Seven Inmates Indicted in Tax Refund Scheme

A federal grand jury in Los Angeles on Thursday indicted seven inmates at a state prison in San Luis Obispo on charges of filing numerous false income tax returns for thousands of dollars in refunds.

Also indicted was a Los Angeles woman--the wife of one of the inmates.

Prosecutors declined to provide full details of the alleged scheme. But they said some refund checks were mailed directly to the medium security California Men’s Colony in San Luis Obispo.

The case stems from a March 1996 announcement by prison authorities that 25 inmates had engineered about $44,000 in refund checks from the Internal Revenue Service by filing false returns.

“Obviously, we’ve only charged eight [people] today,” said Thom Mrozek, a spokesman for the U.S. attorney’s office. “It’s fair to say there’s an ongoing investigation.”

In four indictments returned Thursday, prosecutors detailed 53 false refund claims--most in the range of about $2,000, some as high as $7,000--filed from 1994 through 1997.

Those false claims add up to more than $154,000. The indictments do not disclose how many of the claims led to refund checks. Prosecutors declined to reveal those details.

According to the indictments, the inmates allegedly started with blank tax forms they obtained from the prison library or from the IRS.

Then, according to the indictments, they used either their own names or the names of other inmates. They used their own Social Security numbers or solicited those of other inmates.

Some inmates used information about real businesses but then made up forms detailing wages they had purportedly earned and taxes supposedly withheld, according to the indictments.

Others, the indictments said, tried a different approach--concocting fake businesses, then claiming they had earned paychecks from which taxes were withheld.

The IRS was asked in some cases to send refund checks to the prison’s post office box. In other cases, the agency was directed to send checks to “associates” of the inmates, according to the indictments.

Charged were:

Shannyn Turner, 27, now housed at a San Diego prison.

Victor Matchem, 35, relocated to a prison in Chino.

Carl Goosman, 55, now at a parish jail in Louisiana.

Shawn Meyer, 40, who remains at the San Luis Obispo prison.

Norman Hunt, 59, now at the Los Angeles County Jail.

Herman Terrell, 33, transferred to state prison in Folsom.

Derek Carter, 82, now at a state prison in Soledad, and his wife, Cheryl Carter, who lives in South-Central Los Angeles. She remains free pending a court hearing, Assistant U.S. Atty. Kimberly Dunne said.

The state Department of Corrections said Terrell and Derek Carter are convicted murderers. The others are serving time for a variety of crimes.