Each year, the Internal Revenue Service Criminal Investigation (IRS: CI) unit recounts the agency’s top ten criminal tax matters on its Twitter account. According to the IRS, the list represents the “most prominent and high-profile investigations of the past year.” The top ten list this year is crowded, with several cases that could vie for the number one spot.
The list also presents a narrative of individuals who carried out tax fraud, many with impunity. Each narrative represents a story of how one individual—or network—carried out a tax crime. As criminal tax defense attorneys, we are dedicated to representing individuals who make choices or find themselves overwhelmed by the actions they have taken that make them candidates for criminal tax investigations. As we scroll through the cases from 2022, keep in mind—if you are involved in a payroll tax diversion, knowingly filed a fraudulent tax return, or are a party to an illegal tax scheme—seeking good legal representation before the IRS understands your story can help you create a better future for yourself.
With that, let’s take a look at #10 on the list for 2022.
Stolen Identities and Stolen CARES Act Funds Lead to a Decade in Prison
Like many others, Elias Eldabbagh saw an opportunity when COVID-19 relief was announced through the passage of the CARES Act. The CARES Act provided approximately $150 billion in pandemic relief through the Coronavirus Relief Fund. The money provided relief to families and businesses, and it bolstered an economy struck by crises unseen before in our lifetimes. It also proved a lucrative target for fraudsters.
Mr. Eldabbagh was a business owner who applied for approximately 25 loans totaling about $30 million from the Paycheck Protection Program (PPP). He also applied for Economic Injury Disaster Loans (EIDL) in the amount of $950,000. To support his applications to these programs, Mr. Eldabbagh used stolen tax returns, identities, and financial documents. He stashed the proceeds in 13 individual bank and broker accounts and completed more than 2,000 transactions using crypto.
With his newfound largesse, Mr. Eldabbagh bought a Tesla Model 3, and paid rent, dog boarding expenses, attorney fees, and a myriad of personal expenses. As IRS:CI closed in on the scam in May 2021, Mr. Eldabbagh tried to transfer funds before they were seized by the government. His efforts came to naught.
Noted the U.S. Attorney, “This defendant shamelessly took advantage of a global health crisis to create his own get-rich scheme at the expense of the government's COVID relief programs. He stole more than $2.3 million--and tried to collect many millions more--that was targeted for small businesses and employees struggling to get by."
Mr. Eldabbagh turned over his Tesla, cryptocurrency, and 21 bank accounts to the U.S. government. In September 2022, he was sentenced to 10 years in prison and will pay approximately $5 million in restitution and fines. Only Mr. Eldabbagh can say if it was worth it.
Experienced legal representation if you face an IRS civil audit or tax crime
If you receive an IRS audit letter or are challenged by a tax controversy in Cleveland, Chicago, or elsewhere nationally or abroad, the tax attorneys at Robert J. Fedor, Esq., LLC can help. We deliver seasoned, strong criminal tax defense. Call us at 800-579-0997 or contact us online.