Daniel Allen Coats, 34, of Turlock, pleaded guilty Friday to one count of conspiracy to defraud the United States by filing false claims for federal tax refunds, Acting United States Attorney Phillip A. Talbert announced.
According to court documents, beginning in 2011, Coats and three fellow inmates in the California Correctional Center in Susanville obtained the personal identification information of other inmates and provided it to co-defendants located outside the prison. The co-defendants then used that information to prepare and file false income tax returns with the Internal Revenue Service, claiming refunds to which the inmates were not entitled. Coats also filed three false tax returns in his own name.
According to court documents, the fraudulently obtained refund checks were deposited into various bank accounts and onto prepaid debit cards that the defendants controlled. The refunds were used for personal expenditures, added to the inmates’ commissary accounts, and used to purchase prepaid debit cards. In all, the conspiracy resulted in at least 247 false claims for income tax returns in tax years 2008 through 2011. Although the IRS stopped some of these refunds, approximately 138 fraudulent refunds totaling approximately $219,984 were issued.
This case is the product of an investigation by the Internal Revenue Service, Criminal Investigation, the Federal Bureau of Investigation, and the Investigative Unit at the California Correctional Center. Assistant United States Attorney Amy Schuller Hitchcock is prosecuting the case.
Coats is scheduled to be sentenced by United States District Judge Garland E. Burrell Jr. on Aug. 19. He faces a maximum statutory penalty of 10 years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
On July 8, 2015, Edwin Ludwig IV was sentenced to seven years in prison for his role in the scheme. The charges against the remaining five co-defendants are pending.