Minnesota couple pleads guilty to $1.8 million income tax fraud

MINNEAPOLIS  — A suburban Twin Cities couple pleaded guilty in federal court Tuesday to conspiracy and filing false income tax returns, worth more than $1.8 million,  in the names of hundreds of victims.

These guilty pleas resulted from an investigation by U.S. Immigration and Customs  Enforcement’s (ICE) Homeland Security Investigations (HSI), in cooperation with the Internal Revenue Service’s (IRS) Criminal Investigation unit and the Minnesota Department of Revenue.

Mark Alin Hammerschmidt, 48, of Prior Lake, Minnesota, pleaded guilty to two counts of conspiracy to defraud the United States. Ornella Angelina Hammerschmidt, 36, also of Prior Lake, pleaded guilty to one count of tax fraud.

“The Hammerschmidt’s admitted to owning a tax preparation business that blatantly ignored the tax laws by preparing and filing false tax returns,” said IRS Criminal Investigation Special Agent in Charge Shea Jones. “They systematically defrauded the government and the taxpaying public. IRS Criminal Investigation will continue to vigorously pursue those who unjustly enrich themselves by preparing false claims for refunds.”

“The defendants used their purported immigration and tax preparation business, American Group, to exploit vulnerable victims, including immigrants,” said Assistant United States Attorney Michelle E. Jones. “This case is a fine example of multiple law enforcement agencies working together to investigate and prosecute aggressively those who victimize others to steal taxpayer dollars.”

According to court records, between 2010 and February 2013, the defendants, who are married to one another, conspired to operate an immigration and tax preparation business called, American Group. To attract business, Ornella Hammerschmidt misrepresented herself as an attorney and Mark Hammerschmidt claimed to be an accountant and certified tax preparer with a college degree. The couple used the business to prepare and file more than 1,000 federal income tax returns on behalf of their tax and immigration clients.

According to the defendants’ guilty pleas and documents filed in court, the defendants obtained from others personal identification information (PII) of Guatemalan citizens, including birth certificates and Guatemalan passports.  They used the information to obtain Individual Taxpayer Identification Numbers (ITINs) in the names of the Guatemalan citizens. Once the couple obtained the ITINs, they filed multiple years’ worth of false tax returns in those individuals’ names, seeking refunds based on false household income, false dependents and false education credits. The returns directed that the refunds go to bank accounts the couple controlled. The defendants used these funds to pay individuals who provided them with PII.

The couple also filed false Minnesota state income tax returns using the same scheme. When the Minnesota Department of Revenue sent letters questioning the information provided in these state returns, the defendants provided false substantiation of the claimed income, as well as fraudulent receipts for education expenses.

The Hammerschmidts conspired to steal more than $1.8 million from U.S. taxpayers by filing fraudulent returns.