SANTA ANA, California
A former Orange County tax preparer was sentenced Monday to 10 years in federal prison for leading multi-year tax fraud conspiracies across three countries, officials stated.
The fraud conspiracy claimed more than $10 million from the IRS and dozens of state tax authorities in fraudulent tax refunds and led these authorities to lose more than $1.2 million.
Stephen Jake McGonigle, 67, of Victorville, was sentenced by United States District Judge James V. Selna. The judge also ordered him to pay $1.2 million in restitution.
In addition, Judge Selna ordered that the $300,000 McGonigle previously paid to be free on bond, in this case, be applied to the restitution order.
After an eight-day trial, a jury in November 2023 found McGonigle guilty of conspiracy to defraud the IRS, one count of conspiracy to commit wire fraud, and one count of aggravated identity theft.
McGonigle recruited others to help convince the IRS and dozens of state governments to issue millions of dollars in fraudulent tax refunds.
To perpetrate the massive fraud that began in 2013 and lasted until McGonigle’s arrest in 2019, McGonigle sent one co-conspirator to Thailand to obtain fake identification documents that used stolen victim identities, and then he directed other co-conspirators to use those fake identifications to obtain prepaid debit cards, as well as numerous commercial mailboxes across Orange County and elsewhere.
After sending the prepaid debit cards to these untraceable mailboxes, McGonigle and his co-conspirators filed fraudulent tax returns using the identity theft victims’ Social Security numbers.
Those fraudulent tax returns sought millions of dollars in tax refunds to be deposited into these prepaid debit cards or other bank accounts that they controlled.
With over a decade of tax preparation experience in Southern California, McGonigle used his knowledge to lead the fraud scheme.
The IP addresses used to file the fraudulent returns were traced back to various cities in Southern California, including McGonigle’s home in Fallbrook and various office spaces leased by McGonigle in Lake Forest, Costa Mesa, Fountain Valley, and Carlsbad.
Some IP addresses were traced back to Costa Rica, where law enforcement surveillance and travel records confirmed that McGonigle and his co-conspirators opened an office and hired employees to help file additional fraudulent returns.
McGonigle’s scheme fraudulently sought more than $10 million from federal and state tax authorities and caused an actual loss of $1,230,175.
Prosecutors have secured guilty pleas from two co-defendants, who are also scheduled to be sentenced in the coming months.
IRS Criminal Investigation, Homeland Security Investigations, and the United States Postal Inspection Service investigated this matter.
Assistant U.S. Attorneys Sue Bai of the Terrorism and Export Crimes Section and Colin Scott of the General Crimes Section prosecuted this case.