60-year-old Texas man, 2 family members bilked IRS out of $18 million in tax fraud case
A 60-year-old man and two members of his family have been found guilty of creating fraudulent tax returns in San Angelo that cost the IRS about $18 million, according to the U.S. Attorney’s Office for the Northern District of Texas.
Federal authorities identified the suspects as Hugo Cesar Granados, manager of Columbia Tax Service, his adult daughter, Blanca L Granados, and adult son, Hugo Alberto Granados.
An employee, Saul Garcia-Soto, also was indicted in the case, but he pleaded guilty on July 12 to a federal charge of assisting in the preparation and presentation of false documents.
A federal jury convicted the Granados family on Friday on conspiracy to defraud the United States and multiple counts of aiding in the preparation and presentation of false documents, announced U.S. Attorney for the Northern District of Texas Chad E. Meacham in a news release on Tuesday.
All three family members were immediately remanded into the custody of the U.S. Marshals Service after the jury verdict.
“Columbia Tax Service doctored clients’ tax returns to inflate clients’ refunds and line the Granadoses’ pockets. Such blatant fraud is an affront to all conscientious taxpayers,” Meacham said in the news release. “As is their right, the Granadoses opted for a trial by jury. We are proud to have obtained a guilty verdict. I’m thankful to the IRS Criminal Investigation agents who ran this case to ground and to the members of the jury, who gave three days of their lives to bring these defendants to justice.”
Hugo Cesar Granados faces up to 14 years in federal prison; Blanca Granados faces up to 14 years; and Hugo Alberto Granados faces up to 17 years. Their sentencing date has not yet been set.
Saul Garcia-Soto faces up to three years and is scheduled to be sentenced in October.
“When Hugo Cesar Granados, along with his daughter and son, used their family tax return preparation business, Columbia Tax Service, to file false tax returns and make a fast buck, they underestimated the special agents of IRS Criminal Investigation,” said IRS-Criminal Investigation Special Agent in Charge Christopher J. Altemus Jr., of the Dallas Field Office. “Let these guilty verdicts be a reminder to others seeking to enrich themselves illegally — IRS CI special agents will find you; they will uncover your fraudulent schemes and hold you accountable.”
During the trial last week, prosecutors introduced evidence that the elder Granados and his co-conspirators falsified their clients’ individual income tax returns (Forms 1040) in order to inflate the clients’ tax refunds.
Federal authorities said the family routinely fabricated clients’ Schedule A, itemized deductions, and Schedule C, sole proprietorship profit and loss statements, claiming the taxpayer owned a business when no such business existed, claiming unreimbursed employee expenses such as travel and per diem, and claiming business expenses related to maintenance, utilities, supplies, insurance, and professional services that were never incurred or grossly inflated.
Testimony adduced at trial showed that Columbia Tax Service claimed more than $900,000 in income in 2015 and more than $1.3 million in income in 2016.
Garcia-Soto testified, saying that in 2016, Columbia Tax employees met with Hugo C. Granados because taxpayers were not receiving their refunds from the IRS. When questioned, Granados asked the employees if they thought the company was doing something illegal. Garcia-Soto said that he, Blanca Granados, and Hugo A. Granados all replied that they thought Columbia Tax was doing something illegal. In response, Hugo C. Granados just smiled and turned back to his computer.
In a Skype chat introduced at trial, Blanca Granados wrote to a co-worker: “Fraud is ridiculous here yo . . . I swear.”
Ten taxpayer clients also testified. Two women admitted that they did not operate daycare centers as stated in their returns, but rather cared for family members for free, while a man admitted that his wife did not operate a retail business that generated $19,000 in expenses as stated on the couple’s return.
Prosecutors also introduced into evidence the company’s “tax preparation manual,” a handbook that outlined exactly how to commit fraud.
Jurors concluded that the San Angelo tax preparers submitted numerous fraudulent tax returns. Analysts put the estimated tax loss at roughly $18 million for tax years 2013-17.
