RANCHO PALOS VERDES : 2 Guilty in Filing Bogus Income Tax Returns

A Rancho Palos Verdes man and woman who operate a small environmental firm in Ventura County have been convicted of using bogus tax returns to cheat the U.S. and California governments out of hundreds of thousands of dollars.

On April 4, a U.S. District Court jury in Los Angeles found Onsi Amin Malaty and Sohir Nozhyaziz Metry guilty of conspiring to defraud the Internal Revenue Service and commit mail fraud against the California Franchise Tax Board.

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

Malaty and Metry operated a company called AWS Environmental, which stands for air, water and soil, from a small office in Moorpark, Dunne 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.

Malaty is a U.S. citizen but both are natives of Egypt, Dunne said. Malaty was trained as a geologist. Metry, with a doctorate in biochemistry from Cairo University, immigrated to the United States 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. But Dunne said evidence showed that the pair filed returns for the years 1989 through 1993 in many names, including those of Metry’s husband and two children, and Malaty’s brother, sister-in-law and nieces.

The pair created false W-2 income tax reports from nonexistent companies--and at least two real firms--to show that taxes were withheld from wages.

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

The forms claimed that 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.

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

Agents arrested Malaty and Metry on Nov. 7, and a federal grand jury indicted them 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.