Date: Sept. 5, 2024 Contact: newsroom@ci.irs.gov Riverside, CA — A Riverside County man pleaded guilty today to scheming to defraud the IRS out of more than $2.1 million via the issuing of fake W-2 forms and to fraudulently obtaining nearly $1 million of COVID-19 economic relief loans. William Mandel Musgrow, of Palm Springs, pleaded guilty to one count of wire fraud and one count of aiding and assisting in the preparation of a false tax return. According to his plea agreement, Musgrow used one of his business entities to issue fraudulent IRS Forms W-2. These forms false represented to the IRS that the recipients were employed by defendant’s various businesses, received wages, and had federal tax withheld from their paychecks when, in fact, the Forms W-2 either overstated the recipient’s income, or were wholly fraudulent as the recipient either did not work for the business at all or had no federal income tax withheld from their paychecks. Musgrow then would help the recipient file fraudulent federal income tax returns that utilized the bogus Forms W-2 to generate a tax refund to which the recipient was not entitled. In total, Musgrow issued at least 87 fraudulent IRS Forms W-2 and assisted in the filing of at least 87 false income tax returns. These returns requested a total of $2,769,600 in tax refunds, and the IRS paid out $2,136,630 of the requested refunds. Separately, during the spring of 2020, Congress created federal programs to provide financial assistance to Americans suffering economic harm because of the COVID-19 pandemic. From March 2020 to August 2020, Musgrow submitted 14 false and fraudulent applications to the United States Small Business Administration (SBA) and banks for Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL). In these applications, Musgrow made false statements including the number of employees to whom were paid wages, falsely certifying that the loan proceeds would be used for permissible business purposes, and in some cases, that the businesses were legitimate business when, in fact, they were not operating in any fashion and had no employees whatsoever. In total, Musgrow submitted 14 fraudulent loan applications which requested more than $1.9 million. Relying on Musgrow’s false information, the SBA and lenders approved and funded many of the loans. Musgrow obtained approximately $970,000 in fraudulent proceeds. United States District Judge Kenly Kiya Kato scheduled a January 16, 2025, sentencing hearing, at which time Musgrow will face a statutory maximum sentence of 20 years in federal prison for the wire fraud count and three years in federal prison for the tax fraud count. IRS Criminal Investigation (IRS-CI) is investigating this matter. Assistant United States Attorney Benjamin J. Weir of the Riverside Branch Office is prosecuting this case. On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Justice Department in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The task force bolsters efforts to investigate and prosecute the most culpable domestic and international actors committing civil and criminal fraud and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit the Coronavirus Response webpage. Tips and complaints from all sources about potential fraud affecting COVID-19 government relief programs can be reported by visiting the webpage of the Civil Division’s Fraud Section, which can be found here. Anyone with information about allegations of attempted fraud involving COVID-19 can also report it by calling the Justice Department’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF web complaint form. IRS-CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. IRS-CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a more than a 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.
