COVID tax fraud: California man sentenced to 10 years for multimillion-dollar schemes
Quin Ngoc Rudin will spend 10 years in prison
A California man was sentenced Wednesday to a decade behind bars for multimillion-dollar schemes to defraud the Internal Revenue Service and the Paycheck Protection Program during the COVID-19 pandemic.
The Justice Department, citing court documents, said 55-year-old Quin Ngoc Rudin – a convicted felon – engaged in a conspiracy to commit two fraud schemes while on supervised release using his tax preparation business in the Los Angeles area.
Rudin was the secretary, director and chief financial officer of Mana Tax Services.
The DOJ said Rudin first conspired with his 59-year-old brother, Thanh Rudin, 46-year-old Seir Havana and others to prepare and file a series of false income tax returns on behalf of at least nine professional athletes.
The returns reported fictitious business and personal losses to generate refunds the athletes were not entitled to receive.
In addition, he filed amended tax returns for most of the athletes for prior years to correct what he falsely characterized as "errors" made by their previous accountants.
Mana Tax charged the athletes a fee of 30% of the resulting refunds issued by the IRS and the scheme caused a total tax loss of over $19 million.
The Department of Justice building before dawn in Washington, D.C., U.S., on Tuesday, Feb. 9, 2021. (Photographer: Stefani Reynolds/Bloomberg via Getty Images / Getty Images)
The athletes were not previously identified in court papers, but documents say that several of them had their practice facility in the Eastern District of Virginia and that Rudin had flown to Leesburg, Virginia, to meet with one of them.
In a second scheme, Rudin and co-conspirators – including 49-year-old Milton Estrada – also prepared and submitted false applications for Paycheck Protection Program loans on behalf of small businesses, shell companies and other business entities they controlled.
The group prepared fraudulent PPP loan applications for the firms in exchange for a fee of 30% of the resulting loan.
They submitted fabricated tax returns to support the PPP loan application.
Some of the business owners never saw their applications before Mana Tax filed them.
U.S. Department of the Treasury Internal Revenue Service (IRS) 1040 Individual Income Tax forms for the 2018 tax year are arranged for a photograph in Tiskilwa, Illinois, U.S., on Monday, March 11, 2019. (Photographer: Daniel Acker/Bloomberg via Getty Images / Getty Images)
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To hide the 30% fee, the co-conspirators directed the businesses to pay with cashier's checks and to note on the memo lines that the checks were related to payroll.
In order to obtain fraudulent PPP loans on behalf of the businesses they controlled, they grossly inflated the number of employees and monthly payroll costs claimed on the applications.
Some businesses were not eligible for any PPP loan funds because they did not have any payroll expenses and the fraud loss from the scheme was over $43 million.
Rudin was on supervised release for another fraud scheme in California when he committed the crimes.
Aramark's Benjamin Pellerin, Alexandria Sheriff Sean Casey and Quin Ngoc Rudin pose in a Sept. photo. (Alexandria Sheriff's Office/Facebook / Fox News)
In the U.S District Court in Alexandria, he pleaded guilty in May to one count of conspiracy to defraud the U.S. and to commit wire fraud, as well as to one count of wire fraud.
Three other co-conspirators, including Rudin’s brother, Havana and Estrada, also pleaded guilty as part of this conspiracy.
The U.S. has recovered more than $15 million of the fraud proceeds. Rudin’s restitution amount will be ordered at a later date.
Notably, he and other inmates recently participated in a 10-week food service program with Aramark, earning ServSafe food protection manager certifications and invitations to apply for employment with Aramark after they return to the community.
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"Rudin and his co-conspirators spent their fraudulently obtained funds to further their scheme, including traveling on private jets to portray themselves as successful business owners," special agent in charge Wayne Jacobs of the FBI Washington Field Office Criminal Division, said in a statement. "The FBI and our partners will work to bring those to justice who attempt to enrich themselves at the expense of others and take advantage of government programs designed to aid businesses, people, and our economy during a time of need."
The Associated Press contributed to this report.