A former Orange County tax preparer convicted of carrying out a tax fraud in which prosecutors say he attempted to claim more than $10 million from the IRS and numerous state tax authorities was sentenced on Monday, March 18, to 10 years in federal prison.
Stephen Jake McGonigle, 66, of Victorville was also ordered by U.S. District Judge James V. Selna to pay the $1.2 million in restitution that he took from victims, including California and a dozen other states.
A federal jury late last year found McGonigle guilty of conspiracy to defraud the United States, conspiracy to commit wire fraud and aggravated identity theft.
Prosecutors say McGonigle, leaning on his extensive tax-preparation experience, ran a “massive fraud scheme” in which he used stolen Social Security numbers from identity-theft victims to file fraudulent tax returns seeking millions of dollars in tax refunds.
The scheme began in 2013, lasted more than a half-decade and spanned two other continents as well, prosecutors say. McGonigle was accused of sending a co-defendant to Thailand to get fake identification documents using the stolen identities and filing the false returns in office space in Costa Rica.
McGonigle asked that the tax refunds be deposited into prepaid debit cards he had sent to commercial mailboxes in Orange County and other locations. He also asked that the funds be deposited in bank accounts he and his co-defendants controlled.
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Investigators traced the IP address used to file the fake returns to the office space McGonigle leased in Costa Rica. Using direct surveillance and travel records, law enforcement officials determined that McGonigle had hired employees in that country to help him file the fake returns.
Judge Selna decided not to impose the longer, 20-year-plus sentence requested by prosecutors, pointing out that due to McGonigle’s age that would essentially be a life sentence.
McGonigle did not speak during the hearing at the federal courthouse in Santa Ana, other than to confirm to the judge that he understood the court filings related to his sentencing.
Several victims, whose IDs were stolen, watched from the courtroom gallery, but did not speak during the hearing.