17 indicted in alleged $1.7M COVID relief tax fraud scheme

SAN DIEGO (FOX 5/KUSI) — According to the San Diego County District Attorney, more than a dozen alleged gang members are behind bars after investigators uncovered a tax fraud scheme involving COVID-19 relief funds.

Prosecutors say the scheme, which exploited pandemic relief measures, might have gone undetected if not for a homicide investigation.

District Attorney Summer Stephan identified 31-year-old Stephen Pittman Jr. as the mastermind behind the operation, which reportedly involved filing fraudulent tax claims totaling $2.2 million. Of that, $1.7 million was successfully deposited into the defendants’ bank accounts.

“Pittman recruited 16 others and assisted them in filing the fraudulent tax claims,” Stephan said, adding that he took a large percentage of the refunds for himself. The group allegedly committed the crimes between April and October 2022, with some of the money being used to buy luxury items, including diamond-encrusted jewelry.

According to Stephan, the scheme involved manipulating IRS Form 7202, which allows self-employed individuals to claim credits for sick leave and family leave under COVID-19 relief. The form’s system limited claims to a maximum of 60 days, but the suspects allegedly inflated the number to as much as 15,000 days in some cases.

“Their manipulation of the system allowed them to claim hundreds of thousands of dollars in relief money,” Stephan said.

The fraud was uncovered during an investigation into the 2022 murder of Tre’Von Stewart Jordan in Lincoln Park. Homicide detectives noticed one of their suspects had received a large IRS refund, which led them to involve the San Diego Police Department’s economic crimes unit and the district attorney’s office in a fraud investigation that lasted 10 months.

Assistant Chief Paul Connelly said, “Due to the enormity of the situation, our homicide unit reached out to the economic crimes unit to take the lead in this investigation.”

The district attorney’s office hopes that uncovering this fraud will lead to improvements in the IRS system to prevent similar schemes in the future.

Sixteen of the 17 defendants are currently in custody. If convicted, they could face sentences ranging from 16 months to life in prison.

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