LOS ANGELES
A 63-year-old man who was serving a 27 month prison sentence for fraudulently filing tax refunds was given an additional two years behind bars for his role in another tax-fraud scheme that used stolen identities, officials announced today.
Adel Cotton, 63, had been sentenced to four years and three months in federal prison by U.S. District Court Judge Michael W. Fitzgerald, who ordered that 27 months be served concurrently or together with Cotton’s prior sentence.
The judge also ordered Cotton to pay $725,294 in restitution to the IRS.
Adel Cotton plead guilty in January to one count of conspiracy to defraud the IRS by obtaining the payment of false claims, namely tax refunds.
Adel Cotton’s son and co-defendant – Heber Cotton, 39, of Los Angeles – plead guilty in November to one count of conspiracy to defraud the federal government. Heber Cotton is scheduled to be sentenced on June 6. He is facing up to 10 years in prison, according to officials.
According to Adel Cotton’s plea agreement, beginning in December 2008 and continuing through March 2010, the Cottons caused at least 275 fraudulent income tax returns to be filed with the IRS.
Those fraudulent returns sought income tax refunds totaling more than $2.6 million.
As part of the scheme, Adel Cotton obtained names and Social Security numbers of individuals without their knowledge and consent.
Adel Cotton, with the help of others, prepared false Forms W-2 (IRS Wage and Tax Statements) in the names of the identity theft victims that reported false employment and income information, as well as false tax withholding amounts.
Using the falsified information reported on the Forms W-2, Adel Cotton and others prepared fraudulent individual income tax returns claiming false tax refunds. The tax returns were filed without the knowledge or consent of the identity theft victims.
“This case is the latest involving stolen identity refund fraud, which victimizes both the United States and the individuals who have had their identities stolen,” said U.S. Attorney Eileen M. Decker. “Individual victims of this type of fraud typically have to devote significant time and resources recovering their tax refund and protecting their identities from future fraud.”
In his plea agreement, Adel Cotton admitted that he and his son directed the IRS to mail the fraudulent refunds to addresses they controlled. The defendants then worked with two unidentified co-conspirators to deposit the refund checks using bank accounts opened in the names of the identity theft victims.
In the prior case, Adel Cotton was one of 53 people convicted in relation to the “Old Quest” tax refund scheme that fraudulently sought more than $250 million in tax refunds
Related Story to Tax Refund Scheme Click Here: IRS
The FBI and IRS conducted the investigation on the Cottons.