ROBERT W. SWEET. District Judge.
On August 7, 2013, Raymundo Hernandez ("Hernandez" or "Defendant") pled guilty to conspiracy to steal government funds and theft of government funds.
For the reasons set forth below, Hernandez will be sentenced to 24 months' imprisonment followed by three years' supervised release, subject to the scheduled sentencing hearing on December 11, 2014. Defendant is also required to pay a special assessment of $200.
Defendant was named in a three-count indictment (the "Indictment") filed in the Southern District of New York on March 6, 2013. The first count of the Indictment charges that from at least in or about January 2011, through on or about February 1, 2013, in the Southern District of New York and elsewhere, Hernandez, Andrius E. Gonzalez Francisco ("Francisco"), Jilfredo Gonzalez ("Gonzalez"), Dawin Brito ("Brito"), Isabel Garcia, a/k/a "Chavella" ("Garcia"), Cristino Antonio Rodriguez, a/k/a "Tony," a/k/a "Tonio" ("Rodriguez") and others conspired to engage in a scheme to obtain and case fraudulent income tax return checks, the value of which exceeded $1,000, in violation of 18 U.S.C. § 641 ("Count One"). 18 U.S.C. § 371.
The second count of the Indictment charges that from at least in or about January 2011, through on or about February 1, 2013, in the Southern District of New York and elsewhere, Hernandez, Francisco, Gonzalez, Brito, Garcia, and Rodriguez, engaged in a scheme to obtain and cash fraudulent income tax return checks, the value of which exceeded $1,000 ("Count Two"). 18 U.S.C. § 641.
The third count of the Indictment charges that from at least in or about January 2011, through on or about February 1, 2013, in the Southern District of New York and elsewhere, Hernandez, Francisco, Gonzalez, Brito, Garcia, and Rodriguez, possessed and used the names and personal identifying information of other persons during and in relation to the offense charged in Count Two of the Indictment in violation of 18 U.S.C. § 1028A. The Indictment also included forfeiture allegation and substitute assets provisions.
On August 7, 2013, Hernandez appeared before the Honorable Sarah Netnurn in the Southern District of New York and allocuted to Counts One and Two in accordance with a plea agreement which stipulates the following:
In accordance with the Supreme Court's decision in
18 U.S.C. § 3553(a). A sentencing judge is permitted to find all the facts appropriate for determining a sentence, whether that sentence is a so-called Guidelines sentence or not.
The Court adopts the facts set forth in the Presentence Investigation Report ("PSR") with respect to Defendant's personal and family history.
Participants in the scheme employ stolen Social Security numbers ("SSNs") assigned to residents of Puerto Rico and file fraudulent federal tax returns seeking tax refunds on behalf of those individuals. Residents of Puerto Rico often do not file tax returns with the Internal Revenue Service ("IRS") because such filing is not required as long as all of the resident's income is derived from Puerto Rican sources. Thus, by using Puerto Rican SSNs, participants in the scheme, among other things, minimize the risks that a legitimate federal tax return already will have been filed by the person whose identity has been stolen. The fraudulently filed tax returns claim that the filer resides in one of the fifty states of the United States, for example, in New York State. Participants in the scheme obtain the federal tax refund checks in various ways, including by causing them to be mailed by the United States Treasury to addresses to which the participants have access. Fraudulently obtained tax refund checks may be cashed with the assistance of either corrupt bank employees, corrupt check cashers, or individuals with business checking accounts who may not be required to have the payee named on the face of the check, a person normally in Puerto Rico, appear at the time that the check is cashed. In some instances, participants in the scheme cause tax refunds to be directly deposited into bank accounts controlled by them.
Electronically filed tax returns are transmitted to the IRS through an Electronic Filing Identification Number ("EFIN"). EFINs are issued by the IRS to electronic return originators, such as online tax software provides (e.g., TurboTax, TaxSlayer), businesses (e.g., H&R Block), or individual tax preparers (e.g., accountants) to enable them to file tax returns with the IRS.
Since approximately 2004, a co-conspirator ("CC-1") has participated in a scheme involving the filing of fraudulent income tax returns using the stolen identifying information of residents of Puerto Rico. Among other things, CC-1 obtained EFINs from other co-conspirators and then used those EFINs to filed fraudulent income tax returns after obtaining stolen identifying information of residents of Puerto Rico that CC-1 obtained from other co-conspirators. CC-1 additionally sold these EFINs to other co-conspirators to enable them to also file fraudulent income tax returns using stolen identifying information of residents of Puerto Rico. Further, CC-1 installed tax filing software on computers of other co-conspirators, taught co-conspirators how to use the tax software, and assisted them with setting up bank accounts to automatically have tax refunds electronically deposited into bank accounts.
At the time of CC-1's arrest, approximately 15 laptop computers in CC-1's home, as well as lists containing names, dates of birth, and Social Security numbers were observed. From further conversations with CC-1, it was learned that through a network of individuals who know how to cash Treasury checks, CC-1 also provided fraudulent Treasure refund checks to others to cash, for a percentage of the face value of the check.
On February 4, 2013, voluntarily and at the direction of law enforcement, CC-1 placed multiple separate calls, which were recorded, to Hernandez, Francisco, and Gonzalez. During these conversations, CC-1 informed Hernandez, Francisco, and Gonzalez, in Spanish, that CC-1 had Treasury refund checks that had to be cashed. CC-1 arranged meetings with Hernandez, Francisco and Gonzalez.
On February 4, 2013, Hernandez was observed meeting with CC-1, after he moved the meeting location with CC-1, because he did not like what he believed to be a police presence in the area. During the meeting, Hernandez agreed to use his contacts to cash the checks and took possession of approximately 80 United States Treasury checks and agreed to cash those checks for CC-1. Hernandez was arrested shortly thereafter, at approximately 8:30 p.m., after first fleeing from law enforcement. At the time of his arrest, the Defendant attempted to evade arrest. Hernandez ordered the cab to "go" and fled in the cab, with the door open, at a high speed rate. The Defendant then left the cab and attempted to enter a private home, where he was arrested.
On February 4, 2014, Francisco met with CC-1 at a pre-arranged location. After a discussion of percentages, Francisco took possession of approximately 50 United States Treasury checks and agreed to cash those checks. Francisco also specifically asked CC-1 whether the checks were "white" or "yellow," referring to United States Treasury checks sent via the United States mail or blank checks printed using tax refund software. During the meeting, Francisco contacted an unknown co-conspirator, confirming that Francisco received "yellow" checks and asking about percentages. Francisco was arrested shortly thereafter at approximately 11:30 p.m.
On February 5, 2014, Gonzalez met with CC-1 at the pre-arranged location, along with Brito. Prior to arriving at the location, Gonzalez informed CC-1 that he would accept whatever checks CC-1 had, requesting a minimum of "150," which CC-1 understood to be 150 checks. During the meeting, CC-1, Gonzalez and Brito discussed, among other things, that they were both partners in cashing checks. After a discussion of percentages, CC-1 showed Gonzalez and Brito envelopes containing United States Treasury refund checks. CC-1 informed Gonzalez and Brito that one envelope contained 100 checks and another 50 checks, which Gonzalez and Brito both agreed to cash. Gonzalez and Brito were arrested shortly thereafter at approximately 2:20 a.m.
The Government informed that the United States Treasury refund checks obtained by the Defendant, which were in excess of 80, amounted to more than $400,000. Additionally, it should be noted that although the charges in the instant offense are based on one meeting, Hernandez was also under investigation by District of New Jersey, for his involvement in a conspiracy involving the cashing of millions of dollars in fraudulent United States Treasury checks.
All the checks were recovered and none were cashed. However, as informed by the Government, the IRS continues to be the victim because of the losses associated with these types of schemes in general and because these individuals were large-sale check cashers. According to information obtained from recordings, the defendants received checks, used their networks to cash them, and then kept 35% or so of the face value. On average, 35% to 50% of the face value is what the IRS has observed with large scale check cashers.
The maximum term of imprisonment for Count One is five years. 18 U.S.C. 371. The maximum term of imprisonment for Count Two is ten years. 18 U.S.C. 641. For both counts, the Court may impose a term of up to three years' supervised release, pursuant to 18 U.S.C. § 3583(b) (2); U.S.S.G. § 5D1.1(a)(2). For both counts Defendant is eligible by statute for not less than one nor more than five years' probation. 18 U.S.C. § 3561(c)(1). However, because the applicable guideline range is in Zone D of the Sentencing Table, the Defendant is ultimately ineligible for probation. U.S.S.G. § 5B1.1, Appl. Note #2.
The maximum fine for each count is $250,000, pursuant to 18 U.S.C. § 3571, for a total maximum fine of $500,000.
Pursuant to 18 U.S.C. § 1963(a)(1), (a)(2), and (a)(3), the Defendant must forfeit all property real and personal, involved in the offense or traceable to such property. Pursuant to Rule 32.2 of the Federal Rules of Criminal Procedure, "[t]he Court must include the forfeiture when orally announcing the sentence or must otherwise ensure that the Defendant knows of the forfeiture at sentencing. The Court must also include the forfeiture order, directly or by reference, in the judgment." Fed. R. Crim. P. 32.2(b)(4)(B).
The November 1, 2013 edition of the
The guideline for Count One, a violation of 18 U.S.C. § 371, is found in U.S.S.G. § 2X1.1, which instructs the application of the base offense level for the underlying offense, in this case a violation of 18 U.S.C. 641. Count Two is also a violation of 18 U.S.C. § 641. The guideline for a violation of 18 U.S.C. § 641 is found in U.S.S.G. § 2B1.1. Pursuant to U.S.S.G. § 2B1.1, the base offense level is 6.
As a result of Hernandez's actions, the intended loss to the IRS was more than $400,000, but not more than $1,000,000. Accordingly, a 14-level enhancement is warranted. U.S.S.G. § 2B1.1(b)(1)(H).
The Defendant has demonstrated acceptance of responsibility for the offense and has assisted authorities in the investigation or prosecution of the Defendant's own misconduct by notifying authorities of the intention to enter a plea of guilty. Accordingly, the offense level is decreased by three levels. U.S.S.G. 3E1.1(a)-(b).
The Defendant has no known adult convictions. Accordingly, Defendant has zero criminal history points and a Criminal History Category of I.
Based on a total offense level of 17 and Criminal History Category of I, the guideline range of imprisonment is 24 months to 30 months.
The statutory and guideline range for a term of supervised release of up to three years' supervised release. 18 U.S.C. 3583(b)(2); U.S.S.G. 5D1.1(a)(2). Such terms of supervised release run concurrently. 18 U.S.C. 3624(e).
The Defendant is ineligible for probation. 18 U.S.C. 3561(c)(1); U.S.S.G. § 5B1.1, Appl. Note #2.
The guideline fine range for each count is $5,000 to $50,000, with a maximum statutory fine of $250,000 for each count. 18 U.S.C. § 3571; U.S.S.G. § 5E1.2(c)(3)(A).
Having engaged in the Guidelines analysis, this Court also gives due consideration to the remaining factors identified in 18 U.S.C. § 3553(a) to impose a sentence "sufficient, but not greater than necessary," as is required by the Supreme Court's decision in
For the instant offense, Hernandez shall be sentenced to a term of 24 months' imprisonment on both counts to run concurrently, to be followed by three years' supervised release on both counts to run concurrently.
As mandatory conditions of his supervised release, the Defendant shall:
The mandatory drug testing condition is suspended due to imposition of a special condition requiring drug treatment and testing.
The standard conditions of supervision (1-13) are recommended with the following special conditions:
The Defendant is to report to the nearest Probation Office within 72 hours of release from custody. The Defendant is to be supervised by the district of residence.
It is further ordered that the Defendant shall pay to the United States a special assessment of $200, which shall be due immediately.
Defendant does not have the ability to pay a fine and so the fine in this case is waived.
As a result of committing the offenses alleged in Counts One and Two of the Indictment, the Defendant shall forfeit to the United States, pursuant to 18 U.S.C. § 1963(a)(1), (a) (2), and (a) (3), all property real and personal, involved in the offense or traceable to such property.
The Defendant is ineligible for voluntary surrender. 18 U.S.C. § 3143(a) (2).
It is so ordered.
