DEMAREST, N.J. – A former Demarest businessman who helped federal authorities crack one of the nation's largest income tax scams ever was sentenced to 17 months in federal prison Tuesday in exchange for wearing a wire.
Roberto Diaz will have to serve just about all of that time: There is no parole in the federal prison system.
Diaz, 48, agreed to wear a listening device after Bergen County Police officers helped lead federal agents to a ring responsible for filing 8,000 fraudulent U.S. income tax returns that produced losses to federal taxpayers of $12 million.
Although he purportedly worked in the grocery business, Diaz lived in a house worth more than $1.6 million -- while paying a mortgage of more than $13,000 per month, federal authorities said after his arrest five years ago.
He also gambled more than $250,000 at casinos in New Jersey and elsewhere, bought three Mercedes-Benzes and spent thousands of dollars a night on luxury hotels, they said.
Helping crack the case was an arrest made by an officer who was with what was then the Bergen County Police Department.
BCPD Sgt. Rob Escobar was on patrol near the Palisades Park section of Overpeck County Park when he was flagged down by an elderly man who reported “two suspicious males peering into parked vehicles in the Shop-Rite parking lot,” authorities said at the time.
Escober spotted the pair sitting in a 2007 silver Chrysler 300.
Officer Salvatore LoCascio assisted Escobar after the men signed search consent forms for the sedan.
Inside, the officers found the three checks worth $24,700.
Both men were arrested and then turned over to federal agents.
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Members of the network obtained personal identifiers, such as dates of birth and Social Security numbers, of people living in Puerto Rican, a joint investigation by the IRS and U.S. Postal Inspection Service found.
(Puerto Ricans receive Social Security numbers but are required to pay federal income tax only if the income comes from U.S.-based companies or the government)
The ringleaders used various means to gain control of refund checks, sometimes bribing mail carriers to intercept checks or buying lists of the names of residents along particular mail routes, authorities said.
“Hundreds of refund checks were mailed to just a few addresses in a few towns, including Nutley, Somerset and Newark, they said.
The leaders then got people to open bank accounts so the checks could be taken to cashing businesses and the proceeds deposited into the dummy accounts.
Federal investigators identified a small number of IP addresses responsible for the filings. They then zeroed in on certain “hot spots” of activity and intercepted more than $22 million in fraudulently claimed refunds before they were delivered.
Diaz, who has since moved to Miami, admitted his role in the ring last September, as part of a plea deal with federal prosecutors.
Acting U.S. Attorney William E. Fitzpatrick credited special agents of IRS-Criminal Investigation, the Postal Inspection Service, the Secret Service, the Drug Enforcement Administration and and special agents of U.S. Immigration and Customs Enforcement, Homeland Security Investigations.
Handling the case is Assistant U.S. Attorney Zach Intrater, deputy chief of Fitzpatrick's Economic Crimes Unit.
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