Crime & Safety
Two SD County Men Get 10-Month Sentence for Tax Scheme
The defendants reportedly exploited homeless people, single mothers, and drug-addicted 'customers.'
Two San Diego County men were each sentenced to 10 months in federal prison today for exploiting homeless people, single mothers and drug-addicted "customers" to defraud the United States out of hundreds of thousands of dollars in a long-running tax scheme.
Isaiah Konkus and Justin Petersen, both 38, were ordered to pay $268,832 in restitution to the Internal Revenue Service.
According to court records, Konkus and Petersen masterminded a scheme to defraud the IRS by exploiting its Earned Income Credit program between 2008 and 2011.
The EIC is designed to help working families by offsetting social security taxes and by providing an incentive for individuals to find and keep work.
As part of their fraud, the defendants sought out low-income "customers" by soliciting them at trolley stations, homeless shelters and other places in downtown San Diego.
Purporting to act on behalf of their business -- named "Street Angels" or "SoCal Tax Consultants" -- Konkus and Petersen approached potential "customers" and asked whether they wanted "free money from the government."
The defendants instructed eligible candidates who gave a positive response to sign a blank tax return.
Konkus and Petersen then filled in largely false information about income, occupation and dependents on the signed returns in an attempt to qualify their "customers" for the highest possible EIC payment.
The defendants filed the false returns with the IRS, seeking as much as $8,000 in fraudulent payments at a time.
According to court filings, the defendants charged exorbitant rates to their mostly unsophisticated customers by skimming up to $2,500 of their tax credits.
Konkus and Petersen filed more than 1,000 tax returns, spending their ill-gotten gains on illegal drugs, a Humvee, a sport fishing trip and a stay at the most expensive suite at a luxury hotel in the Gaslamp District on New Year's Eve, according to court filings.
The defendants were charged last Oct. 12 and pleaded guilty the same day to conspiracy to defraud the United States regarding false claims and filing a false tax return. Konkus and Petersen also admitted to falsifying their own tax returns, evading more than $35,000 each in taxes.
