Description: San Diego, California criminal defense lawyer represented the Defendant charged with aiding and assisting in the preparation of false tax returns for two taxpayers for the calendar year 2015.

Beginning as early as July 2014 and continuing through at least April 2020, Alvin Pates, from San Diego, admitted that he used the names, social security numbers, and credit of the straw borrowers to obtain loans and lines of credit that primarily benefited Pates. Pates prepared, or directed others to prepare, the fraudulent loan and credit card applications. The applications included information about the borrowers’ income and employment that Pates knew to be false and were supported by false paystubs, W2s, and bank statements procured by Pates.

In exchange for the use of the straw borrowers’ personal identifying information and credit, Pates typically paid a 10 percent kickback from the loan proceeds to the straw borrower, and falsely promised to make all the payments on the loans. On at least one occasion, Pates communicated by telephone directly with a financial institution, pretending to be the straw borrower, in order to pass security questions and obtain approval of a loan.

Pates acknowledged in his plea agreement that he funneled the majority of the loan proceeds through the bank accounts of one of his shell companies to use for his personal benefit. For example, Pates admitted to using the funds for numerous personal transactions, cash withdrawals, personal living expenses for himself and his family, and to make payments to other credit unions. Pates admitted that the value of the fraudulent loans charged in the indictment is $87,000, and that he will be required to pay restitution of at least $40,500.

In addition to the bank fraud, Pates also admitted to aiding and assisting in the preparation of false tax returns for two taxpayers for the calendar year 2015. The tax return for one of the taxpayers falsely stated that the individual received “Other Income” in the amount of $538,462 and had paid federal income taxes of $543,643, thus entitling him to a refund of $376,260. Pates supplied false Forms 1099 to the taxpayer to support the return and accompanied the taxpayer to the IRS to submit the false return. The Internal Revenue Service (IRS) issued a refund check to the taxpayer for $376,260, which was ultimately returned to the IRS.

Pates is scheduled to be sentenced on March 1, 2024, at 9 a.m. before U.S. District Judge Cathy Ann Bencivengo.

This case is being prosecuted by Assistant U.S. Attorneys Melanie K. Pierson and Loren G. Rene.

Outcome: Defendant elected to plead guilty.

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