Mexican National Gets 6 Years in Prison for Leading $25 Million Tax Fraud Scheme

FRESNO, Calif. - Miguel Martinez, 39, a Mexican national residing in Bakersfield, was sentenced today to six years in prison for leading a $25 million fraud against the IRS, U.S. Attorney Phillip A. Talbert announced.

"Martinez sought to steal millions in taxpayer funds meant to provide services for us all," said U.S. Attorney 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."

"Miguel Martinez's involvement in this complex tax scheme ultimately earned him six years in prison. IRS-CI special agents worked extremely hard day in and day out to dismantle this group of bad actors who preyed on innocent, hardworking taxpayers, and the United States government," said IRS Criminal Investigation Acting Special Agent in Charge Michael Mosley. "Today's sentencing is a true reflection of the collaborative commitment between IRS-CI and the U.S. Attorney's Office to protect the people in our communities, uphold a fair tax system, and bring justice to light."

According to court records, from November 2019 through June 2023, Martinez led a scheme to file hundreds of fraudulent tax returns that claimed millions of dollars in refunds. Martinez used stolen identities to create fake businesses and report phony wage and withholding information for the businesses to the IRS. He then submitted hundreds of individual income tax returns to the IRS in the names of still other individuals whose identities he had also stolen, claiming that those individuals worked for the fake businesses and were owed tax refunds based on the phony wage and withholding information that had been reported.

Martinez used several people to help him carry out the scheme. This included Martinez's co-defendant, Victor Cruz, who was a tax return preparer in Bakersfield and is alleged to have helped to file some of the fraudulent tax returns. It also included a former IRS tax examiner who gave Martinez advice on how to avoid the IRS' fraud detection systems. In exchange, Martinez paid them thousands of dollars and took them out to lavish dinners.

As a result of the scheme, the IRS paid out $2.3 million in tax refunds. When federal agents arrested Martinez and searched his three homes, he was found with $750,000 in fraudulent tax refund checks, identification cards for more than 200 individuals, and multiple firearms that he could not lawfully possess due to his illegal status in the United States.

Importantly, Martinez lied to government agents when he was first interviewed in the beginning of the investigation. Martinez initially said that he had no knowledge of, or involvement in, tax preparation for others, and that he just sold gold and ran a party rental business. He also said that he did not know others who were involved in the scheme and that he did not have any relevant text messages or other evidence. Those statements, however, were later contradicted by his conviction in this case.

This case is the product of an investigation by IRS Criminal Investigation. Assistant U.S. Attorneys Joseph Barton and Henry Carbajal III are prosecuting the case.

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

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