Thre Bank Employees Plead Guilty

Published on August 16, 2012, 12:07 am
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Preet Bharara, the United States Attorney for the Southern District of New York, announced today that three former employees of J.P Morgan Chase Bank (“Chase”) pled guilty in Manhattan federal court to participating in two separate tax refund schemes that used the identities of Puerto Rican citizens to obtain fraudulent tax returns.

In the first scheme, KATHERINE TORRES, a former Chase branch manager, and ROSALIND SMITH, a former Chase employee at the same branch, pled guilty to participating in a scheme that defrauded the Internal Revenue Service (“IRS”) and New York State out of over $1 million. In the second scheme, JUDITH FULGENCIO, a former personal banker at another Chase bank branch, pled guilty to participating in a scheme that also defrauded the IRS and New York State out of more than $1 million. TORRES and SMITH pled guilty before U.S. Magistrate Judge Henry B. Pitman. FULGENCIO pled guilty before U.S. District Judge Robert P. Patterson.

Manhattan U.S. Attorney Preet Bharara said: “As bank employees on the take, these three defendants facilitated fraudulent tax schemes using the stolen identities of Puerto Rican citizens. Their conduct contributed to a national crime wave that is costing the IRS billions of dollars in lost revenue. Today’s guilty pleas should serve as warnings to others who might contemplate aiding tax cheats that we will prosecute you to the full extent of the law.”

According to the Indictments against TORRES, SMITH, and FULGENCIO, and statements made during their plea allocutions earlier today:

Although operated separately, the two schemes worked in similar fashion. Participants would unlawfully obtain identifying information, including names, dates of birth, and social security numbers, of Puerto Rican citizens. Their stolen identities would then be used to file fraudulent tax returns, claiming large refunds from New York State and the federal government. Participants in the scheme directed the resulting tax refund checks to addresses they controlled, or along specific mail routes assigned to U.S. Postal Service employees who had been bribed to pull the checks from the mail. The checks were then cashed at one of the two Chase bank branches at which the defendants who had been bribed to facilitate the transactions worked.

In the first scheme, TORRES and SMITH, who both worked at a Chase branch on University Avenue in Bronx, conspired with co-defendant Carlos DeLeon to cash over $1 million in fraudulently-issued tax refund checks in exchange for thousands of dollars in bribes.

TORRES and SMITH concealed the fact that DeLeon cashed tens of thousands of dollars in fraudulent tax refund checks on an almost daily basis between 2006 and June 2007. They also offered thousands of dollars in cash bribes to tellers who helped them to further the scheme.

In the second scheme, FULGENCIO, who worked at a Chase branch at Yankee Stadium, conspired to cash more than $1 million in fraudulently-issued tax refund checks in exchange for tens of thousands of dollars in bribes. FULGENCIO directed tellers whom she supervised to cash the fraudulent checks in a manner that deliberately avoided the filing of Currency Transaction Reports and concealed the fact that a co-conspirator cashed tens of thousands of dollars in fraudulent tax refund checks on a regular basis between 2006 and June 2007.

FULGENCIO also offered thousands of dollars in cash bribes to the tellers who followed her instructions.

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TORRES, 52, SMITH, 41, and FULGENCIO, 32, all of Bronx, New York, each pled to one count of conspiracy to steal government funds. They each face a maximum sentence of five years in prison. Charges against DeLeon, 44, of New Rochelle, New York, are still pending. The charges and allegations against DeLeon are merely accusations, and he is presumed innocent unless and until proven guilty.

Mr. Bharara praised the outstanding investigative work of the Internal Revenue Service, Criminal Investigation Division. He also thanked the U.S. Postal Inspection Service (“USPIS”), the USPIS Office of Inspector General, the Federal Bureau of Investigation, and the New York State Division of Taxation and Finance for their assistance in the investigation.

This case is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorney Howard Master is in charge of the prosecutions.

 

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