Mexican National Sentenced for Leading $25M Tax Fraud Scheme

Miguel Martinez was sentenced to six years in prison for orchestrating a $25 million IRS fraud using stolen identities.Photo byEmiliano BaronUnsplash

Miguel Martinez, 39, a Mexican national residing in Bakersfield, was sentenced to six years in federal prison today for leading a $25 million tax fraud scheme against the IRS, according to the U.S. Attorney's Office, Eastern District of California.

“Martinez sought to steal millions in taxpayer funds meant to provide services for us all,” said U.S. Attorney Phillip A. Talbert.

“Today’s sentence is fitting for someone who embodies such reckless disregard for the law. This office will continue our efforts to bring to justice those who would organize and lead such schemes.”

According to court records, from November 2019 through June 2023, Martinez led a scheme to file hundreds of fraudulent tax returns, claiming millions of dollars in refunds.

Martinez used stolen identities to create fake businesses and reported false wage and withholding information for those businesses to the IRS.

He then filed individual income tax returns in the names of others whose identities he had stolen, falsely claiming they worked for the fake businesses and were owed refunds based on the fraudulent information.

Martinez enlisted the help of several individuals, including his co-defendant Victor Cruz, a tax preparer in Bakersfield, who allegedly assisted in filing some of the fraudulent tax returns.

The scheme resulted in the IRS paying out $2.3 million in tax refunds.

When federal agents arrested Martinez and searched his three homes, they found $750,000 in fraudulent tax refund checks, identification cards for over 200 individuals, and multiple firearms, which Martinez was prohibited from possessing due to his illegal status in the U.S.

According to the DOJ, during the initial investigation, Martinez lied to federal agents, claiming he had no knowledge of tax preparation for others and only operated a gold-selling and party rental business.

He also denied knowing others involved in the scheme and claimed he had no relevant text messages or evidence. These statements were later disproved by his conviction in the case.

Cruz is awaiting trial. The charges against him are only allegations; he is presumed innocent until and unless proven guilty beyond a reasonable doubt.