A California man is charged with leading a tax fraud conspiracy in which hundreds of people claimed $763 million in refunds from the IRS - more than $10 million of which was actually paid out.
Ronald L. Brekke, 54, of Orange County, Calif., is accused of encouraging and helping others to prepare tax returns on the bogus theory that they could claim refunds equal to the amount of their debt and their credit card limits. Several were Canadian citizens who had never paid any U.S. income tax.
Assistant U.S. attorneys Tessa Gorman and Thomas Woods in Seattle said the IRS flagged the majority of fraudulent returns, but some got through. A federal indictment alleges that over the past two years, Brekke’s clients received tax returns of up to $491,000.
He persisted in the scheme, even after two of his clients were arrested on suspicion of theft of public money last year and another person e-mailed him a warning the FBI had issued about his fraud, prosecutors said.
Brekke appeared in U.S. District Court in Seattle for a detention hearing Wednesday. A magistrate judge ordered him released on electronic monitoring pending trial, despite a government request to keep him in custody.
His attorney, Barry Flegenheimer, insisted that Brekke did not believe what he was doing was unlawful and has no criminal history.
“He’s made no effort to hide what he was doing,” Flegenheimer said. “He’s made no effort to flee.”
The investigation began a year ago after two Canadians, Donald Mason and John Chung, opened bank accounts in Bellingham, in northwestern Washington, and deposited tax returns they received totaling more than $350,000 each. Mason and Chung were subsequently convicted, and the investigation revealed they had been following a scheme promoted by Brekke, prosecutors said.