Bronx businessman scams IRS for $5 million using Puerto Rico Social Security numbers
Bronx businessman Jose Quilestorres, according to federal prosecutors, used over 1,000 Social Security numbers stolen from people in Puerto Rico to file phony tax forms and defraud the government of more than $5 million.
By Robert Gearty AND Corky Siemaszko / NEW YORK DAILY NEWS
Published: Monday, December 17, 2012, 9:12 PM
Updated: Tuesday, December 18, 2012, 3:00 AM
Enid Alvarez/New York Daily News
Quilestorrres operates a tax refund fraud mill out of an apartment at 2380 Grand Avenue in the Bronx, NY on Saturday, December 15, 2012
The Internal Revenue Service processed more than a thousand federal
income tax forms last year from a collection of purported Puerto Ricans
who appeared to have just two things in common:
All their tax forms were filed by computer from a Bronx apartment. And all their refunds wound up in the pockets of Bronx businessman Jose Quilestorres and his alleged accomplices.
Quilestorres, according to federal prosecutors, used 1,032 Social Security numbers stolen from people in Puerto Rico to file phony tax forms and defraud the government of more than $5 million. Prosecutors say the crooks are part of a plague of sophisticated identity thieves — operating from New York to Alaska — who prey on Puerto Ricans and use their information to steal billions from the IRS.
“Basically, what you have are fairly smart people ingeniously and cynically exploiting what our tax system was designed to do — get refunds out as quickly as possible,” Manhattan U.S. Attorney Preet Bharara told the Daily News.
Alleged scammers like Quilestorres take advantage of the fact that Puerto Ricans have Social Security numbers — but generally don’t file federal income tax returns if they still live on the island. That greatly reduces the risk that a fake return will be flagged by the IRS.
One of Quilestorres’ alleged cohorts, Jairo Polanco, “possessed a ledger with Puerto Rican Social Security numbers,” court records show. That ledger landed in prosecutors’ hands when cops rounded up the ring on Sept. 19 — just as Quilestorres was preparing to hightail it to the Dominican Republic, where he owns expensive real estate, sources close to the case said.
Quilestorres, 47, and the other accused crooks have pleaded not guilty to federal fraud charges. Their bank accounts were frozen. He is being held without bail.
The alleged tax fraud mastermind is also accused in New Jersey of filing 8,000 fraudulent tax returns since 2008 — and raking in an additional $11 million — using stolen Puerto Rican Social Security numbers.
Prosecutors suspect Quilestorres has stashed away millions in ill-gotten gains. He bragged to a confidential informant that he made $7.5 million in February 2011 by filing phony tax forms, according to court records.
Quilestorres’ ring operated in an apartment on Grand Ave., prosecutors say. Between January 2011 and October 2011, he and his fellow fraudsters filed more than a thousand phony IRS tax returns. The ringleader hired two people and paid them $1.50 for each return they prepared. They filled in the returns with predetermined income figures, phony occupations, bogus W-2 forms — and the real Social Security numbers.
Then they sent the returns to the IRS electronically, using Internet-based services that allow individuals with income below a certain amount to file for free. They gave a Shirley, L.I., return addresses and bribed a mailman to intercept the refund checks by giving him a kickback for each one he turned over to Quilestorres, sources said.
Then Quilestorres used a network of associates to cash the checks through personal or business checking accounts — in exchange for 10% to 20% of the check’s value.
Investigators got wind of the scam in June 2011 from a snitch and rounded up 13 members of the ring 15 months later, sources said. A Shirley postal clerk whose name was not divulged was also arrested and is believed to be cooperating with investigators.
-With Amanda Mikelberg
rgearty@nydailynews.com
All their tax forms were filed by computer from a Bronx apartment. And all their refunds wound up in the pockets of Bronx businessman Jose Quilestorres and his alleged accomplices.
Quilestorres, according to federal prosecutors, used 1,032 Social Security numbers stolen from people in Puerto Rico to file phony tax forms and defraud the government of more than $5 million. Prosecutors say the crooks are part of a plague of sophisticated identity thieves — operating from New York to Alaska — who prey on Puerto Ricans and use their information to steal billions from the IRS.
“Basically, what you have are fairly smart people ingeniously and cynically exploiting what our tax system was designed to do — get refunds out as quickly as possible,” Manhattan U.S. Attorney Preet Bharara told the Daily News.
Alleged scammers like Quilestorres take advantage of the fact that Puerto Ricans have Social Security numbers — but generally don’t file federal income tax returns if they still live on the island. That greatly reduces the risk that a fake return will be flagged by the IRS.
One of Quilestorres’ alleged cohorts, Jairo Polanco, “possessed a ledger with Puerto Rican Social Security numbers,” court records show. That ledger landed in prosecutors’ hands when cops rounded up the ring on Sept. 19 — just as Quilestorres was preparing to hightail it to the Dominican Republic, where he owns expensive real estate, sources close to the case said.
Quilestorres, 47, and the other accused crooks have pleaded not guilty to federal fraud charges. Their bank accounts were frozen. He is being held without bail.
The alleged tax fraud mastermind is also accused in New Jersey of filing 8,000 fraudulent tax returns since 2008 — and raking in an additional $11 million — using stolen Puerto Rican Social Security numbers.
Prosecutors suspect Quilestorres has stashed away millions in ill-gotten gains. He bragged to a confidential informant that he made $7.5 million in February 2011 by filing phony tax forms, according to court records.
Quilestorres’ ring operated in an apartment on Grand Ave., prosecutors say. Between January 2011 and October 2011, he and his fellow fraudsters filed more than a thousand phony IRS tax returns. The ringleader hired two people and paid them $1.50 for each return they prepared. They filled in the returns with predetermined income figures, phony occupations, bogus W-2 forms — and the real Social Security numbers.
Then they sent the returns to the IRS electronically, using Internet-based services that allow individuals with income below a certain amount to file for free. They gave a Shirley, L.I., return addresses and bribed a mailman to intercept the refund checks by giving him a kickback for each one he turned over to Quilestorres, sources said.
Then Quilestorres used a network of associates to cash the checks through personal or business checking accounts — in exchange for 10% to 20% of the check’s value.
Investigators got wind of the scam in June 2011 from a snitch and rounded up 13 members of the ring 15 months later, sources said. A Shirley postal clerk whose name was not divulged was also arrested and is believed to be cooperating with investigators.
-With Amanda Mikelberg
rgearty@nydailynews.com
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