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Twelve illegal aliens have pleaded guilty to swindling taxpayers out of more than $13 million in a major, four-year scheme in which tax firms catering to Hispanics claimed more than $22 million in fraudulent tax credits or deductions.

Acting U.S. Attorney Kevin F. McDonald for the District of South Carolina told the Greenville News, “This is the largest tax fraud case that I’m aware of ever occurring in the district of South Carolina. This is an extraordinarily serious, large case.”

McDonald told the newspaper that two tax preparation companies, Seguros Internacionales, in Spartanburg and Forest City, N.C., and Poz Servicios Para Hispanos, in Boiling Springs, and associated individuals filed at least 10,000 federal income tax returns and claimed more than $22 million in refunds. The two firms are said to have been shut down.

According to the report, nine illegals pleaded guilty to conspiracy to commit mail fraud and to entering the U.S. without authorization. They are Edgar Carrillo-Borjas, Miguel Angel Carrillo-Borjas, David Hernandez-Juarez, Ariana Canseco-Orozco, Maribel Juan-Orozco, Cristina Sanchez-Perez, Juan Carlos Carrillo-Roy, Carlos Carrillo-Rodriguez, all from Mexico, and Luis Gerardo Mora-Vargas, from Costa Rica.

A tenth illegal alien, Omar Maldonado-Cardenas, of Mexico, pleaded guilty to mail fraud and illegal entry. Senior U.S. District Judge G. Ross Anderson Jr. accepted the pleas, and the defendants will soon face sentencing.

McDonald said at least 20 people were involved in the tax fraud ring. Most of the bogus tax credit claims involved alleged child care-related expenses. The Internal Revenue Service paid out $13 million in refunds before investigators spotted the fraudulent returns.

Two others, Juan Manuel Galban Ortega and Rodolfo Magana Escoto, both from Mexico, confessed to burning records from Seguros Internacionales, the Greenville News reported. They pleaded guilty in federal court to obstruction of justice in February.

The 12 convicted defendants face maximum sentences of five to 20 years. McDonald said they will be deported upon completion of their sentences.

The case is being investigated by the IRS, the U.S. Postal Inspection Service and U.S. Immigration and Customs Enforcement. Federal authorities made at least five more arrests last week. Yolanda Poz of Boiling Springs, Lisa Mendoza of Spartanburg, Teresa Bravo of Pacolet and Ashley Moore of Forest City and another unidentified person have been charged with conspiracy to commit mail fraud.

However, tax-fraud schemes are not a new development in the illegal-alien community.

Edwin Rubenstein, president of ESR Research, business researcher, financial analyst and economics journalist, released a report last year documenting abuse of the Earned Income Tax Credit, or EITC. The EITC is a refundable credit that can be collected by low-income workers who pay no income taxes.

Rubenstein’s 55-page report is titled “The Earned Income Tax Credit and Illegal Immigration: A Study in Fraud, Abuse, and Liberal Activism.” It was published in “The Social Contract,” a quarterly journal of public affairs.

“At a cost of more than $44 billion per year, EITC spending dwarfs that of the traditional welfare program – Temporary Assistance for Needy Families (TANF) – and food stamps combined,” Rubenstein explains. “More than 23 million households currently receive the credit.”

He added, “Immigrants accounted for about 13 percent of the U.S. population in 2008 but receive an estimated 26 percent of EITC benefits – about $12 billion.”

EITC proponents claim it is an effective anti-poverty program that helps the “working poor.” However, Rubenstein explains that the program is dominated by fraud.

“Year after year about one-third of all EITC returns are based on illegal multiple returns, phony Social Security numbers or claims of nonexistent children or spouses,” he wrote. “A disproportionate share of illegal alien households receive the benefit.”


2007 IRS poster advertising opportunity to get an advance on the Earned Income Tax Credit. These posters are available in Spanish as well.

Rubenstein said the incentive to cheat on taxes is huge because a worker with two children who earns less than $38,646 could receive an EITC payout of up to $4,824 in 2008. Another tax credit – the Additional Child Tax Credit, or ACTC – would pay the same person another $1,126 if their income was less than $16,000.

“For most families in this income bracket, the EITC check is the largest single sum of money they will receive in the course of the year,” Rubenstein states.

While EITC recipients are required to have valid Social Security numbers, he notes, “In practice, identity theft, counterfeit Social Security cards and other scams easily nullify such restrictions. EITC outreach groups … offer tips as to how immigrants can receive EITC payments for years in which they did not have a valid SSN. As a result, illegal aliens are estimated to receive the EITC at even greater rates than their legal counterparts.”

He writes that illegal aliens often obtain fraudulent Social Security cards by targeting young children and infants. The numbers are stolen from medical documents and used to file returns.

“The fraud can go undetected for years – until the child looks for a job as a teenager,” he explained.

Rubenstein adds that the ACTC is even available to illegals without Social Security numbers. They simply use an Income Taxpayer Identification Number, or ITIN, which he says the “IRS is only too happy to provide.”

According to the report, the General Accounting Office has reported that the IRS estimates between 27 and 32 percent of EITC dollars are collected fraudulently.


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