Mastermind of Tax Return Fraud Ring Gets 4 1/2 Years : Courts: The Studio City financial planning expert admitted conspiring to file more than 900 false refund claims nationwide. Two others await trial.

A Studio City financial planning expert has been sentenced to 4 1/2 years in federal prison for masterminding a scheme to file the largest number of fraudulent income tax returns in U.S. history, federal prosecutors said Wednesday.

R. David Sanborn, 52, also was ordered Monday to pay a $7,500 fine and to serve three years on probation by U.S. District Judge Malcolm F. Marsh, who described it as an “enormous white-collar crime.”

Sanborn pleaded guilty July 27 in federal court in Portland, Ore., to conspiring to file more than 900 false income tax refund claims across the nation. The scheme was orchestrated out of Portland.

“He lived in Los Angeles but traveled up here to make arrangements with his co-conspirators,” said Deputy U.S. Atty. Claire Fay, who prosecuted the case.

Prosecutors said Sanborn is an attorney and financial planner who operated a company in Burbank called RDS Investment Management Inc., and traveled the country giving seminars on financial management.

His sentence could be reduced if he cooperates with federal prosecutors in cases against his two co-defendants, Jack Roy Rowlands and Rita Marie Stimson, both of Portland, Fay said. Their trial is scheduled to begin Nov. 10.

Authorities said the scam was uncovered early this year after officials at regional IRS centers in Fresno, Philadelphia and New York state noticed that “large batches of returns came in with the same P.O. boxes” listed as return addresses, Fay said.

The scam was shut down before Sanborn could collect refunds on most of the filings, although authorities have still not been able to account for all the phony returns, Fay said.

Sanborn and his alleged accomplices obtained about 1,000 names and Social Security numbers from files at United Grocers in the Portland suburb of Milwaukie, where Stimson worked in the payroll department during 1991.

Sanborn, using software he developed, created four fictitious businesses and issued W-2 wage and income tax statements using the stolen names.

The names then were used to request refunds that were to be sent to 32 mail drops in California and several Eastern states.

Sanborn used a driver’s license of an acquaintance, Mac Edward Fournier, as identification for opening the mailbox accounts after doctoring it with his own picture. Fournier, who has not been charged, had reported the driver’s license stolen.

After noticing the pattern of post office box return addresses, IRS investigators sought out the boxes and discovered it was Sanborn who had rented all of them.

When he opened the mailbox account using Fournier’s name, he was issued an identification card by the company, which kept a duplicate on file. It was through that ID card that authorities ultimately identified Sanborn, Fay said.

Authorities first tracked down Fournier, who said he knew nothing of the plot.

“We could obviously tell he wasn’t the man in the photo,” Fay said.

But IRS agents examined Fournier’s phone records and discovered a series of phone calls to Rowlands, one of Sanborn’s alleged accomplices. Authorities then obtained phone records for Rowlands, which in turn led them to Sanborn.

Taxpayers whose names were stolen and used on the bogus returns will experience IRS problems for at least two more years, Fay said.

The returns forced hundreds of IRS workers to spend more than 5,000 overtime hours checking tax returns by hand and the scheme cost the government about $2 million to clear the records of taxpayers whose names he used, Fay said.

“The names he used are real people and it has not only hurt these innocent people--it seriously mucked up their records,” Fay said. “It may take the IRS years to clean this up.”