A New Jersey man has been sentenced to more than six years in prison for masterminding a scheme to help troubled mortgage borrowers cheat the IRS.
Kenneth Crawford Jr. is headed to prison for 78 months for conspiring to defraud the United States, filing false claims and obstructing internal revenue laws, according to Acting Deputy Assistant Attorney General Stuart M. Glodberg of the Justice Department’s Tax Division.
Between 2015 and 2016, Crawford, along with co-conspirators, promoted and sold a “mortgage recovery” tax fraud scheme. Under the scam, Crawford and his co-conspirators obtained fraudulent tax refunds from the IRS for their clients.
Crawford pushed the scheme to people who were behind on their mortgage payments or facing foreclosure, telling them that they could reduce or eliminate their outstanding mortgage debt by filing tax forms with the IRS.
Crawford and the other scammers told clients to file forms that falsely claimed that a substantial amount of taxes had already been withheld from them, according to the Justice Department. These false claims resulted in the IRS issuing huge refunds the clients weren’t actually entitled to. Crawford’s scam resulted in more than $2.5 million in phony refunds being sought from the IRS – of which the agency paid out more than $1.3 million. Crawford charged his clients a fee of about 25% for each refund obtained.
When the IRS discovered the scam and attempted to recover the refunds it had already issued, Crawford provided his clients with phony documents to send to the agency. He also directed clients to conceal his role in filing the fraudulent returns, and advised them to remove money from their bank accounts in order to stymie the government’s collection efforts.
In addition to the prison term, US District Judge Robert B. Kugler ordered Crawford to serve three years of supervised release and pay $1,393,511 in restitution to the United States.