Date: September 18, 2023 Contact: newsroom@ci.irs.gov A former Orange County social worker was sentenced today to 57 months in federal prison for stealing the Social Security numbers and other personal identifying information (PII) from clients then using the stolen information to fraudulently obtain tax refunds, welfare benefits, and credit cards. John Tran, of Fountain Valley, was sentenced by United States District Judge James V. Selna, who also ordered him to pay $1,110,288 in restitution. Tran pleaded guilty in November 2019 to one count of conspiracy to defraud the United States with respect to claims, three counts of mail fraud, and one count of aggravated identity theft. From August 2010 to June 2019, Tran and his co-conspirators used the stolen information to fraudulently obtain money from the federal government, the State of California, the County of Orange and financial institutions. The Orange County Social Services Administration employed Tran from July 1994 until October 2018. Tran abused his position of public trust to steal PII belonging to agency clients as well as other individuals, many of whom were recent immigrants to the United States. Tran and his co-conspirators used the stolen PII to file false federal and state tax returns in the names of identity theft victims, fraudulently obtaining welfare benefits, underreporting income, and falsely claiming deductions on their personal tax returns, and opening credit cards and other lines of credit in the names of the identity theft victims. Proceeds from the schemes were laundered and structured to avoid detection by law enforcement and banks. Tran and his accomplices filed approximately 433 tax returns using stolen PII and generated at least $973,153 in tax refund payments from the United States. To further the scheme and avoid detection by the IRS, Tran provided the stolen PII to tax preparers in Orange County who used it to create fraudulent Forms 1099-MISC purporting to show payments made to the identity theft victims by companies, including those controlled by Tran and other co-conspirators. False federal income tax returns were prepared using the Tran-provided stolen identities. Purported payments on the fraudulent Forms 1099 were falsely used as income to the identify theft victims, making them appear to qualify for tax credits, including the Earned Income Tax Credit and the Child Tax Credit. In turn, the purported payments to the identity theft victims were used by the tax preparers' clients to offset business revenues and reduce the taxes they owed by making it appear that the identity theft victims worked for them. In exchange for the fabrication of the Forms 1099, the corrupt tax preparers' clients paid them a fee. Tran also used the stolen identities of two victims to open fraudulent bank accounts, open credit cards, and open social services cases. For example, in September 2014, Tran opened a credit card account in another person's name and used that card for personal expenses, including for items such as skin care products, Costco purchases, and sports gambling. Tran in 2007 charged approximately $14,000 to a credit card in the name of one victim after he convinced the victim to allow him to use the victim's credit card. The victim, who was a recent immigrant to the United States and one of Tran's SSA clients, believed that he had to let Tran use the credit card because Tran was a powerful government official who had control over the victim's families' SSA benefits. In addition to opening at least 12 fraudulent bank and credit card accounts, Tran fraudulently created and managed SSA benefits cases for family, friends, and for himself, obtaining state benefits for which he and others were not entitled. In total, along with the $973,153 in fraudulently obtained tax refunds, Tran defrauded two victims out of approximately $44,604, and defrauded the Orange County Social Services Administration out of approximately $92,531. "[Tran] abused his position of trust as a social worker to steal his client's identities and generate fraudulent tax refunds for his personal gain," prosecutors argued in a sentencing memorandum. "Not satisfied with stealing from the IRS, [Tran] also fraudulently obtained social services benefits for himself and others." Anton Nguyen, 54, of Fountain Valley, the owner of a Westminster-based tax preparation business, was sentenced last month to 41 months in prison and was ordered to pay $3,773,282 in restitution for his role in the scheme. Rosemary Pham, 65, of Midway City, another tax preparer, pleaded guilty on July 14 to one count of conspiracy to defraud the United States and one count of aiding and advising the filing of false tax returns. She faces up to eight years in federal prison at her October 30 sentencing hearing. In total, federal prosecutors have secured eight guilty pleas in this criminal case. IRS Criminal Investigation, with assistance from the Orange County District Attorney's Office, investigated this matter. Assistant United States Attorney Bradley E. Marrett of the Santa Ana Branch Office prosecuted this case.
