CORONA, CA — A Corona resident was sentenced to serve six years in jail for his decade-long scheme of filing fraudulent tax returns for his clients, defrauding the IRS of at least $28 million, authorities said Tuesday.

Salvador Gonzalez received his sentence Monday and will have to pay $403,908 in restitution, according to the U.S. Attorney’s Office, Central District of California.

Gonzalez’s scheme began in 2013 when he opened Grace’s Lighthouse Resource Center, Inc., a tax preparation business under which he prepared thousands of returns for Corona residents.

Gonzalez would direct his clients to create a fake corporation and to title their homes, cars and other assets under it. Then, an associate would prepare a sham tax return for each of these corporations and ask clients to record fake business expenses in a spreadsheet.

Clients included personal expenses such as mortgage payments, car payments and utility bills. Prepared tax returns inevitably showed a loss, which trickled down to the clients’ income tax returns and fradulently reduced the amount of taxes each client paid, according to the Justice Department.

These fraudulent business losses offset clients income. Gonzalez also faked deductions on their returns, such as unreimbursed employee expenses, cash contributions to charity and medical and dental expenses. Due to these practices, his clients paid much less than they owed in taxes.

For these services, Gonzalez charged clients a flat fee of $500 per tax return. By 2019, he started charging clients 1% of their gross income as a fee for his services.

The complaint seeks to bar Gonzalez from preparing, assisting in, directing or supervising the preparation or filing of federal tax returns, amended tax returns or other related documents or forms for others, the Justice Department said.

Over the past 10 years, the Justice Department says it has obtained injunctions against hundreds of similarly fraudulent tax preparers.

“Taxpayers seeking a return preparer should remain vigilant against unscrupulous tax preparers,” the department said.

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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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