3rd Defendant Pleads Guilty to Taking Part in Tax-Fraud Ring

A Van Nuys woman pleaded guilty in federal court Tuesday to participating in a ring that defrauded the Internal Revenue Service of $1 million by filing phony tax returns electronically, government prosecutors said.

Doris Wheeler, 41, was the third defendant in the Los Angeles-based ring to admit involvement in the scheme, which federal officials described as the biggest of its kind in Southern California. Five other defendants are still awaiting trial.

Law enforcement authorities say using electronic means to file false tax-refund claims could become the tax crime of the 1990s. Electronic transmission of tax returns has been aggressively promoted by the IRS because it allows returns to be processed in a matter of days, rather than weeks.

For the 1990 tax year, about 7 million of the country’s more than 100 million taxpayers filed returns electronically, according to the IRS. About 3,600 of such refund claims, totaling $6 million, were phony, officials estimate.

In the Los Angeles ring, the defendants allegedly recruited more than 200 people, using their real names and Social Security numbers to prepare false W-2 forms.

The forms were then taken to tax preparers at local H & R Block offices, where they were transmitted electronically to the IRS, which paid out refunds a few days later. One of the defendants worked at an H & R Block office in South-Central Los Angeles, authorities said.

Prosecutors said Wheeler, who was unemployed at the time, prepared phony W-2 forms and recruited people in her neighborhood to file them. She collected about $35,000 from the scheme, a prosecutor said.

Wheeler, who also used the name Doris Martin, is scheduled for sentencing on Dec. 4 before U.S. District Judge Laughlin E. Waters. She faces a maximum penalty of 10 years in prison and a $250,000 fine.