News: CJ Exclusives

Wallace Couple Pleads Guilty in $12 Million IRS Fraud

Court records show couple filed fraudulent tax returns using names of more than 300 real or fake people

The retail store in Wallace owned by Walda Luna, where some of the illegal tax refund activity took place. (CJ Photo by Don Carrington)
The retail store in Wallace owned by Walda Luna, where some of the illegal tax refund activity took place. (CJ Photo by Don Carrington)

Wallace, N.C.. residents Walda Lorena Luna and her husband, Perfecto Ruano, pleaded guilty on June 20 in U.S. District Court in Wilmington, to charges associated with a tax fraud scheme in which they illegally obtained more than $12 million from the Internal Revenue Service.

Carolina Journal first reported the couple’s activities in January.

According to court documents, Luna is a native of Honduras who obtained temporary protective status in November 2006. She entered the United States illegally in 1993. Ruano is a native of Guatemala, who obtained legal permanent resident status in 1988. Both required the services of a Spanish interpreter to participate in the court proceeding.

The activity took place between January 2009 and May 2012. During that time, 2,760 U.S. Treasury refund checks with a total face value of $12,104,825 were deposited in a business bank account maintained by the couple.

Luna and Ruano were arrested Jan. 11 and have remained in jail since that time. They are scheduled to be sentenced on Sept. 26 in federal court in Raleigh.

The IRS calls this type of crime Stolen Identity Refund Fraud, or SIRF. More recently it has labeled the crime Identity Theft tax refund fraud, or IDT refund fraud. The IRS has been aware of this type of fraud at least since 2011 and recently stepped up efforts to catch it.

But IRS computers did not detect the couple’s activities. Instead, the agency first learned of the tax fraud as the result of a May 2014 a traffic stop in Arkansas.

The Arkansas State Police stopped the couple for an unspecified reason and found them carrying $1.8 million in cash. The police notified the Duplin County, N.C., Sheriff’s Department and within days law enforcement officials seized tax fraud evidence from the couple’s North Carolina home and business.

Ruano’s plea agreement involves one count of participating in a conspiracy to commit mail fraud offenses against the United States. He could receive a maximum prison sentence of five years.

Luna’s plea agreement involved three counts. The first is identical to Ruano’s. The second is the filing of a false personal income tax return in which she claimed as dependents two children who were not her relatives in order to reduce her tax bill. The third count is aggravated identity theft in which she used the Social Security numbers of those children. She could receive a maximum sentence of 10 years.

They agreed to pay restitution to the IRS in the amount of $2,944,799 and also to assist the government in the recovery and forfeiture of any assets that were acquired through their illegal activities. The government already filed a forfeiture notice stating that the couple would have to give up four parcels of real estate in Wallace.

The scheme

According to court documents, Luna and Ruano obtained Individual Taxpayer Identification Numbers for at least 300 names that may represent real or fictitious people. The IRS issues ITINs instead of Social Security numbers to foreign individuals working in the United States, giving them a means of filing income tax returns and paying taxes on income earned.

Luna and Ruano allegedly fabricated W-2 wage and tax statements for each name using the names of real employers, then prepared tax returns and submitted refund claims to the IRS. The refund checks were sent to post office boxes rented by Luna or Ruano. The average refund check was $4,385. The checks all were deposited in a First Bank business account that Luna had opened in 2006. Luna withdrew $11,888,300 in cash by writing 252 checks for cash.

Since February 2010, Luna operated a small convenience store named Beverly Tienda, located on North Norwood Street in Wallace. For the 2009 through 2012 calendar years, Luna reported annual incomes from the store of $16,000, $18,000, $17,481 and $24,915, respectively. She reported no other income.

For 2009 through 2012 Ruano reported business income from several sources for a total of $18,560, $26,204, $27,002 and $59,123, respectively. He reported no other income.

Duplin County birth records show they are the parents of three children. The oldest, a daughter, was in court to see her parents enter guilty pleas.