$28M IRS Scam Leads To 6-Year Prison Sentence For Riverside County Man

RIVERSIDE COUNTY, CA — A Corona man was sentenced Monday to 6 years in federal prison for preparing and filing false tax returns for his clients, a scam that caused a tax loss to the IRS of at least $28 million, the Justice Department announced.

According to federal prosecutors, Salvador Gonzalez's scheme dates back to 2013 when operated Grace’s Lighthouse Resource Center, Inc., a Corona-based tax return preparation business.

During that time, on thousands of returns he prepared for clients, Gonzalez directed them to create a phony corporation and to title their homes, cars, and other assets in the name of that fake entity. Gonzalez then referred the clients to an associate who prepared the sham returns. The associate would provide the clients with a blank spreadsheet and request that they input their business expenses into it, prosecutors allege.

Under Gonzalez's direction, the clients would include personal expenses such as their mortgage payments, car payments, and utility bills. The associate would, in turn, use the spreadsheet to prepare the business tax returns, which inevitably would show a loss, according to prosecutors.

Gonzalez then prepared the clients’ individual income tax returns, which incorporated the fraudulent business losses and offset their income.

The "fabricated losses flowed through to the clients’ individual income tax returns and fraudulently reduced the amount of individual income taxes they paid," prosecutors said.

To further reduce the clients’ taxes owed to the IRS, Gonzalez also fabricated deductions on the personal returns, such as unreimbursed employee expenses, cash contributions to charity, and medical and dental expenses, according to prosecutors.

As a result of Gonzalez’s fraudulent return-preparation practices, his clients paid less taxes than they owed.

Gonzalez profited from his return-preparation business. Before 2019, he typically charged clients a flat fee of $500 per tax return. In 2019, he started charging clients 1% of their gross income as a fee for his services, prosecutors said.

In total, Gonzalez caused a tax loss to the IRS of at least $28 million, according to court documents.

Gonzalez pleaded guilty on June 17 to three counts of aiding and assisting in the preparation of false tax returns. He was sentenced by United States District Judge Jesus G. Bernal, who also ordered him to pay $403,908 in restitution.

It's not clear what happened to Gonzalez's clients.

"Taxpayers seeking a return preparer should remain vigilant against unscrupulous tax preparers," according to the Justice Department. "The IRS has information on its website for choosing a tax return preparer and has launched a free directory of federal tax preparers. The IRS also offers tips to recognize tax scams and fraud."

In the past decade, the Justice Department has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the U.S. Attorney’s Office’s website and the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page.

Consistent with Gonzalez's plea agreement, the U.S. Attorney’s Office – Tax Section filed a civil complaint against him. The complaint seeks to permanently prevent Gonzalez from ever preparing, assisting in, directing, or supervising the preparation or filing of federal tax returns, amended tax returns, or other related documents or forms for others.