2 Are Found Guilty of Filing False Tax Returns

Two operators of a small Moorpark environmental firm have been convicted of using bogus tax returns to cheat the U.S. and California governments out of hundreds of thousands of dollars.

A U.S. District Court jury in Los Angeles found Onsi Amin Malaty and Sohir Nozhyaziz Metry guilty Tuesday of conspiring to defraud the Internal Revenue Service and commit mail fraud against the California Franchise Tax Board.

Malaty, 41, faces up to 105 years in prison and fines totaling $5.25 million, while Metry, 40, could be imprisoned for up to 45 years and fined $2.25 million, said Assistant U.S. Atty. Kimberly Dunne.

The pair shared a house in Rancho Palos Verdes in Los Angeles County, Dunne said. Authorities declined to describe the couple’s relationship.

Malaty and Metry operated a company called AWS Environmental, which stands for Air, Water and Soil, from a small office in Moorpark, she said. The company’s Moorpark Avenue address served as the mailing address for several of the dozens of false tax returns they filed, she said.

Although Malaty is a U.S. citizen, the two are natives of Egypt, Dunne said. Malaty was trained as a geologist. Metry, with a doctorate in biochemistry from Cairo University, immigrated to the U.S. in April, 1993, to do research at Michigan State University. In the fall of 1993, Metry moved to California, Dunne said.

Using aliases, friends’ names, post office boxes and variations on the AWS address--such as changing “Suite 280” to “280”--the pair created dozens of false identities.

Attorneys for Malaty and Metry could not be reached for comment Wednesday.

But Dunne said evidence showed that the pair filed returns for the years 1989 through 1993 in a variety of names, including those of Metry’s husband and two children, Malaty’s brother, sister-in-law and nieces and other relatives and friends.

The pair created false W-2 income tax reports from nonexistent companies--and at least two real firms--to back their claims that these ghost taxpayers had had taxes withheld from their wages.

They also falsified Schedule A forms to show large deductions and Schedule E forms to claim substantial losses from rental properties, Dunne said.

And between November, 1993, and April, 1994, Dunne said, Malaty and Metry filed about 200 income tax returns with the IRS and the Franchise Tax Board.

The forms claimed the state and federal governments owed refunds totaling more than $1 million to the ghost taxpayers, Dunne said.

Last year, Dunne said, the tax agencies mailed out refund checks based on the false returns, totaling $350,000.

Malaty and Metry spread the money out through 20 bank accounts they had set up using the names of the ghost taxpayers, Dunne said.

Between December, 1992, and October, 1994, she said, Malaty got 76% of his income from tax refunds to which he was not entitled. In one year, the bank accounts showed cash withdrawals totaling $100,000, some of which was spent on living expenses, Dunne said.

As the IRS Service Center in Fresno was preparing to pay out another $400,000 on the false returns, inspectors there red-flagged some of the cases, said Special Agent James Wilson, an IRS investigator.

After noticing that the addresses and numbers were similar on some of the returns, the IRS assigned its investigators and U.S. postal inspectors to the case, Wilson said.

“We found out what the addresses were, and also did surveillance of the individuals to try to identify (them),” Wilson said. “Bank analysis was also a big factor, tracking the money.”

Agents arrested Malaty and Metry on Nov. 7, and a federal grand jury indicted the pair four days later.

After a nine-day trial before U.S. District Judge Dickran Tevrizian, jurors found Malaty guilty of five counts of filing false claims with the IRS and 15 counts of mail fraud, for sending false tax returns to the Franchise Tax Board.

Metry was found guilty of five counts of filing false IRS claims and three counts of mail fraud.

Malaty and Metry are being held in the federal Metropolitan Detention Center in Los Angeles. They are to be sentenced June 19.