Tax Preparation

Former Proprietor Of Tax Preparation Enterprise Convicted Of Fraud, Identification Theft, And Cash Laundering Crimes | USAO-SDNY

Damian Williams, the United States Attorney for the Southern District of New York, announced that ARIEL JIMENEZ, a/k/a “Melo,” was convicted today following a two-week jury trial before the Honorable Sidney H. Stein. As the jury found, between in or about 2009 through in or about 2015, JIMENEZ, the owner of a tax preparation business in the Bronx, New York (the “Business”), sold the stolen identities of minors to his customers so that his customers could claim inflated tax refunds. The jury convicted JIMENEZ of four counts: conspiracy to defraud the United States, conspiracy to commit wire fraud, aggravated identity theft, and money laundering.

US Attorney Damian Williams said: “Ariel Jimenez’s tax and identity theft crimes cruelly forced his victims to endure bureaucratic snafus and agonizing delays for their much-needed tax refunds. Jimenez now stands convicted, and now faces years in federal prison. Today’s conviction is a strong reminder that tax fraud results in real-world victims and real-life consequences.”

According to the Indictment, evidence presented during trial, court documents, and statements in open court:

Beginning in or about 2007, JIMENEZ founded the business. From the outset, JIMENEZ obtained hundreds of stolen minor identities and, working with his co-conspirators, sold those identities, as fraudulent dependents, to his customers for between $1,000 and $1,500 in cash. JIMENEZ personally received $1,000 in cash for every identity sold. JIMENEZ and his co-conspirators callously referred to these stolen identities as “pollitos,” meaning little chickens. In some years, JIMENEZ sold more than a thousand identities, resulting in personal profits to him of more than $1 million per year. In addition, JIMENEZ also made hundreds of thousands of dollars every year in the tax fees that his business charged just to prepare fraudulent tax returns. In return for their participation in this scheme, the customers received thousands of dollars in inflated tax refunds.

JIMENEZ’s use of stolen identities harmed the actual caretakers of the fraudulently claimed children. In some cases, the people actually taking care of these children had much-needed tax refunds delayed and were required to prove their actual connection to their own dependent children.

JIMENEZ used the profits from his tax preparation business to acquire millions of dollars of real estate, in addition to funding his lavish lifestyle. By his own admission, JIMENEZ spent more than $5.5 million on the business’s proceeds on properties in the United States and abroad, jewelry, cars, and gambling. In or about March 2016, JIMENEZ transferred several properties purchased with fraud proceeds to his parents, for little to no value, in order to conceal the criminal source of the funds used to purchase the properties.

One of the primary credits claimed by JIMENEZ and the Business for their clients was the Earned Income Tax Credit (“EITC”). The EITC is intended to provide tax relief or tax refunds for qualifying low and moderate income working individuals and families. Between tax years 2009 and 2014, the Business filed approximately 14,199 personal income tax returns claiming the EITC. In total, these returns claimed approximately $37,910,246 in the EITC alone. During these years, between 54% and 62% of all personal income tax returns filed by the Business claimed the EITC. By comparison, approximately 41% of all returns filed by tax preparers in the Bronx and approximately 20% of all returns filed by tax prepares nationwide claimed the EITC.

JIMENEZ was first arrested in November 2018, along with eight of his co-conspirators. JIMENEZ is the last of the defendants charged to be convicted. The remaining eight defendants have pleaded guilty to fraud and other offenses.

* * *

ARIEL JIMENEZ, 38, of Bronx, New York was convicted at trial of one count of conspiracy to defraud the United States with respect to tax returns, which carries a maximum sentence of 10 years; conspiracy to commit wire fraud, which carries a maximum sentence of 20 years; aggravated identity theft, which carries a mandatory consecutive sentence of 2 years; and money laundering, which carries a maximum sentence of 20 years. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge. JIMENEZ is scheduled to be sentenced by Judge Stein on June 6, 2022.

Mr. Williams praised the outstanding work of the IRS-Criminal Investigation.

This case is being handled by the Office’s General Crimes Unit. Assistant US Attorneys Daniel G. Nessim, Ni Qian, Marguerite Colson, and Dina McLeod are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that ARIEL JIMENEZ, a/k/a “Melo,” was convicted today following a two-week jury trial before the Honorable Sidney H. Stein. As the jury found, between in or about 2009 through in or about 2015, JIMENEZ, the owner of a tax preparation business in the Bronx, New York (the “Business”), sold the stolen identities of minors to his customers so that his customers could claim inflated tax refunds. The jury convicted JIMENEZ of four counts: conspiracy to defraud the United States, conspiracy to commit wire fraud, aggravated identity theft, and money laundering.

US Attorney Damian Williams said: “Ariel Jimenez’s tax and identity theft crimes cruelly forced his victims to endure bureaucratic snafus and agonizing delays for their much-needed tax refunds. Jimenez now stands convicted, and now faces years in federal prison. Today’s conviction is a strong reminder that tax fraud results in real-world victims and real-life consequences.”

According to the Indictment, evidence presented during trial, court documents, and statements in open court:

Beginning in or about 2007, JIMENEZ founded the business. From the outset, JIMENEZ obtained hundreds of stolen minor identities and, working with his co-conspirators, sold those identities, as fraudulent dependents, to his customers for between $1,000 and $1,500 in cash. JIMENEZ personally received $1,000 in cash for every identity sold. JIMENEZ and his co-conspirators callously referred to these stolen identities as “pollitos,” meaning little chickens. In some years, JIMENEZ sold more than a thousand identities, resulting in personal profits to him of more than $1 million per year. In addition, JIMENEZ also made hundreds of thousands of dollars every year in the tax fees that his business charged just to prepare fraudulent tax returns. In return for their participation in this scheme, the customers received thousands of dollars in inflated tax refunds.

JIMENEZ’s use of stolen identities harmed the actual caretakers of the fraudulently claimed children. In some cases, the people actually taking care of these children had much-needed tax refunds delayed and were required to prove their actual connection to their own dependent children.

JIMENEZ used the profits from his tax preparation business to acquire millions of dollars of real estate, in addition to funding his lavish lifestyle. By his own admission, JIMENEZ spent more than $5.5 million on the business’s proceeds on properties in the United States and abroad, jewelry, cars, and gambling. In or about March 2016, JIMENEZ transferred several properties purchased with fraud proceeds to his parents, for little to no value, in order to conceal the criminal source of the funds used to purchase the properties.

One of the primary credits claimed by JIMENEZ and the Business for their clients was the Earned Income Tax Credit (“EITC”). The EITC is intended to provide tax relief or tax refunds for qualifying low and moderate income working individuals and families. Between tax years 2009 and 2014, the Business filed approximately 14,199 personal income tax returns claiming the EITC. In total, these returns claimed approximately $37,910,246 in the EITC alone. During these years, between 54% and 62% of all personal income tax returns filed by the Business claimed the EITC. By comparison, approximately 41% of all returns filed by tax preparers in the Bronx and approximately 20% of all returns filed by tax prepares nationwide claimed the EITC.

JIMENEZ was first arrested in November 2018, along with eight of his co-conspirators. JIMENEZ is the last of the defendants charged to be convicted. The remaining eight defendants have pleaded guilty to fraud and other offenses.

* * *

ARIEL JIMENEZ, 38, of Bronx, New York was convicted at trial of one count of conspiracy to defraud the United States with respect to tax returns, which carries a maximum sentence of 10 years; conspiracy to commit wire fraud, which carries a maximum sentence of 20 years; aggravated identity theft, which carries a mandatory consecutive sentence of 2 years; and money laundering, which carries a maximum sentence of 20 years. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge. JIMENEZ is scheduled to be sentenced by Judge Stein on June 6, 2022.

Mr. Williams praised the outstanding work of the IRS-Criminal Investigation.

This case is being handled by the Office’s General Crimes Unit. Assistant US Attorneys Daniel G. Nessim, Ni Qian, Marguerite Colson, and Dina McLeod are in charge of the prosecution.

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