Shirley man pleads guilty in multimillion-dollar tax fraud scam
Federal prosecutors on a potentially multimillion-dollar Long Island tax fraud case got their first conviction Monday when a Shirley man pleaded guilty in a scheme allegedly involving identity theft, corrupt postal workers and check-cashing employees.
Michael Figat, 35, pleaded guilty in federal district court in Central Islip to charges of conspiracy to defraud the United States and theft of property of the United States. The scheme took advantage of a part of the federal income tax code exempting Puerto Rican citizens from paying federal income taxes on money earned in the island commonwealth, officials said.
Figat was one of the six people arrested by federal agents in December in connection with the scheme in which three different groups filed a total of 11,000 federal income tax returns in 2011 and 2012 falsely claiming that the Internal Revenue Service owed a total of $74.5 million in tax refunds.
Figat himself admitted to getting $250,000 in pleading guilty to the charges.
Assistant U.S. Attorney Christopher Caffarone, who is heading the investigation, and other officials would not say Monday how much was actually refunded.
The case was the latest across the nation in which identity theft has figured in large-scale fraud. President Barack Obama has appointed a task force to study the problem nationwide. It is co-chaired by former Bush administration Attorney General Alberto Gonzales.
In Figat's case, the identity-theft scheme involved getting the names and Social Security numbers of people living in Puerto Rico, according to court papers and officials. Figat and others then filed federal income tax returns with requests for the refunds in those persons' names.
A postal carrier or a member of the ring would then intercept the mail with the refund check when it was delivered to the resident, officials said. Lastly, the refund checks in the name of the person in Puerto Rico would be cashed at a check-cashing business by an employee in on the scheme, according to officials and the court papers.
Officials and court papers did not disclose how the names and Social Security numbers of the actual Puerto Rican citizens were obtained or how residences on Long Island were selected to receive the refunds. They did not say how many postal and check-cashing firm employees were involved in the scheme.
Eastern District spokesman Robert Nardoza would only say Monday that there is an ongoing "active investigation" in the case.
Figat, who faces up to 20 years in prison, could get a sentence ranging from 78 to 97 months under the terms of a plea agreement, according to prosecutor Caffarone. No date has been set for sentencing.
Figat's attorney, Joseph Ferrante of Hauppauge, said his client "had taken responsibility for his actions, and he regrets them."