US indicts 14 in tax-credit cases

IRS agent among those charged in fraud inquiry

By Jenifer B. McKim
Globe Staff / March 25, 2011

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Fourteen people, including an Internal Revenue Service employee, have been charged with using the federal credit for first-time home buyers to commit tax fraud, US Attorney Carmen M. Ortiz said yesterday.

The defendants, most of them from Massachusetts, were charged in multiple indictments related to filing false tax returns linked to the federal credit that was created in 2008 in an attempt to stimulate the flailing housing market.

The credit offered first-time buyers up to $8,000 off their tax bills if they purchased a home before the end of last September. Yesterday’s charges are the latest to allege fraud in the program. At least $26 million in erroneous or illegal refunds has been documented so far, government reports show.

“It is critically important that taxpayers who play by the rules do not end up paying for refunds to people who commit fraud and blatantly lie on the forms submitted to the IRS,’’ Ortiz said in a prepared statement.

One of those charged is a longtime IRS agent, Michael E. Doyle, of Hudson, N.H.. Ortiz’s office alleges Doyle claimed he bought a home in 2008 to qualify for the credit, but actually purchased the property in 2007. Doyle, 44, could not be reached for comment, and an IRS official could not say whether Doyle still works for the federal agency, where he served as a supervisor.

Two other defendants, Junior Lopez, 29, of Southbridge, and Christopher Proe, 27, of Michigan, filed more than 50 fraudulent tax returns, receiv ing about $500,000 in refunds, prosecutors said. The two men allegedly filed false tax returns using identification from third parties and then funneled refunds into their own accounts. Neither Lopez nor Proe could be reached for comment.

Richard DesLauriers, a special agent with the FBI, said the charges were the product of a collaboration between state and federal agencies, including the FBI, the US Department of Housing and Urban Development, and the IRS.

As part of yesterday’s filings, seven Massachusetts residents were charged separately on allegations they filed false tax returns and obtained tax-credit refunds even though they did not buy homes. They are Celestino Alves, 43, of Brockton; John Davis, 32, of Dorchester; Trystin Johnson, 34, of Mattapan; Maxine Thevenin, 33, of Dorchester; Jerry Janvier, 32, of Hyde Park; Samuel Jean, 33, of Dorchester, and Theresa Finocchio, 38, of Canton.

Finocchio — the only one of those defendants who could be reached for comment — said she knew nothing about the investigation, did not own a home, and did not recently claim on her tax forms that she bought property.

In addition, Methuen brothers George Saad, 32, and Elias Saad, 29, were charged with conspiring to commit wire fraud and submitting false claims for tax refunds. US authorities say the brothers recruited people to purchase homes and say they were first-time homebuyers, when the Saads were actually the buyers. George Saad’s wife, Harlene Grullon, 34, of Methuen, and Kristijan Jatjna, 32, of Boston, also were charged in the alleged scheme.

Fraud has accounted for about $26.7 million in incorrect or illegal refunds related to the program, according to a report last year by the Treasury’s inspector general for tax administration, which oversees the IRS.

The report also found that hundreds of jail inmates, some of them serving life sentences, allegedly claimed they purchased primary homes to qualify for the tax credit, according to the report. And multiple taxpayers — as many as 67 in one case — were alleged to have claimed the same home on their tax forms.

J. Russell George, the Treasury’s inspector general for tax administration, said yesterday that it is “especially troubling’’ when an IRS agent is implicated in a fraud case. “Congress created and modified the homebuyer credit to stimulate and help taxpayers achieve the American Dream, not to line the pockets of wrongdoers,’’ he said.

Globe correspondent Allison Knothe contributed to this report. Jenifer B. McKim can be reached at