our investigative analysts (IAs)are critical to advancing the United States were detailed to provide support to the law enforcement efforts of CI. IAs are assigned a large biofuel credit investigation. In March 2017, 23 to The field offices, Refund Crimes, and International. CSA/TFIAs received comprehensive training at the They use sophisticated analytical software to develop Federal Law Enforcement Training Center (FLETC) in leads and support complex cases for the special agents Glynco, Georgia. in the field. Analysts attend training alongside special agents to keep abreast of the emerging trends related Various field offices throughout the country and TOIS to employment tax, internet investigations, virtual (Technology Operations & Investigative Services) lever- currency and interviewing techniques. IAs work on the aged Operation Warfighter, an umbrella program that High Intensity Drug Trafficking Areas (HIDTA), Joint enabled CI to recruit eight disabled veteran interns as Terrorism Task Force (JTTF) and other federal law en- IRS: Criminal Investigation Annual Report 2017 25 NATIONAL CI TRAINING ACADEMY IRS CI SPECIAL Agents are the finest financial by FLETC. CITP covers basic criminal investigation provides leadership development programs from pre- investigators in the world. Their training begins at techniques including federal criminal law, courtroom management through senior manager to ensure the the National Criminal Investigation Training Academy procedures, enforcement operations, interviewing and identification and development of future leaders. NCITA (NCITA) at the Federal Law Enforcement Academy firearms training common to all federal law enforce- develops continuing professional education courses for (FLETC) in Brunswick, Georgia. NCITA is dedicated ment agents. special agents and professional staff each year with an to fostering the highest levels of professionalism and emphasis on emerging trends such as cybercrime and ethical behavior throughout the Criminal Investigation Following CITP, new special agent trainees attend the workforce. NCITA’s primary focus is training new NCITA Special Agent Investigative Techniques (SAIT) special agents in the fundamentals of financial investi- course. SAIT provides training in tax law, evidence gations, including elements of tax offenses, methods gathering, interviewing, report writing, methods of of proof unique to federal tax investigations, and all the proving unreported income, money laundering viola- requisite knowledge, skills, and abilities to be federal tions, as well as physical fitness conditioning and use law enforcement's finest financial investigators. of force training. New special agents attend approximately six months In addition to SAIT, NCITA provides advance training of training including the Criminal Investigator Training to special agents in use of force, firearms instruc- Program (CITP), which is an 11-week program run tion, building entry and defense tactics. NCITA also crypto currencies. NCITA PROVIDES ADVANCED TRAINING TO SPECIAL AGENTS IN USE OF FORCE, FIREARMS INSTRUCTION, BUILDING ENTRY AND DEFENSE TACTICS IRS: Criminal Investigation Annual Report 2017 26 NATIONAL CI TRAINING ACADEMY NCITA provides training to foreign governments and Financial Police School in Ostia, Italy sponsored by ment and the appropriate degree of force necessary to agencies on crime detection, investigative techniques, the Organization for Economic Cooperation and safely carry out enforcement activities. These activities case studies, developing trends and best practices. CI Development (OECD), as well as State Department- include search warrants, arrests, surveillance, armed trains foreign governments through collaborative efforts sponsored training. escorts, dignitary protection, undercover activities with the International Law Enforcement Academies. and seizures. t These academies are in Budapest, Hungary; Bangkok, IRS CI special agents attend quarterly firearms, defen- Thailand; San Salvador, El Salvador; and Gaborone, sive tactics and semi-annual building entry training. Botswana and at the International Academy for Tax Through frequent use of force training, they maintain Crime Investigation at Guardia di Finanza Economic and their skills and abilities so they always use good judge- IRS: Criminal Investigation Annual Report 2017 27 COMMUNICATIONS & EDUCATION (C&E) CRIMINAL INVESTIGATION (CI) serves the American outreach efforts for cases their field offices work. public by investigating potential criminal violations of Headquarters communicators manage websites, write the Internal Revenue Code and related financial crimes speeches and talking points and support the field in in a way that encourages compliance with the law and their outreach activities. All CI communicators work confidence in the tax system. One of the most effec- to balance media outreach with training and educa- tive ways to encourage compliance is publicizing CI tion opportunities to ensure they can react swiftly to activities that enforce the laws within its jurisdiction. unplanned communication needs. The Communications and Education Office (C&E) CI communicators face unique challenges when directly supports CI’s mission by raising the level of engaging external audiences due to the sensitive awareness of all stakeholders—internally and exter- nature of CI’s work with grand juries, taxpayer informa- nally—about the important work that CI does to protect tion, law enforcement material and relationships with the financial interests of the United States. U.S. Attorneys’ Offices around the country. C&E works through these challenges to support CI’s mission. Their Public information officers (PIOs) in each field office work directly contributes to the deterrent effect on and communication specialists at headquarters support financial crimes and promotes voluntary compliance CI’s communication functions. PIOs are case-working and confidence in our tax system. t special agents who are also trained to carry out media IRS: Criminal Investigation Annual Report 2017 28 EQUITY, DIVERSITY AND INCLUSION (EDI) THE MISSION OF the Criminal Investigation (CI) ates the organization's compliance with the directive ing trends in EEO complaints, disciplinary actions, Equity, Diversity, and Inclusion Office (EDI) office is and other policies the Equal Employment Opportunity promotions, awards, separations, retention, employee to identify, examine and address the organization’s Commission (EEOC) establishes. The directive’s development and training, recruitment and hiring initia- employment practices and policies to ensure that all purpose is to identify program weaknesses or deficien- tives and practices. t employees and applicants for employment receive cies and uncover evidence of hidden barriers that equal opportunity in every facet of CI’s programs, would cause discrimination or hinder equal opportuni- activities and services. EDI’s goal is to provide ex- ties for all employees, at every grade level, and in every ceptional customer service, advice and education to occupational series to reach their full potential. It also management, employees and stakeholders to ensure provides the framework for identifying EEO plans that compliance with federal EEO laws and regulations that are tailored to remove barriers and detect problems. prohibit discrimination based on age, color, disability, equal pay, national origin, pregnancy, race, religion, The EDI staff develops action plans to comply with retaliation, sex (gender) and sexual harassment. the six essential elements of a model EEO program as defined by MD 715: EDI is responsible for identifying, examining and addressing the organization's employment policies and • Demonstrated commitment from agency leadership practices to create an effective EEO program. EDI staff • Integration of EEO into the agency’s strategic mission work to ensure that employment practices and deci- • Management and program accountability sions are made with the highest integrity and fairness • Proactive prevention of unlawful discrimination to every employee. EDI also advises CI’s senior leader- • Efficiency in dispute resolution and complaint ship on strategies for capitalizing on the strengths of its employees and embracing their differences and unique processing • Responsiveness and legal compliance viewpoints to create a fully engaged workforce. Additionally, the EDI staff prepares CI’s Management Other responsibilities include monitoring the organiza- Directive 715 (MD 715) report, and monitors and evalu- tion's effort to enhance diversity initiatives and analyz- IRS: Criminal Investigation Annual Report 2017 29 COMMUNITY OUTREACH WHEN IT COMES to the social needs of the communi- people. Many CI employees spent countless hours officer read and distributed books to 3-and-4-year ties where we live and work, CI special agents and providing relief to the victims of Hurricane Harvey. old students at an elementary school in a high-crime professional staff stand ready to lend a helping hand. community. This activity is part of the U.S. Attorney’s They roll up their sleeves to paint, build, repair, clean, In Puerto Rico, 10 special agents were chosen from Office Violence Reduction Partnership (VRP) Reading plant, teach and more. They give generously of their more than 200 volunteers to fly to Puerto Rico to help Program. The VRP was established in 2011 to address time, talents and funds, helping to meet needs next victims of Hurricane Maria. They searched for missing violent crime, gang activity and firearms offenses door and across the nation. Notable examples of our FY IRS employees and provided basic assistance with plaguing high crime areas in Miami. The objective of 2017 community engagement include: food, water, clothing and first aid supplies. The special the reading program is to increase children’s appetite agents also visited hard-to-reach communities to help for reading before entering kindergarten, thus reducing Hurricane Harvey devastated the state of Texas over feed hundreds of people and allow them to use a CI early academic failure. Children who read at grade level a four-day period causing catastrophic flooding in the satellite phone to contact loved ones. by the fourth grade are four times more likely to stay in southern and eastern parts. Rainfall topped 50 inches school. The VRP Reading Program has expanded to 20 in some areas. The resulting floods damaged hundreds On a monthly basis, members of the Miami field schools throughout the Southern District of Florida, and of thousands of homes and displaced thousands of office management team and the public information area students have received over 11,000 books. t IRS: Criminal Investigation Annual Report 2017 30 COMMUNITY OUTREACH IRS: Criminal Investigation Annual Report 2017 31 FIELD OFFICE LOCATIONS CLICK A FIELD OFFICE TO LEARN MORE SEATTLE ST. PAUL DETROIT BOSTON CHICAGO NEW YORK NEWARK PHILADELPHIA CINCINNATI DENVER ST. LOUIS OAKLAND WASHINGTON, D.C. LAS VEGAS CHARLOTTE NASHVILLE LOS ANGELES PHOENIX ATLANTA DALLAS AL GA FL SAN ANTONIO HOUSTON PUERTO RICO NEW ORLEANS U.S. VIRGIN ISLANDS TAMPA MIAMI MARIANA ISLANDS GUAM IRS: Criminal Investigation Annual Report 2017 32 SEATTLE FIELD OFFICE 915 SECOND AVE, SEATTLE WA, 98174 WASHINGTON THE SEATTLE FIELD Office covers the states of • Bend, OR • Honolulu, HI Alaska, Hawaii, Oregon, and Washington, the U.S Terri- • Saipan, MP • Vancouver, WA tory of Guam and the Commonwealth of the Northern Marianas Islands. Planning and collaboration take on Significant cases worked by Seattle CI Special added importance when faced with the geographic Agents include: challenges of seven judicial districts and four time zones. Specific regions within the field office provide opportunities for a diverse case load. Our investigations Hawaii Couple Sentenced for Tax Violations Resulting in Non-Payment of Over $4 Million in Taxes include domestic and international tax crimes, public OREGON corruption, identity theft fraud, cyber‐crime and drug On November 18, 2016, in Honolulu, Hawaii, Calvin related financial crimes. The Seattle Field Office (with Kim, and Chun Cha Kim, were sentenced to 36 and our respective U.S. Attorney’s Offices) plays a pivotal 12 months in prison, respectively, for violations of role in combating financial crime in the Western states. federal tax laws. Calvin Kim and Chun Cha Kim were also ordered to pay restitution of $1,969,463 and The Seattle Field Office has additional locations in the $1,937,267, respectively, which represent all back following areas: taxes and penalties. Criminal fines of $250,000 and $100,000 were also imposed on Calvin Kim and Chun ALASKA HAWAII • Agana, GU • Eugene, OR Cha Kim, respectively. In addition, both defendants • Medford, OR • Spokane, WA agreed to the imposition of a fraud assessment by the • Anchorage, AK • Everett, WA IRS, which may amount to an additional civil penalty • Portland, OR • Tacoma, WA of $3 million. According to court documents, Mr. and "I began my career as a trial attorney in the Tax Division at the Department of Justice, and have been an Assistant United States Attorney for many years. It has been a great privilege to work with so many outstanding IRS CI Special Agents. Their skill in conducting financial investigations is unmatched, and their dedication to justice is unwavering. IRS CI Special Agents are very valuable assets to every fraud prosecution team." — CLAIRE M. FAY, ASSISTANT UNITED STATES ATTORNEY, DISTRICT OF OREGON MARIANA ISLANDS GUAM IRS: Criminal Investigation Annual Report 2017 33 SEATTLE FIELD OFFICE CASE FILES Mrs. Kim operated two companies that sold heating pads and other products. In October Washington Man Sentenced for Conspiracy to Commit Money Laundering 2000, they became followers of so-called or re-processed multiple times. In total, over sion of a firearm in furtherance of the drug $39,000,000 of proceeds of the scheme conspiracy. According to court documents, was laundered through accounts owned or Holloway previously pleaded guilty to controlled by Estes. conspiring with others to distribute drugs "tax protestors" and decided not to file a valid On January 31, 2017 in Spokane, Washing- tax return until May 2014. The court docu- ton, Richard Estes was sentenced to 105 ments reflect that from 2005 to 2012 alone, months in prison, three years of supervised Press Release – https://www.justice.gov/ guilty plea, Holloway admitted that he sold the tax returns of the Kims’ businesses, of released and ordered to pay restitution of usao-edwa/pr/renton-washington-man-sen- drugs on multiple occasions with other co- which they were then the sole shareholders, $4,360,724 to the taxpayers of the United tenced-105-months-prison-conspiracy-com- conspirators, and that he traveled with other showed payments ranging from $418,238 to States. Estes previously pleaded guilty to mit-money-laundering members of the conspiracy who carried drug $971,983 for Calvin Kim for each year, and conspiracy to commit money laundering. proceeds and firearms to protect themselves $271,564 to $1,000,562 for Chun Cha Kim, According to court documents, Estes was and those proceeds. Holloway and several resulting in taxes owed for each of those a member of a conspiracy involving Gen-X years ranging from $133,009 to $325,375 for Energy Group, Inc. (Gen-X), a renewable him and $83,828 to $335,378 for her. energy company formerly located in Pasco and Moses Lake, Washington. Between and to launder the proceeds. As part of his other conspirators maintained a “stash Twelfth Alleged Fairview Gang Members Sentenced for Drugs, Weapons and Money Laundering Offenses house” in the Government Hill neighborhood, where law enforcement officers found large amounts of drugs and money. Several defen- Press Release – https://www.justice.gov/ March 2013 and May 2014, Estes and his usao-hi/pr/hawaii-couple-sentenced-tax- co-conspirators laundered the proceeds of On December 29, 2016, in Anchorage, users could call to reach available members violations-resulting-non-payment-over- schemes to falsely claim the production of Alaska, Isaiah Holloway was sentenced to arrange for drug sales. During the time of 4-million-taxes marketable renewable energy credits and file to 144 months in prison, followed by five this conspiracy, the members were involved false claims for refunds of excise credits with years of supervised release for his role in a in numerous crimes in Anchorage involving the IRS. Throughout this period, much of the conspiracy to distribute heroin, cocaine, and the use or possession of firearms, for which renewable fuel claimed to be produced at crack in Anchorage, to launder thousands several face sentencings or have recently the Gen-X facilities was either not produced of dollars in drug proceeds, and for posses- been sentenced in state court. dants also shared a “dope phone” that drug IRS: Criminal Investigation Annual Report 2017 34 SEATTLE FIELD OFFICE CASE FILES Press Release – https://www.justice.gov/ California. This heroin was received and Press Release – https://www.justice. possession of 118 grams of heroin, 59 grams usao-ak/pr/12-alleged-fairview-gang-mem- distributed in Alaska by Hakim Giddins and gov/usao-ak/pr/alaska-man-sentenced- of powder cocaine and 35 grams of crack bers-sentenced-drugs-weapons-and-money- his co-conspirators. Johnson himself pos- 90-months-role-drug-conspiracy-and-money- cocaine. White’s residence was searched, laundering-offenses sessed heroin for distribution. He and others laundering and law enforcement officers found 786 Alaska Man Sentenced for Role in Drug Conspiracy and Money Laundering also entered into an agreement to launder grams of methamphetamine, 1318 grams of the proceeds obtained from the distribu- heroin, 176 grams of cocaine and 837 grams tion of drugs brought into Alaska by the of marijuana. In addition, the officers found conspiracy. The cash proceeds from the sale of these drugs were laundered by making deposits into bank accounts located in Alaska Anchorage Man Sentenced for Drug Trafficking, Money Laundering and Firearms Offenses 11 firearms, including rifles, semi-automatic pistols and shotguns. White is a felon and prohibited from possession of firearms On July 24, 2017, in Anchorage, Alaska, in other people’s names. This money was Brandon Johnson was sentenced to 90 then withdrawn in California. Cash was also On July 25, 2017, in Anchorage, Alaska, felonies. At White’s sentencing hearing, a months in prison, followed by three years shipped in bulk from Alaska to California. Bernard Yamura White was sentenced to 216 former neighbor of White’s asked to speak of supervised release, for his role in a drug Hakim Giddins directed Johnson and others months in prison, for drug trafficking, money with the court, and expressed concern for trafficking conspiracy that brought controlled to make bank deposits on his behalf with laundering, firearms offenses and violating the community that White had been con- substances, including heroin and metham- money that he knew had come from drug his prior terms of supervised release. Accord- victed of three drug trafficking offenses and phetamine, into Alaska. According to court trafficking. Hakim Giddins believed that by ing to court documents, on August 22, 2016, after significant time in prison continued to documents, Johnson was indicted with having the deposits made that way, it would and January 12, 2017, White attempted to engage in the same dangerous conduct. multiple co-conspirators including Hakim conceal his connection to the money as well ship two parcels containing $59,610 and Giddins, Shakin Giddins, Markin Giddins, as to the true source of the money. Multiple $30,980 in drug proceeds from Anchorage to Press Release – https://www.justice.gov/ Tara McNutt, Kourtney Davis, and Briana co-conspirators were indicted and sentenced California. On February 8, 2017, White was usao-ak/pr/anchorage-man-sentenced- Herndon. From 2014 to 2016, McNutt, Davis, for the criminal conduct related to this contacted at a traffic stop by law enforce- combined-18-years-drug-trafficking-money- and Herndon opened various mailboxes with drug conspiracy. ment officers in Anchorage and was found in laundering-and-firearms due to his two prior federal drug trafficking Alaska addresses to receive heroin from IRS: Criminal Investigation Annual Report 2017 35 OAKLAND FIELD OFFICE 1301 CLAY ST, OAKLAND CA, 94612 | 510.907.5249 THE OAKLAND FIELD Office is responsible for Significant cases worked by Oakland CI Special covering the Northern and Eastern Judicial Districts Agents include: of California, which is more than half of the state of California. The judicial districts run from the Sierra’s to the west coastline and from Bakersfield to the Oregon California Man Sentenced for Filing False Tax Returns border. The field office’s top law enforcement priori- CALIFORNIA ties are designed to promote tax compliance, address On August 25, 2017, in Sacramento, California, Omar emerging areas of fraud (for example, cybercrimes), Kabiljagic was sentenced to 51 months in prison for and meet the needs of the law enforcement commu- filing fraudulent tax returns. According to court docu- nity by supporting national crime initiatives. Criminal ments, Kabiljagic submitted a series of fraudulent tax Investigation assists in the prosecution of significant returns to the IRS falsely reporting that in 2008 and financial investigations to generate the maximum 2009, he earned interest from “original issue discount” deterrent effect, enhance voluntary compliance, and (OID) bonds. He falsely reported that various financial promote public confidence in the tax system. institutions withheld this interest income and claimed that this entitled him to hundreds of thousands of The Oakland Field Office has additional locations in the dollars in tax refunds. The IRS repeatedly warned following areas: Kabiljagic that his filings were frivolous and that he risked criminal charges if he persisted. Nevertheless, • Fresno, CA • San Jose, CA on June 25, 2009, Kabiljagic filed two more tax returns • Modesto, CA • San Rafael, CA that falsely claimed refunds totaling $863,520. On April • Redding, CA • Santa Rosa, CA 4, 2017, a jury found Kabiljagic guilty of two counts of • Sacramento, CA • Walnut Creek, CA filing fraudulent tax returns. • San Francisco, CA "The U.S. Attorney's Office of the Eastern District of California has a long history of partnering with IRS Criminal Investigations to investigate and prosecute a variety of tax and white collar offenses. CI agents consistently bring their special expertise to complex financial cases and have repeatedly proven themselves to be invaluable partners in our mission of protecting the public and pursuing justice." ­­­— PHILLIP A. TALBERT, U.S. ATTORNEY, EASTERN DISTRICT OF CALIFORNIA IRS: Criminal Investigation Annual Report 2017 36 OAKLAND FIELD OFFICE CASE FILES Press Release – https://www.justice.gov/ could legally receive large refunds by filing usao-edca/pr/sacramento-man-sentenced- tax returns using IRS Forms 1099-OID. over-four-years-prison-filing-false-tax-returns AFS prepared false Forms 1099-OID that Former Bakersfield Police Department Detective Sentenced for Bribery, Drug Trafficking, and Filing False Tax Returns reported the clients’ debts as income and enforcement activities as well as protection from investigation and arrest. Diaz also filed a joint income tax return for the calendar year 2012 that falsely reported total income the same amount as income tax withheld. On October 3, 2017, in Fresno, California, of $168,485 and did not include additional This resulted in significant claims for refunds Damacio Diaz, formerly a detective with income of at least $97,900. the clients were not entitled to receive. The the Bakersfield Police Department was scheme included clients from 26 states sentenced 60 months in prison for bribery, Press Release – https://www.justice.gov/ and caused the IRS to pay out over 40 tax possession and attempted possession with usao-edca/pr/former-bakersfield-police- On April 26, 2017, in Sacramento, California, refunds, totaling more than $9 million. Clients the intent to distribute methamphetamine, department-detective-sentenced-5-years- Teresa Marty was sentenced to 120 months of AFS have been prosecuted in Arizona, and making and subscribing a false income prison-bribery-drug in prison, two years of supervised release Colorado, Florida, Georgia, Missouri, Oregon tax return. According to court documents, and ordered to pay restitution in the amount and Washington for filing false claims that between April 2012 and February 2015, of $9,500,492 to the IRS. According to Marty and AFS prepared. while employed as a police officer with the Tax Preparation Business Owner Sentenced for Filing False Tax Returns court documents, Marty was the owner of Bakersfield Police Department, Diaz handled California Bay Area Doctor Sentenced for Tax Evasion Advanced Financial Services (AFS), a tax Press Release – https://www.justice.gov/ a criminal informant who was involved in the return preparation business. Marty conspired usao-edca/pr/tax-preparation-business- large-scale sale and distribution of metham- with her office managers, Pamela Harris and owner-sentenced-10-years-prison phetamine. Diaz continued to operate the On April 11, 2017, in San Francisco, Califor- Rebecca Bandera-Marty to file fraudulent informant even though he was fully aware nia, Dr. John Compagno was sentenced to federal tax returns claiming more than $60 of the informant’s ongoing criminal activity. 37 months in prison, three years of super- million in refunds. Marty and Harris recruited During this time, Diaz received bribes from vised release, a $75,000 fine, and ordered clients by falsely representing that the clients the informant in return for intelligence on law to pay $5,426,239 in restitution. Compagno IRS: Criminal Investigation Annual Report 2017 37 OAKLAND FIELD OFFICE CASE FILES pleaded guilty on December 14, 2016, to Press Release – https://www.justice.gov/ 2013, through April 27, 2015, the defendants income tax evasion. According to his plea usao-ndca/pr/bay-area-doctor-sentenced- conspired to commit the offenses against agreement, Compagno is a medical physi- more-three-years-prison-tax-evasion the United States which included theft of California Resident Sentenced for Role in $37 Million Cisco Fraud and Related Crimes cian specializing in pathology. He is also the government money. The scheme involved On August 31, 2017, in San Jose, California, owner and operator of three corporations. using the names of deceased individuals, Cuong Cao “Calvin” Dang was sentenced to In his plea agreement, Compagno admitted filing false tax returns in the names of those 90 months in prison, followed by three years individuals, obtaining false identifications, of supervised release for his role in a scheme and illegally cashing U.S. Treasury checks. to sell products stolen from Cisco Systems Robinson, with the help of others, got names by its employees. According to court docu- of deceased individuals for use in filing false ments, Dang owned and operated Network he submitted both corporate and individual tax returns that understated his liability to the IRS. For the tax years 2005 through California Resident Sentenced for Filing Fraudulent Tax Returns and Appropriating Fraudulent and Stolen Treasury Checks 2011, Compagno caused a corporate tax return preparer to overstate the amount of On February 8, 2017, in Oakland, California, tax returns. The returns falsely represented Genesis, based in San Jose, from approxi- expenses on his corporate tax return by Hugh Robinson was sentenced to 144 that the individuals earned wages or other mately January 2006 until January 23, 2013. including $10,679,080 in non-deductible months in prison for his role in a conspiracy income and that the individuals listed on Dang admitted to having a small network of expenses. As a result, the amount of income to commit theft of government property. the tax returns were entitled to tax refunds. Cisco employees who delivered stolen Cisco taxes due was understated. This resulted in Robinson was charged along with ten A search of the location where Robinson merchandise to Network Genesis for resale additional tax due of $3,859,060. Compagno co-defendants on November 5, 2015, with resided yielded $237,394 worth of uncashed to customers both in and outside California. also omitted $10,505,091 in constructive conspiracy to commit theft of public money, U.S. Treasury checks. Dang admitted that, to cover his tracks, he dividends from his 2006 through 2011 theft of public money, wire fraud, and ag- individual income tax returns. This resulted in gravated identity theft. On October 31, 2016, Press Release – https://www.justice.gov/ merchandise and created fraudulent “test additional tax due of $1,567,179. Ultimately, a jury convicted Robinson of all charges usao-ndca/pr/richmond-resident-sentenced- sheets” to give to customers. Dang also Compagno acknowledged in his plea agree- against him in the indictment. According to 12-years-imprisonment-filing-fraudulent-tax- admitted using nominees to launder the ment he owed more than $5.4 million in court documents, from at least August 21, returns-and illicit proceeds, enabling him to obtain large changed the serial numbers on the stolen unpaid taxes. IRS: Criminal Investigation Annual Report 2017 38 OAKLAND FIELD OFFICE CASE FILES amounts of cash without having the money and admitting this criminal conduct, Dang did go through bank accounts associated with not stop all of his criminal activity. him or his businesses. On October 30, 2013, a federal grand jury returned a superseding Press Release – https://www.justice.gov/ indictment in which Dang and seven other usao-ndca/pr/cuong-cao-calvin-dang-sen- defendants were charged with various tenced-7-years-prison-role-37m-cisco-fraud- offenses related to Dang’s scheme. Dang and-related-crimes was charged with conspiracy to commit mail fraud and money laundering. On December 11, 2015, Dang entered into the first of two plea agreements. In this plea agreement, Dang pleaded guilty to conspiracy to commit mail fraud, money laundering, and money laundering of criminally derived proceeds. Dang admitted Network Genesis’s business was “overwhelmingly that of buying and selling merchandise stolen from Cisco”. Dang also admitted that from January 2006 until federal law enforcement officers raided Network Genesis in January 2013, sales revenues totaled approximately $37,000,000. Despite entering into this plea agreement IRS: Criminal Investigation Annual Report 2017 39 LOS ANGELES FIELD OFFICE 300 N. LOS ANGELES ST, LOS ANGELES CA, 90012 | 213.372.4129 AS THE NATION’S second largest field office, the Significant cases worked by Los Angeles CI Special Los Angeles Field Office serves a population of Agents include: approximately 22 million people, stretching over nine counties from San Luis Obispo to the United StatesMexican border. We work a diverse mix of financial California Tax Return Preparer Who Stole Over $1.2 Million in Refunds Owed to His Clients Sentenced investigations across this large geographic area. Our investigations include cybercrimes, international tax On June 12, 2017, in Los Angeles, California, Michael fraud, and identity theft. We play crucial roles on the Joseph Calalang Cabuhat was sentenced to 46 months U.S. Attorney’s priority task forces, to include the Joint in prison and ordered to pay restitution in the amount Terrorism Task Force and the Organized Crime Drug of $1,496,416 to his victims and the IRS. According to Enforcement Task Forces. court documents, Cabuhat pleaded guilty in June 2016 CALIFORNIA to wire fraud and subscription to a false federal income The Los Angeles Field Office has additional locations in tax return. Cabuhat is a half-owner of VisionQwest the following areas: Resource Group, Inc., which operates VisionQwest Accountancy Group and Icon Tax Group, Inc., in Glendale. • Camarillo, CA • San Diego, CA Cabuhat admitted that, from 2010 through 2016, he • EL Monte, CA • San Marcos, CA defrauded his clients in two ways. In some instances, • El Segundo, CA • Santa Ana, CA the client was given a copy of a tax return that showed • Glendale, CA • Santa Maria, CA a much smaller refund amount than on the tax return • Laguna Niguel, CA • Van Nuys, CA that Cabuhat filed with the IRS. Without the taxpayer’s • Long Beach, CA • Woodland Hills, CA knowledge, Cabuhat filed paperwork that directed • San Bernadino, CA the IRS to deposit the small amount reflected on the “I always say that IRS agents are worth their weight in gold, because if you have an IRS agent on your case, your investigation is going to be 10 times better than without them. It doesn’t matter what type of case – financial fraud, drug cartels, public corruption – their level of expertise is always a huge bonus and their work is second to none. We wish there were more IRS agents to go around.” — ALANA W. ROBINSON, ACTING U.S. ATTORNEY IRS: Criminal Investigation Annual Report 2017 40 LOS ANGELES FIELD OFFICE CASE FILES taxpayer’s copy of the tax return into the taxpayer’s bank account, and to deposit the remainder into a bank account that Cabuhat California Woman Sentenced for Using Stolen IDs to File Fraudulent Returns Seeking More than $2 Million in Refunds controlled. In other instances, Cabuhat gave was awaiting sentencing, she was subsequently charged in a second indictment for filing false claims to the IRS, wire and mail California Man Sentenced for Role in Scheme to Launder Money for Drug Rings, Including the Sinaloa Cartel fraud, and aggravated identity theft. Lozano the client a copy of a tax return that falsely On July 12, 2017, in San Diego, California, took the names and Social Security numbers On November 30, 2016, in Los Angeles, Cali- showed a tax due, but Cabuhat would Cynthia Lozano was sentenced to 175 from her Section 8 tenants, and others who fornia, Bradley John Martin was sentenced to file with the IRS a tax return that sought months in prison and ordered to pay restitu- submitted rental applications to her. She 63 months in prison and three years super- a refund. Using these fraudulent means, tion of $1,479,134 to the IRS and Department used their names and numbers to submit ad- vised release for his part in an international Cabuhat stole more than $1.2 million that of Housing and Urban Development (HUD) ditional false federal tax returns. Lozano then money laundering organization that conspired belonged to over 150 of his clients. Cabuhat for mail and wire fraud, false claims and directed the IRS to deposit the tax refunds to move more than $15 million in drug money also admitted that he failed to report this aggravated identity theft. According to court into new bank accounts she opened with the for organizations that included the Sinaloa money on his own tax returns, which allowed documents, on February 13, 2015, Lozano assistance of two co-conspirators. Cartel. Martin pleaded guilty in May to him to evade the payment of approximately pleaded guilty to aggravated identity theft $268,000 that he owed to the IRS. and participation in her fraudulent scheme. Press Release – https://www.justice. an unlicensed money remitting business. In total, Lozano used the identities of over gov/usao-sdca/pr/lemon-grove-woman- The illegal scheme spanned the world and Press Release – https://www.justice.gov/ 200 victims to file over 400 federal tax sentenced-14-years-prison-using-stolen-ids- involved operatives in Canada, India, the usao-cdca/pr/glendale-tax-return-preparer- returns, resulting in her receipt of over $1.5 file-fraudulent-returns United States and Mexico. These operatives who-stole-over-12-million-refunds-owed-his- million in fraudulently-obtained tax refunds laundered drug trafficking proceeds gener- clients between 2008 and 2013. Lozano used most ated from multi-kilogram and multi-pound of the funds obtained from her initial scheme sales of narcotics in Canada and the United to purchase 20 properties in and around States for and on behalf of the Sinaloa Phoenix, Arizona. In June 2015, while Lozano Cartel and their affiliated drug trafficking conspiracy to launder money and operating IRS: Criminal Investigation Annual Report 2017 41 LOS ANGELES FIELD OFFICE CASE FILES organizations. The laundered money was to federal-prison-role-scheme-launder-money- clients. Schwartz admitted that between statements. In addition to the nearly $5 have either been transported to the Sinaloa drug-rings-including May 2010 and January 2014, he withdrew million stolen from Ms. Morissette, Schwartz Cartel as profits or reinvested in additional approximately $4.8 million belonging to admitted that he embezzled more than $1 narcotics to be sold and distributed in the Alanis Morissette without her knowledge or million from another client and attempted United States and Canada. Martin admitted authorization. Because of his position as a to conceal the theft by claiming the cash business manager, Schwartz had access to withdrawals were used for renovations to his clients’ bank accounts so he could pay the client’s home. Schwartz further admitted their bills and get cash for them. As part of that he embezzled $737,500 from another an embezzlement scheme, Schwartz submit- client and forged that client’s signature on that he was a repeat money courier in an international “hawala” ring that transferred narcotics proceeds for the Sinaloa drug cartel CPA Sentenced to Prison for Embezzling $7.2 Million from Alanis Morissette and Other Celebrities and other drug trafficking organizations. Specifically, Martin admitted to personally On May 3, 2017, in Los Angeles, California, ted cash-withdrawal requests to banks that at least two cash receipts. Because of the transporting over $1,800,000 in cash, which Jonathan Todd Schwartz, a certified public were not authorized by his clients, and he entire scheme, Schwartz acknowledged that he knew was drug trafficking proceeds. accountant and business manager for either had the cash delivered to him or he he owes the IRS more than $1.7 million in During a four-year federal wiretap investiga- singer-songwriter Alanis Morissette, as well picked up the money himself. Schwartz con- federal income taxes. tion by IRS-Criminal Investigation and DEA, as other well-known entertainment and cealed the embezzlements because the bank authorities seized a total of $15,467,293 sports figures, was sentenced to 72 months statements were sent to GSO, and not to the Press Release – https://www.justice.gov/ in bulk U.S. currency, 321 kilograms of in prison, three years of supervised release, clients. GSO prepared monthly statements usao-cdca/pr/cpa-sentenced-6-years- cocaine, 98 pounds of methamphetamine, and ordered to pay $8,657,268 in restitution. for the clients based on a ledger of expenses federal-prison-embezzling-72-million-alanis- 11 kilograms of MDMA (“ecstasy”) and nine Schwartz pleaded guilty in February to wire that GSO bookkeepers maintained. However, morissette-and-other kilograms of heroin. fraud and tax fraud charges. Schwartz was those statements were false because a member of GSO Business Management, Schwartz had provided false information to Press Release – https://www.justice.gov/ LLC, a business management firm that the bookkeepers and caused other pertinent usao-cdca/pr/carlsbad-man-sentenced- provides financial guidance to high-net worth information to be deleted from the monthly IRS: Criminal Investigation Annual Report 2017 42 LAS VEGAS FIELD OFFICE 110 N. CITY PARKWAY, LAS VEGAS NV, 89106 | 702.868.5091 The Las Vegas Field Office covers the Districts of Significant cases worked by Las Vegas CI Special Nevada, as well as the District of Utah, comprising Agents include: two judicial districts. We work a diverse mix of cases across the geographic area to include: criminal tax fraud, money laundering and cyber crimes. We also Kaysville CPA Sentenced to Prison after Pleading Guilty to Tax Evasion hold pivotal roles on the respective U.S. Attorney’s NEVADA priority task forces, including the Joint Terrorism Task On January 26, 2017, in Salt Lake City, Utah, David Force, Organized Crime Drug Enforcement Task Force Brian Bybee was sentenced to 12 months and one (OCDETF), and the Financial Crimes Task Force. In day, three years of supervised release and ordered to addition, we cover a large part of the casino industry pay $469,381 in restitution for attempting to evade for the United States and an outstanding narcotics payment of U.S. taxes. According to court documents, program in Utah, which recently funded an additional Bybee managed and controlled several companies SAUSA (Special Assistant United States Attorney). that offered various services, including membership in various business professional associations and groups, The Las Vegas Field Office has additional locations in along with bookkeeping, accounting, and tax manage- the following areas: ment training and services. Bybee admitted that he and • Ogden, UT • Reno, NV • Salt Lake City, UT his business partner filed a Form 1040 joint personal return with the IRS for tax years 2000 through 2002 and 2005 through 2009, for which the IRS assessed $153,569. Bybee admitted he willfully failed to pay the UTAH “The Las Vegas Field Office of IRS-Criminal Investigation epitomizes professionalism and reliability. Special Agents and staff members are tried and true partners in our combined work to hold accountable those who would harm the Treasury, and those who would victimize others to feed their own greed. Prosecutors in my office consistently offer glowing reviews of the work product from IRS-Criminal Investigation. Moreover, when times get tough in a challenging investigation or prosecution, we count ourselves fortunate to have partnered with IRS-Criminal Investigation. Big picture people who are motivated and thorough. This is how I view the professionals at IRS-Criminal Investigation.” — JOHN W. HUBER, UNITED STATES ATTORNEY, DISTRICT OF UTAH IRS: Criminal Investigation Annual Report 2017 43 LAS VEGAS FIELD OFFICE CASE FILES taxes due the U.S. government. From 2008 in prison and three years of supervised United States and was sentenced to serve 12 laundering relating to a real estate fraud to 2011, substantial revenues from credit release for conspiring to defraud the United months in prison, three years of supervised scheme. According to court documents, card sales were deposited into the America States and tax evasion. According to court release and ordered to pay $428,003 in Wilson ran a real estate investment scheme First Credit Union account. Bybee admitted documents, Nowak, and Ramzi Suliman restitution to the IRS. from approximately 2005 until 2012. His that despite not being an authorized signer jointly owned and operated liquor stores in on the account, he controlled electronic Las Vegas. At their first liquor store, Super Press Release – https://www.justice.gov/ were in desperate need for financing, and funds transfers out of the account for, among Liquor Store South Strip, Nowak and Suliman opa/pr/nevada-liquor-store-owner-sentenced- the economic collapse made such loans other things, various personal expenditures. skimmed cash receipts and maintained a prison-conspiring-defraud-united-states-and- more difficult to obtain through traditional The expenditures included a mortgage, cars, double set of books to underreport income tax-evasion means. Wilson sought individuals all over jet skis and a boat. to the IRS. One set of books accurately the country who were developing real estate reflected the store’s sales, while a second projects, such as shopping malls or resorts. Press Release – https://www.justice.gov/ set of books fraudulently omitted nearly usao-ut/pr/kaysville-cpa-pleads-guilty-tax- $4 million in cash receipts the business evasion-and-sentenced-prison received.. Nowak and Suliman provided the phony set of books to their accountant, fraud accelerated in 2009 when businesses Wilson represented to investors that his St. George Man Sentenced to 108 Months in Federal Prison after Convictions for Fraud, Money Laundering causing him to create corporate tax returns Nevada Liquor Store Owner Sentenced for Conspiring to Defraud the United States and Tax Evasion company could provide financing for real estate development projects for an advance fee of either $80,000 or $150,000 through a “substitution of collateral program.” Through that did not fully report the liquor store’s On October 7, 2016, in Salt Lake City, Utah, this program, individuals would provide the gross receipts and taxable income. Nowak Edmund Edward Wilson was sentenced to fee, obtain financing for their projects within and Suliman also caused their true personal 108 months in federal prison, three years 30-60 days (in some cases hundreds of income to be concealed on their individual of supervised release and ordered to pay millions of dollars), and not have to repay On March 6, 2017, in Las Vegas, Nevada, income tax returns. Suliman pleaded guilty $12,227,920 in restitution to victims. Wilson the loan. In return, these individuals Wilson Jeffrey Nowak was sentenced to 41 months to conspiring with Nowak to defraud the pleaded guilty to wire fraud and money called “investors” would give him a 30 IRS: Criminal Investigation Annual Report 2017 44 LAS VEGAS FIELD OFFICE CASE FILES percent stake in the development project. When investors called Wilson to ask why Peila Sentenced for Conspiracy to Distribute Oxycodone, Money Laundering they had not received funding for their pick up the oxycodone pills for distribution in Utah. Several co-conspirators involved in the case have pleaded guilty and are serving sen- projects within the time promised, Wilson On December 3, 2016, in Salt Lake City, tences ranging from 72 months to probation. falsely represented that he needed additional Utah, Aaron Peila, was sentenced to 144 Sentencing is pending for three individuals. money to cover various unforeseen fees and months in federal prison after pleading guilty expenses, and that once these costs were to a conspiracy to distribute oxycodone and Press Release – https://www.justice.gov/ paid, funds would be released for the devel- conspiracy to commit money laundering. usao-ut/pr/peila-sentenced-144-months-fed- opment projects. Wilson failed to disclose to According to court documents that, federal eral-prison-conspiracy-distribute-oxycodone- investors that he never provided any funding prosecutors wrote in a sentencing memoran- money for any development project through his dum filed with the court, from approximately substitution of collateral program and that he 2007 through 2012, Peila engaged with other used a significant portion of the advanced co-conspirators in a large-scale effort to fees for his personal benefit. distribute oxycodone in Utah and surrounding areas.. Through a significant investigation, Press Release – https://www.justice.gov/ agents believe Peila and his co-conspirators usao-ut/pr/st-george-man-sentenced- distributed approximately 89,000 oxycodone 108-months-federal-prison-after-convictions- 80 mg tablets and 22,000 oxycodone 30 fraud-money mg tablets. They also laundered about $3.8 million in drug proceeds. As a part of his plea agreement with federal prosecutors, Peila admitted traveling from Utah to Las Vegas to IRS: Criminal Investigation Annual Report 2017 45 PHOENIX FIELD OFFICE 4041 N. CENTRAL AVE, PHOENIX AZ, 85012 | 602.636.9721 THE PHOENIX FIELD Office covers the southwestern states of Arizona and New Mexico. The office’s special Former Santa Fe Engineer Sentenced for Obstructing IRS and Filing False Tax Returns agents investigate both legal and illegal source tax ARIZONA crimes, including cases with an international nexus. On September 19, 2017, in Albuquerque, New Mexico, The office operates a financial crimes task force named Darryl J. Gutierrez was sentenced to 33 months in DeTECT that identifies and investigates a wide variety prison, one year of supervised release and ordered of complex financial crimes. Located on the U.S. / to pay $174,196 in restitution to IRS, a $15,000 fine Mexico border, the office provides significant participa- and a $1,100 special penalty assessment for violating tion in the high level Organized Crime Drug the federal tax laws by obstructing and impeding the Enforcement Task Force (OCDETF). administration of the internal revenue laws and filing false tax returns. Gutierrez was an electrical engineer NEW MEXICO The Phoenix Field Office has additional locations in the who worked at Los Alamos National Laboratory for following areas: almost 30 years, earning an annual salary ranging from • Albuquerque, NM • Mesa, AZ $80,000 to $115,000 in tax years 2000 to 2009. After • Glendale, AZ • Santa Fe, NM years of regularly filing timely income tax returns with • Las Cruces, NM • Tucson, AZ the IRS, Gutierrez stopped complying with the federal tax laws and began engaging in a pattern of obstruc- Significant cases investigated by Phoenix CI Special tive conduct to prevent the IRS from assessing and Agents include: collecting his taxes. This included sending frivolous correspondence to the IRS, and, submitting under penalty of perjury, false tax information to his employer and to “IRS Criminal Investigation is our ‘go-to’ agency for financial expertise. Whether pursuing money launderers in tandem with other investigative agencies, or proving willful violations of the tax code, IRS Criminal Investigation agents provide critically important support to our office.” — JAMES D. TIERNEY , ACTING U.S. ATTORNEY, DISTRICT OF NEW MEXICO IRS: Criminal Investigation Annual Report 2017 46 PHOENIX FIELD OFFICE CASE FILES the IRS. The evidence further showed that was an anesthesiologist and a founding guilty to wire fraud. As a registered tax return was found guilty following trial on multiple between November 2010 and January 2011, member of Forest Country Anesthesia, an preparer, Puerta owned and operated Taxes counts, including conspiracy, mail fraud and Gutierrez filed 10 false federal income tax anesthesiology practice in Flagstaff. Chris- Y Mas in Glendale, Arizona. Beginning in aggravated identity theft. Anthony was a returns for tax years 2000 to 2009 seeking a tensen was indicted in 2014 for concealing 2011, Puerta submitted fraudulent tax returns key participant in the scheme, in which the refund when in fact Gutierrez owed the IRS approximately $2,100,163 in income from by using the names and identities of indi- conspirators stole the identities of dozens of approximately $125,000. the IRS and failing to pay approximately viduals in Mexico who were unaware their taxpayers and filed false income tax returns $562,083 in federal income taxes. In May, identities were being used this way. Puerta to obtain hundreds of thousands of dollars in Press Release – https://www.justice.gov/ a jury in Phoenix convicted him on seven filed the fraudulent returns using a substitute tax refunds in the victims’ names. Anthony usao-nm/pr/former-santa-fe-engineer- counts of willful evasion of tax assessment identification number, called an individual tax and others obtained the fraudulent refunds sentenced-federal-prison-obstructing-irs- for 2004 through 2010, as well as two counts identification number, issued in the name of through online accounts set up with prepaid and-filing-false-tax of willful failure to file a tax return for 2009 the identity-theft victims. debit cards and used multiple bank accounts to convert the refund money into cash. Once and 2010. Anthony obtained the cash, she, or people she recruited, laundered the money out Flagstaff Anesthesiologist Sentenced for Tax Evasion Tax Preparer Sentenced to Prison for Using Stolen Identities to Obtain Over $250,000 in False Tax Refunds On October 25, 2016, in Phoenix, Arizona, Tax Preparer Sentenced for Stolen Identity, International Money Laundering Scheme of the United States by wiring most of the On July 31, 2017, in Phoenix, Arizona, Paula Press Release – https://www.justice. funds to Nigeria. Dr. Gary Christensen was sentenced to 42 On August 7, 2017, in Phoenix, Arizona, Anthony was sentenced to 36 months gov/usao-az/pr/tax-preparer-sentenced- months in prison, three years supervised Karina Puerta was sentenced to 21 months in prison for her role in a stolen identity prison-stolen-identity-international-money- release and ordered to pay $1,603,533 in res- in prison and ordered to pay over $250,000 and money laundering scheme. Anthony, laundering-scheme titution to the U.S. government. Christensen in restitution. Puerta previously pleaded formerly a registered tax return preparer, IRS: Criminal Investigation Annual Report 2017 47 PHOENIX FIELD OFFICE CASE FILES Tucson Man Sentenced on Narcotics and Money Laundering Charges is pending for other individuals related to Johnson gave a fictitious reference and other the operation. false information during the hiring process to prevent her new employer from contact- On June 15, 2017, in Tucson, Arizona, David Galvan-Haro was sentenced to 84 months Former Phoenix Resident Sentenced for Embezzlement in prison, four years supervised release ing the Phoenix employer and discovering her fraud. Upon being hired in early 2015, Johnson proceeded to steal almost and ordered to forfeit $143,540 in cash. On September 11, 2017, in Phoenix, Arizona, $500,000 from her new, Atlanta-based Haro pleaded guilty to possession with Shana Raelisa Johnson was sentenced to employer. Johnson concealed her embezzle- intent to distribute cocaine and conspiracy 44 months in prison and ordered to pay ment from both companies by falsifying bank to commit money laundering. According to more than $2 million in restitution. Johnson statements and other financial records. court documents Haro coordinated ship- had previously pleaded guilty to wire fraud. ments of cocaine via the United States From 2008 through 2014, Johnson worked Press Release – https://www.justice. Postal Service along with others. After the as an accountant at a property management gov/usao-az/pr/former-phoenix-resident- narcotics were shipped via the mail, Haro company based in Phoenix. During that time, sentenced-44-months-embezzlement provided bank account numbers for individu- she stole more than $2.4 million from her als to deposit what Haro knew to be drug employer by issuing fraudulent checks and trafficking proceeds into his bank account making unauthorized electronic transfers in order to conceal and disguise the nature, from her employer’s bank accounts. After location source ownership and control of the the Phoenix-based company discovered her proceeds of the narcotics shipments. Haro theft, Johnson moved to Atlanta, Georgia, would withdraw the money and transport the and applied for a similar accountant position money to other co-conspirators. Sentencing at another property management company. IRS: Criminal Investigation Annual Report 2017 48 DENVER FIELD OFFICE 1999 BROADWAY, DENVER CO, 80202 | DENVER.FINCRIMES@CI.IRS.GOV COLORADO THE DENVER FIELD Office covers a large geo- Significant cases worked by Denver CI Special graphic area (approximately 432,500 square miles) that Agents include: includes the states of Colorado, Montana, Idaho and Wyoming and their respective judicial districts. The Denver Field Office works a diverse mix of criminal Colorado Man Sentenced to Prison for Conspiring to File Fraudulent Tax Refund Claims investigations including all manners of tax fraud, money laundering and other federal frauds with a financial On July 14, 2017, in Denver, Colorado, Daryl Brent nexus. We hold pivotal roles on the U.S Attorney’s Giesking was sentenced to 24 months in prison, Office priority task forces, including the OCDETF three years of supervised release and ordered to pay Strikeforce, Suspicious Activity Task Force, Guardians $310,261 in restitution to the IRS. Giesking conspired Project Strikeforce, and the Virtual Currency Task Force. with his return preparer to claim fraudulent refunds by filing three individual tax returns claiming more IDAHO MONTANA The Denver Field Office has additional locations in the than $1 million in refunds based on falsely reported following areas: income tax withholdings. As a result, the IRS paid • Billings, MT • Fort Collins, CO out a $350,765 fraudulent refund to Giesking. Within • Boise, ID • Grand Junction, CO months of receiving the refund, Giesking spent the • Cheyenne, WY • Helena, MT funds on precious metals and coins, a truck, jewelry, • Coeur d'Alene, ID • Missoula, MT luxury travel and sporting equipment. After discovering • Colorado Springs, CO • Washington, DC the refund should not have been paid, the IRS levied • Durango, CO • Westminster, CO Giesking’s bank accounts and recovered approximately $40,503. Following the IRS’s levies, Giesking liquidated "Special agents for IRS CI are the best of the best when it comes to work ethic, team mentality, and financial investigation sophistication. We rely on their ability to solve complex financial crimes, and break them down in an understandable way, across almost every criminal case type in our office." — BOB TROYER, UNITED STATES ATTORNEY, DISTRICT OF COLORADO WYOMING IRS: Criminal Investigation Annual Report 2017 49 DENVER FIELD OFFICE CASE FILES a number of his assets to include selling the of false tax returns. From January 2009 until to a bank account controlled by I&A. Iley to being the leader of a drug trafficking truck he bought with the fraudulent proceeds December 2015, Iley was the owner and kept the money that was intended for payroll organization (DTO) involving her children and and withdrawing all the funds in his retire- operator of Iley and Associates (I&A), an taxes and used it for his own purposes. friends. The DTO sold oxycodone, heroin and ment account. He then relocated to Ecuador, accounting and tax preparation firm providing where he was arrested in June 2016, on a payroll and payroll tax services to more than Press Release – https://www.justice.gov/ Montana and North Dakota. In total, federal warrant issued in this case. 140 businesses. The payroll tax services usao-co/pr/parker-cpa-sentenced-125-years- agents arrested 11 individuals in February included the preparation of Forms 941, Em- prison-wire-fraud-and-aiding-and-assisting- 2016. All have pleaded guilty and Press Release – https://www.justice.gov/ ployer’s Quarterly Federal Tax Returns, and preparation been sentenced. usao-co/pr/colorado-man-sentenced-prison- an ACH Deduction Report listing the amount conspiring-file-fraudulent-tax-refund-claims of payroll taxes to be withdrawn from the Leader of DTO Loren “Mama” Toelle Sentenced to Prison Press Release – https://www.justice.gov/ client’s bank account and paid to the IRS. Iley methamphetamine in Idaho, Washington, usao-id/pr/leader-drug-trafficking-organization-loren-mama-toelle-sentenced-prison caused the Form 941 tax return to be mailed to the client with a cover letter stating the On May 2, 2017, in Coeur d’Alene, Idaho, enclosed tax return is a copy for their records Loren Michelle Toelle was sentenced to 212 and that Iley pays the taxes for the client. months in prison followed by five years of Iley then prepared and submitted payroll supervised release for conspiracy to distrib- tax returns to the IRS on behalf of clients ute controlled substances and conspiracy On July 25, 2017, in Denver, Colorado, Don showing no payroll taxes due for a given tax to launder money. Toelle also forfeited her R. Iley was sentenced to 151 months in period. Iley knew when he submitted these interest in more than $2million of various On May 19, 2017, in Missola, Montana, prison, three years of supervised release and payroll tax returns that the clients did in assets, which were the profits of the criminal former Vann’s CEO George Manlove was ordered to pay $9.7 million in restitution. Iley fact owe payroll taxes. Then Iley initiated or actions or were intended to be used to sentenced to 63 months in prison after being pleaded guilty on April 18, 2017, to wire fraud caused others to initiate an ACH electronic promote the criminal actions. Toelle admitted convicted at trial in February of wire fraud, and aiding and assisting in the preparation fund transfer from the client’s bank account CPA Sentenced to Prison for Wire Fraud and Aiding and Assisting in the Preparation of False Tax Returns ‘The Wolf of Brooks Street:’ Former Vann’s CEO Sentenced to Prison IRS: Criminal Investigation Annual Report 2017 50 DENVER FIELD OFFICE CASE FILES bank fraud, money laundering and conspiracy for defrauding Vann’s. Manlove was accused Colorado Man Sentenced for Conspiracy to Defraud the United States of creating holding companies, buying filed federal income tax returns for the 2010 through 2013 tax years, knowing these returns did not reflect all his income for t buildings and leasing them to Vann’s without On September 19, 2017, in Denver, Colorado, board approval, as well as causing Vann’s to Jerald Williams was sentenced to 60 months pay for his executive MBA degree without in prison, three years of supervised release Press Release – https://www.justice.gov/ board approval, and using company money and ordered to pay $427,581 to the IRS for usao-co/pr/longmont-man-sentenced- on personal and family expenditures. The conspiracy to defraud the United States. conspiracy-defraud-united-states jury also decided Manlove must forfeit $2.4 Williams generated substantial income from million in property deemed ill-gotten gains of the interstate transportation and distribution his fraud conviction. A separate hearing will of controlled substances, specifically mari- be held to determine the amount Manlove juana and cocaine. Williams tried to conceal will owe for restitution. this income by structuring cash deposits into hose years. an account titled to his business Colorado Press Release – https://www.justice. Fire Services. Between 2010 and 2014, gov/usao-mt/pr/former-ceo-vann-s-inc- Williams and his co-conspirator structured sentenced-5-years-prison-0 approximately $858,495 into various bank accounts. Williams and his co-conspirator used the proceeds to purchase assets with cashier’s checks including a house in Tucson, along with a pool and other improvements, and a recreational vehicle and trailer. Williams IRS: Criminal Investigation Annual Report 2017 51 DALLAS FIELD OFFICE 1100 COMMERCE, DALLAS TX, 75242 | 214.413.5929 THE DALLAS FIELD Office covers the Northern and Significant cases worked by Dallas CI Special Eastern Districts of Texas and Oklahoma. Our agents Agents include: work a diverse mix of criminal investigations, which include tax fraud, identity theft, public corruption, narcotics, and terrorism investigations. Our agents hold Owner of Oklahoma City Employer Organization Sentenced for $22.8 Million Tax Scheme pivotal roles on the respective U.S. Attorney’s Office TEXAS priority task forces, including the Organized Crime and On May 30, 2017, in Oklahoma City, Oklahoma, Janis Drug Enforcement Task Force (OCDETF), the High Ann Edwards was sentenced to 36 months in prison, Intensity Drug Trafficking Area Task Force (HIDTA), the followed by three years of supervised release and Financial Crimes Task Force and the Joint Terrorism ordered to pay $22,720,242 in restitution to the IRS. Task Force (JTTF). According to court documents, Edwards was the sole owner of Corporate Resource Management(CRM) OKLAHOMA The Dallas Field Office has additional locations in the Inc., and several related companies with their principal following areas: place of business in Oklahoma City. These companies • Amarillo, TX • Lubbock, TX operated as "professional employer organizations," or • Beaumont, TX • Muskogee, OK "PEOs." The employees of small businesses became • Farmers Branch, TX • Oklahoma City, OK employees of one of Edwards’s entities, and their • Fort Worth, TX • Tulsa, OK payroll taxes were to be paid under the tax identi- • Irving, TX • Tyler, TX fication number of one of those entities. However, Edwards failed to pay substantial amounts of payroll taxes collected from small businesses that had “Special Agents with IRS Criminal Investigation are indispensable partners in fully investigating and prosecuting our most complex prosecutions in the Northern District of Texas,” said U.S. Attorney John Parker. “They are uniquely skilled at helping us unravel the most sophisticated financial schemes designed to facilitate and hide many other types of criminal activity, particularly fraud. The analytical and forensic capabilities of these agents have a direct and undeniable impact on the success of our cases and the reduction of crime in our communities.” — JOHN R. PARKER, U.S. ATTORNEY, NORTHERN DISTRICT OF TEXAS IRS: Criminal Investigation Annual Report 2017 52 DALLAS FIELD OFFICE CASE FILES contracted with one of the CRM-related entities. The 23 counts related to quar- San Angelo Restaurant Owner Sentenced for False Tax Returns terly payroll tax returns filed by Oklahoma Press Release – https://www.justice.gov/ false statements and representations in the usao-ndtx/pr/san-angelo-man-sentenced- tax returns that he submitted to increase the 36-months-federal-prison-filing-false- amount of tax refunds to which the taxpayer income-tax-returns would be entitled. Kincade could intercept Corporate Resource, Inc.; Missouri Corpo- On April 21, 2017, in Dallas, Texas, Ai Shu rate Resource, Inc.; and Texas Corporate Cheng was sentenced to 36 months in the government tax refunds for his own Resource, Inc., for various quarters in 2010 prison, one year of supervised release and benefit by printing the refund checks, not and 2011. Edwards regularly and intentionally ordered to pay $1,767,566 in restitution to giving them to his clients, and then cashing directed her own employees to alter these the IRS. Cheng pleaded guilty to two counts quarterly tax returns to reflect less payroll of failure to file and pay personal and employ- tax liability than what was actually owed. On ment taxes. According to court documents, January 6, 2017, Edwards pleaded guilty to Anderson County Man Sentenced for Tax Fraud/Identity Theft Scheme them with the assistance of two individuals Cheng filed his 2010 Form 1040, under- On January 26, 2017, in Tyler, Texas, Jef- Press Release – https://www.justice.gov/ tax evasion, including causing the filing of a reporting his total income. Cheng reported ferson Kincade was sentenced to 102 usao-edtx/pr/anderson-county-man-sen- federal payroll tax return she knew was false. a total income of $208,652 when his actual months in prison for filing fraudulent or false tenced-tax-fraudidentity-theft-scheme In a plea agreement, she agreed she would income was approximately $696,148, result- statements in a tax return, theft or conver- be held responsible in this criminal case for ing in a tax loss to the IRS of approximately sion of money, and aggravated identity theft. failing to pay between $3.5 million and $25 $165,108. Cheng filed his 2012 tax return and Kincade also agreed to a cash forfeiture of million in payroll taxes. again underreported his total income. Cheng $110,919. According to court documents, reported total income of $186,486 when his Kincade prepared tax returns for individuals Press Release – https://www.justice.gov/ actual income was approximately $600,976, at a tax preparation business, EZ Tax, in usao-wdok/pr/owner-oklahoma-city-em- resulting in a tax loss to the IRS of approxi- Palestine, and devised a scheme to prepare On August 17, 2017, in Dallas, Texas, Latonya ployer-organization-sentenced-three-years- mately $145,072. false tax returns, steal clients' refunds, and Lanette Carson and Smith Olsola Akin were use the clients' and other individuals' identi- sentenced to 135 and 120 months in prison, federal-prison-228 who were not associated with EZ Tax. Two Sentenced in Stolen Identity Theft and Money Laundering Scheme ties to accomplish the theft. Kincade made IRS: Criminal Investigation Annual Report 2017 53 DALLAS FIELD OFFICE CASE FILES respectively, for their role in a scheme to tors paid $1,184,950 from these accounts to ing. Rivas-Estrada admitted to conspiring steal personally identifiable information, use purchase used cars from wholesale dealer to commit money laundering as part of it to fraudulently obtain income tax refunds, auctions in Dallas County. Between January a methamphetamine drug operation. He and then launder those funds. According to 2012 and January 2015, the defendants and also admitted to providing others with U.S. court documents, in October 2016 Carson their conspirators exported approximately currency and wiring money, through a money was convicted for conspiracy to commit theft 279 used cars to Nigeria. remitter business, to Mexico, knowing it was from drug proceeds. This sentence is related of public funds, access device fraud and wire fraud, aggravated identity theft, conspiracy to Press Release – https://www.justice.gov/ to the multi-defendant OCDETF Investigation commit money laundering, money laundering usao-ndtx/pr/two-sentenced-stolen-identity- Operation Siquiendo El Dinero. and wire fraud. Akin pleaded guilty to one theft-and-money-laundering-scheme count of conspiracy to commit money laundering. Carson and Akin, along with other conspirators, were involved in a scheme in which they filed false tax returns using stolen identities, some of which belonged to prison- Texas Man Sentenced for Conspiring to Commit Money Laundering ers. The co-conspirators converted the tax refunds from debit/Green Dot cards into cash On January 3, 2017, in Sherman, Texas, and cashier's checks using phony company Jonathan Rivas-Estrada was sentenced to bank accounts. They used the illegal 420 months in prison and returned to the proceeds to purchase vehicles that they then custody of the U.S. Marshal. In August shipped to Nigeria. Between May 2013 and 2016, Rivas-Estrada entered a guilty plea May 2014, the defendants and their conspira- to charges that included money launder- IRS: Criminal Investigation Annual Report 2017 54 SAN ANTONIO FIELD OFFICE 601 NW LOOP 410, STE 290, SAN ANTONIO TX, 78216 | 210.841.8522 THE SAN ANTONIO Field Office covers over 93,000 square miles and consists of the Western Judicial San Antonio Businessman Sentenced to Prison for Estimated $5.3 Million Tax and Wire Fraud Scheme District of Texas. It covers the largest border area in the TEXAS country for one state and is home to the El Paso Intel- On November 17, 2016, in San Antonio, Texas, Robert ligence Center (EPIC). Each corner of The field office Warren Scully, former owner of San Antonio-based is home to several military institutions, which results in Gourmet Express, LLC, was sentenced to 180 months various investigations involving Military Contract Fraud. in prison, three years of supervised release and ordered We are home to one of the busiest Organized Crime to pay $1,206,539 restitution to the IRS, plus a $5,000 Drug Enforcement Task Force (OCDETF) regions in the fine for his role in an estimated $5.3 million tax and country that has resulted in us pioneering innovative wire fraud scheme. From April 2001 until July 2009, investigative and seizure techniques in cases involving Scully and others conspired to defraud the IRS by kleptocracy and the forfeiture of quarter horses used hiding earned taxable income generated by his frozen to launder narcotic proceeds. Because Austin is also food business. Scully and others used intermediary home to the IRS Service Center where international tax companies in Thailand to provide shrimp and other returns are filed, we have a special venue for interna- ingredients at an inflated cost to Gourmet Express, tional tax crimes. In addition, we work a diverse mix of thereby also defrauding his co-owners. Scully and criminal investigations including tax, OCDETF, money others used the proceeds generated from the inflated laundering and public corruption. costs for personal expenses and failed to disclose that income to the IRS. The San Antonio Field Office has additional locations in Press Release – https://www.justice.gov/usao-wdtx/pr/ the following areas: • Austin, TX • Waco, TX • El Paso, TX san-antonio-businessman-sentenced-prison-estimated53-million-tax-and-wire-fraud-scheme Significant cases worked by San Antonio CI Special Agents include: IRS: Criminal Investigation Annual Report 2017 55 SAN ANTONIO FIELD OFFICE CASE FILES Texas Businessman Sentenced for Defrauding Personal Injury Clients, Tax Evasion and Bankruptcy Fraud money from the personal injury clients by failing to pay monies owed to clients under settlement agreements or to pay obligations Texas Man Sentenced for Filing False Tax Returns and Corruptly Endeavoring to Impede the Internal Revenue Laws for medical treatment and physical therapy IRS. On these fraudulent returns, he underreported his income for tax years 2004, 2007 and 2008. In addition, between 1998 and 2014, Antolik attempted to obstruct the ad- On April 4, 2017, in San Antonio, Texas, after committing to do so. To carry out this On October 28, 2016, in Austin, Texas, Victor ministration of the Internal Revenue laws by Elpidio Gongora (also known as Pete scheme, Gongora collected the proceeds of Antolik was sentenced to 72 months in attaching altered Forms W-2 and 1099 to his Gongora) was sentenced to 48 months in fraudulently endorsed personal injury settle- prison following his conviction for filing false tax returns, providing false information to his prison, three years of supervised release ment checks and hid from the attorneys his tax returns and attempting to impede the accountant that was used to prepare corpo- and ordered to pay $3,490,000 restitution failure to pay clients entitled to settlement administration of the Internal Revenue laws. rate and individual income tax returns on his for a scheme to defraud personal injury proceeds. In 2013, Gongora and his wife filed Antolik owned and operated a commercial behalf, using nominees to conceal income clients, evading payment of more than for Chapter 7 Bankruptcy but Gongora failed janitorial business with locations in Austin, and assets, as well as committing other $1.6 million in taxes and attempting to hide to disclose he owned personal assets that San Antonio and Houston, Texas, under a fraudulent acts. In addition to the prison term assets from the bankruptcy trustee. On included a vehicle, boats and real property. In variety of business names, including Diversi- imposed, Antolik was also ordered to serve July 28, 2016, Gongora pleaded guilty to addition, Gongora also admitted he willfully fied Building Services Inc., DBS Services one year of supervised release and to pay conspiracy to commit mail fraud, bankruptcy attempted to evade paying over $1.6 million Inc., Partners in Cleaning, PIC Building restitution to the IRS of $916,358. fraud and tax evasion. Gongora, aided by in taxes, penalties and interest owed to the Services and BSI Industries. Antolik also his co-defendants, Rosa Ramirez, Juan IRS for calendar years 2003 through 2005 earned income as a real estate agent, real Press Release – https://www.justice.gov/ Rodriguez and Ronald Higgins, operated and 2007 through 2013. estate broker and property manager. Antolik opa/pr/texas-man-sentenced-prison-filing- earned a portion of his real estate income false-tax-returns-and-corruptly-endeavoringimpede-internal the law offices of several personal injury attorneys in the city of San Antonio and Press Release – https://www.justice.gov/ through his companies SGN Realty Inc. and elsewhere in Texas, Arkansas and New usao-wdtx/pr/san-antonio-businessman-sen- Signature Realty Services. Antolik submitted Mexico. Gongora admitted that he stole tenced-federal-prison-defrauding-personal- false individual income tax returns to the injury-clients-tax IRS: Criminal Investigation Annual Report 2017 56 SAN ANTONIO FIELD OFFICE CASE FILES Seven Members of South Texas Family Sentenced for Money Laundering for Drug Cartels in Mexico regarding a drug trafficking and money laundering conspiracy occurring in south Texas, central Texas and Oklahoma. According to the indictment, since January 2000, the On May 24, 2017, in San Antonio, Texas, defendants conspired to engage in financial seven members of the Villarreal Arelis family transactions using proceeds derived from in south Texas were sentenced from 18 importing, receiving, concealing, buying and/ months to eight years in federal prison for or selling cocaine; and transporting monetary their role in laundering drug money through instruments to locations outside of the real estate, commercial fronts and horse United States to conceal the source [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3Ac8216b9cbf087ee4. Public record. Not legal advice.