Salvador Gonzalez pleaded guilty Monday to three counts of aiding and assisting in the preparation of false tax returns.

The plea agreement with the U.S. Attorney’s Office was announced during a hearing before U.S. District Judge Jesus Bernal at the federal courthouse in downtown Riverside. Bernal scheduled a sentencing hearing for Oct. 7.

Each count carries a maximum three-year prison term.

Gonzalez remains free on bond.

He was arrested in March 2023 after a federal grand jury handed down a 47-count indictment.

According to the U.S. Attorney’s Office, the defendant operated Grace’s Lighthouse Resource Center Inc., and from 2016 to 2021, he “prepared income tax returns for individuals and corporate clients to submit to the IRS that claimed tens of thousands of dollars in bogus business losses.”

“Gonzalez directed his clients to create a phony corporation and to title their homes, cars and other assets in the name of the corporation,” the agency stated. “Gonzalez then referred those clients to an associate to prepare these sham corporations’ tax returns.”

Prosecutors said the defendant arranged for customers to submit business and personal expenses, including mortgage and car payments, as well as utility bills, indicating a “loss” at the end of every tax cycle.

“Gonzalez then prepared the clients’ individual income tax returns, which incorporated the fraudulent business losses and offset their income,” the U.S. Attorney’s Office said. “To further reduce the clients’ taxes owed to the IRS, Gonzalez fabricated deductions on the personal returns such as unreimbursed employee expenses, cash contributions to charity and medical and dental expenses.”

The defendant’s fees were initially $500 per return, but in 2019, he converted the payment for services to 1% of customers’ adjusted gross incomes, prosecutors said.

The case was investigated by the IRS.

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As manager of the tech firm Networks 2000, Matthew P. Hernandez controlled finances and was able to transfer company money to his personal accounts, the U.S. Attorney’s Office said.

He issued direct deposits from the company’s checking account to pay off personal credit card debt and used corporate credit cards to buy luxury items including a home gym, a $3,500 hot tub and a watch priced more than $1,000, the Los Angeles Times reported Monday.

The scheme involved hundreds of transactions over seven years, prosecutors said.

Matthew P. Hernandez, 46, had pleaded guilty to wire fraud. He was sentenced on Friday.

The sentencing also ordered him to pay restitution of more than $356,600 to the San Diego-based company, the Times said.

AP News | Contributed

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