MINNEAPOLIS-A federal indictment unsealed recently charges a couple with defrauding the Internal Revenue Service (“IRS") by filing false individual income tax returns that claimed refunds to which they were not entitled. The indictment, which was filed under seal on June 18, 2013, charges Mark Allen Garcia and Patricia Ann McQuarry with one count of conspiracy to defraud the United States and two counts of making false claims. The indictment was unsealed following the defendants’ initial appearance in federal court on June 19. Earlier today, both were arraigned.
The indictment alleges that between July 2008 and November 2009, the married defendants conspired to obtain money by filing false U.S. Individual Income Tax Returns for tax years 2007 and 2008. Those allegedly fraudulent returns claimed unentitled refunds and, in one instance, resulted in the IRS paying a false refund of approximately $226,000.
For tax years 2007 and 2008, both defendants filed self-prepared tax returns as “married filing separately." In her return, McQuarry allegedly stated that she had received more than $127,000 in original issue discount (“OID") income from several financial institutions, and that the entire amount had been withheld and paid, when in fact, none of the listed financial institutions had paid McQuarry any OID income. By creating false withholdings in the amount of her claimed OID income, McQuarry manufactured a large federal refund.
In addition, both defendants allegedly included false interest income from various financial institutions on their tax returns. In fact, only one of the listed institutions paid the defendants any interest income at all. By creating the false withholdings, both defendants manufactured large tax refunds for tax years 2007 and 2008.
For his part, Garcia allegedly applied for and obtained a “Refund Transfer" from a financial institution in connection with his 2007 tax return. The IRS disbursed Garcia’s federal tax refund, which he allegedly knew was false, to the financial institution, which transferred the refund to his bank account.
As a result of the conspiracy, the defendants allegedly made more than $500,000 in false claims to the IRS.
If convicted, the defendants face a potential maximum penalty of ten years in prison for conspiracy and five years on each count of making a false claim. Any sentence would be determined by a federal district court judge.
This case is the result of an investigation by the IRS-Criminal Investigation. It is being prosecuted by Assistant U.S. Attorney Kimberly A. Svendsen.
An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial. Per U.S. Department of Justice policy, the U.S. Attorney’s Office is not allowed to provide the age and city of residence for defendants charged in criminal tax cases.
Source: U.S. Department of Justice, Office of the United States Attorneys
