Justice Department and IRS Announce Nationwide Surge Targeting $490 Million in Tax Fraud

The U.S. Department of Justice’s National Fraud Enforcement Division and the Internal Revenue Service's Criminal Investigation unit announced prosecutorial actions against 76 defendants across the country following a nationwide enforcement initiative. Running from early September through the announcement, the department's first "National Tax Enforcement Surge" targeted alleged and proven tax fraud schemes involving an estimated intended revenue loss to the federal government exceeding $490 million.

The coordinated effort involved the Fraud Division's Tax Section alongside 35 U.S. Attorneys' Offices. According to the Justice Department, federal prosecutors returned 23 actions containing new charges against 31 defendants, accounting for an estimated intended loss of more than $350 million. In parallel, authorities engaged in approximately 39 other enforcement actions—including trials, guilty pleas, and sentencings—involving 45 defendants tied to an estimated intended loss of nearly $140 million.

The enforcement actions encompass a wide variety of schemes, including employment tax evasion, fraudulent trust operations, and improper tax credit claims:

• Texas: Four individuals were indicted in the Northern District of Texas for promoting an illegal tax shelter. The defendants allegedly marketed a fraudulent trust scheme that sheltered more than $1.5 billion in income, resulting in an estimated tax loss to the IRS of over $200 million.
• Georgia: Three Mexican citizens were indicted in the Northern District of Georgia on charges including mail and wire fraud conspiracy. The indictment alleges they used identification documents to secure Individual Taxpayer Identification Numbers (ITINs), filed fraudulent returns, and cashed more than 16,000 U.S. Treasury refund checks totaling over $74 million.
• North Carolina: Nejlai Mitchell was sentenced in the Eastern District of North Carolina to 60 months in prison for conspiring to file false tax returns seeking fraudulent refunds under COVID-19 sick and family leave tax credits. The scheme sought roughly $23.9 million, with the IRS paying out more than $13.8 million. Five other return preparers received sentences ranging from six to 26 months.
• New York: Two men were charged in the Eastern District of New York with filing false tax returns for purported trusts, allegedly seeking over $21 million in fraudulent refunds and receiving more than $1 million.
• Ohio: Sherita Booker was charged in the Northern District of Ohio for allegedly preparing fraudulent returns for hundreds of clients seeking $11.8 million, using false claims related to COVID-19 credits, fuel taxes, and prior-year overpayments.
• Arkansas and Kansas Sentencings: In Arkansas, trucking company owner Marty Allen Linville was sentenced to 20 months in prison and ordered to pay $3.8 million in restitution for failing to pay over employee trust fund taxes. In Kansas, Missouri businessman Ephantus Mwangi received a 51-month prison sentence for failing to pay employment taxes while spending over $200,000 on luxury vehicle payments.
• Other Indictments: Prosecutors also filed indictments in Maryland, New Jersey, and Florida addressing various counts of employment tax non-payment, personal expense diversion, and failure to file tax returns.

Justice Department and IRS officials stated that the surge reflects ongoing multi-agency efforts to investigate tax evasion and prosecute those who submit fraudulent claims to the U.S. Treasury.

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