Man Pleads Guilty in Tax Refund Scheme : Fraud: Studio City financial planner engineered the largest operation of its kind ever uncovered, authorities say.

A Studio City financial planning expert has pleaded guilty to engineering the largest tax refund fraud scheme ever uncovered, spanning both coasts and involving at least $8 million in bogus returns, according to federal authorities.

The mastermind of the fraud conspiracy, Ronald David Sanborn, 52, entered his plea Monday in Portland, Ore., to charges of conspiring to file false income tax returns. He faces up to five years in prison and $250,000 in fines.

Authorities in Portland, where the case is being prosecuted, said Tuesday that their investigation is continuing, as they try to identify Sanborn’s accomplices in the scam, which has been operation for almost a year.

They described Sanborn as a lawyer, accountant and certified financial planner who ran a company called RDS Investment Management Inc. in Burbank, and traveled the country giving seminars on financial management.

But they say the former Portland resident also orchestrated a complex conspiracy in which he used other people’s real names and Social Security numbers--most of them drawn from an employee list stolen from an Oregon grocery company--to create fictitious companies and employee rosters in four states.

With the help of his accomplices, Sanborn set up mail drops in more than 32 locations in California and several East Coast states, officials said. Using computer programs, he created and mailed at least 900 bogus tax returns seeking more than $9,000 apiece, and waited for refund checks from the Internal Revenue Service.

The scam was shut down before Sanborn could collect any money, although authorities say they have yet to account for all the phony returns.

“He couldn’t remember after a while how many he did,” said Assistant U.S. Atty. Claire M. Fay in Portland. “He lost track.”

Authorities said the scam was discovered early this year after officials at several regional IRS centers noticed that the filings fit the profile of fraudulent returns. They refused to say what led them to Sanborn, who was arrested in April at his Burbank office, where authorities seized his computer and printer.

Fay and Keith Rodgers, chief of the IRS criminal investigations division in Oregon, said the scam was the largest of its kind ever uncovered by the federal government.

“Mr. Sanborn obviously was a very sophisticated individual, and the scheme was a very good one,” Rodgers said. “It didn’t work, but it was very good.”

Sanborn has been in jail since his arrest and no bail has been set. Authorities say he is a flight risk because of a plane ticket to Costa Rica found in his briefcase when he was arrested. Sentencing has been set for Oct. 5.

Sanborn had leased office space on the 17th floor of the Burbank Tower since 1989. Workers on the floor expressed surprise Tuesday at his role in the conspiracy. One described Sanborn as a pleasant man who kept to himself. “He seemed like a very nice guy,” she said.

That assessment is apparently not shared by Mac Edward Fournier, an Oregon fiberglass worker. According to authorities and Fournier’s lawyer, Sanborn assumed Fournier’s identity after obtaining his wallet--which had been stolen at a pool tournament last November--then used Fournier’s name to set up mail drops to receive hundreds of the bogus refund checks.

Earlier this year, Fournier was contacted by IRS agents who questioned him about the mail drops and tax returns.

“He doesn’t know much more about it than that,” said Fournier’s Portland lawyer, Paul Osterlund. “He’s not particularly happy.”

Authorities say the hundreds of grocery company employees whose names were used aren’t too happy either because the IRS has received two tax returns under their names, including the one filed by Sanborn. Those employees are from California, Oregon and Washington.

Sanborn could not be reached for comment. His attorney said only, “The case speaks for itself.”