Identity Theft Tax Fraud Scheme Cheats IRS Out of $2.89 Million

A Bronx, New York resident admitted his role in a phony tax return scheme that cost the government $2.89 million. The scheme relied on stealing people’s identities.

Yerfri Castillo pleaded guilty to one count of conspiracy to steal government funds, one count of theft of government funds and one count of aggravated identity theft, according to a press release issued by the U.S. Attorney’s Office.

The scheme went like this: Castillo and others obtained stolen personal identifying information, including names and Social Security numbers. They then used that information to file fraudulent federal tax returns. Victims hailed from New Jersey, Puerto Rico and elsewhere. Once he received the refunds, he used the proceeds for his own benefit, according to the office of U.S. Attorney Paul Fishman.

According to a story in, two other men, Jhan Luis Mejia Marcelino and Odanys Orlando Rojas, previously pleaded guilty and are awaiting sentencing in the case, which was investigated by the Internal Revenue Service’s Criminal Investigation division.

“Prosecutors say Castillo faces up to five years in prison on the conspiracy charge, 10 years on the theft of government funds charge, and a $250,000 fine or twice the gain or loss on each,” reports.

Castillo now faces a mandatory two-year prison sentence on the aggravated identity theft charge, as well as up to five years in prison for the conspiracy charge and 10 years on theft of government funds charge. He also could be slapped with a $250,000 fine or twice the gain or loss on each, according to the statement from the U.S. Attorney’s Office.

Identity theft victims who have had a fraudulent return filed on their behalf often are unaware it has happened until they efile a return and discover that a “return already has been filed using your SSN. Or, the IRS may send you a letter saying we have identified a suspicious return using your SSN,” according to

Warning Signs

What do the warning signs of possible tax-related identity theft include? The IRS or your tax provider might contact about:

  • More than one tax return filed using your SSN.
  • You owing additional tax, refund offset or have had other collection actions taken against you for a year you did not file a tax return.
  • IRS records indicate you received wages or other income from an employer for whom you did not work.

Visit this page to learn more about the steps you should take if you are a victim.


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