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Financial Crimes
04/15/2013

Chicago leader of Romanian-based conspiracy that obtained $1.6 million in false tax refunds sentenced to 85 months in prison

CHICAGO — The Chicago leader of a Romanian-based international conspiracy that fraudulently obtained millions of U.S. tax dollars was sentenced Friday to more than seven years in federal prison.

The sentence was announced by U.S. Attorney Gary S. Shapiro, Northern District of Illinois. The case was investigated by the following agencies: FBI, the Internal Revenue Service's Criminal Investigation Division, and U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI).

Ovidiu Isac, 31, a Romanian citizen who lived in Skokie, Ill., was sentenced April 12 by U.S. District Judge Charles Norgle to 85 months in prison and ordered to pay restitution totaling $1,641,209. Isac pleaded guilty in January to conspiring to defraud the United States and theft of government funds. He will be deported after he completes his prison sentence.

Isac oversaw and directed nearly two dozen co-defendants in the United States who used their bank accounts to receive fraudulent federal income tax refunds from overseas co-conspirators. The overseas co-conspirators filed hundreds of false tax returns claiming refunds in the names of Romanian citizens who had visited the United States on exchange student visas.

At least 470 false tax returns, typically claiming refunds between $4,000 and $7,000, were filed, resulting in a loss to the U.S. Treasury of more than $1.6 million during the conspiracy that spanned three tax years between 2007 and 2009. The returns were filed in the names and social security numbers of individuals who had previously traveled to the United States on temporary student visas and had filed tax returns in the past, but who were likely no longer living in the U.S. nor filing a real return in their own name.

Isac led and organized the co-conspirators in Chicago and controlled the flow of money to his co-conspirators in Romania. On one occasion, Isac led a group of co-conspirators in physically attacking a group of individuals who were associated with someone who refused to pay Isac his cut of the proceeds.

Isac was arrested in April 2010 and was among 24 defendants indicted in July 2010 for their roles in the conspiracy. Nineteen of the defendants have been convicted and sentenced, while five remaining co-defendants are fugitives.

Evidence in two companion cases showed that the fraudulent returns typically claimed large deductions for moving expenses, and the fraud was concealed by electronically submitting false wage and tax statements. The returns were filed in the names of real individuals and employers who likely were unaware that their identities and information were being misused. At least 200 bank accounts in the names of more than 75 individuals were used to receive and obtain the tax refund money triggered by the fraudulent returns.

Assistant U.S. Attorneys Matthew Burke, Jennie Levin and Julie Porter, Northern District of Illinois, prosecuted this case.