Two Santa Ana men were ordered Thursday to be held in federal custody on an indictment accusing them of defrauding the government in an income tax return scheme that preyed on Spanish-speaking people.
Joel Castaneda, 32, and Abel Toledo, 20, are charged in a 16-count indictment with operating a scheme to file bogus tax returns electronically on behalf of legitimate taxpayers and illegally obtaining $43,000 in refunds.
Specifically, both are accused in two counts of conspiring to submit false claims and obstruction of an Internal Revenue Service investigation. Castaneda also is charged with 14 counts of making false claims.
Both were arrested Wednesday, Castaneda at his home and Toledo at their tax preparation business, World Financial Services, in Santa Ana. They are scheduled to be arraigned Monday, which is when they will enter pleas.
Castaneda was being held Thursday in lieu of a $25,000 bond. Toledo was detained without bail because he was considered a flight risk, Assistant U.S. Atty. Ellyn Lindsay said.
According to an indictment returned last week, the tax returns given to the taxpayers differed from the returns Castaneda and Toledo submitted to the IRS, and neither set was accurate, Lindsay said.
Generally, those filed with the IRS claimed a much higher refund, while those given to clients omitted supporting schedules that contained blatantly false information. When refund checks were issued, Castaneda and Toledo would often accompany the taxpayers to a financial institution to cash them, then demand large portions of the cash for themselves, the prosecutor said.
Taxpayers later audited by the IRS were, in some cases, given false documentation from Castaneda and Toledo, Lindsay said.