A man accused of leading a tax fraud scheme while incarcerated at the California Correctional Center in Susanville has been sentenced to seven years in prison.
Edwin Ludwig IV, 34, currently an inmate in an Oklahoma state prison, was sentenced Wednesday in federal court in Sacramento for conspiring to defraud the United States and for filing false claims for federal tax returns, according to a U.S. Attorney’s Office news release. Ludwig was ordered to pay more than $219,000 in restitution.
According to court documents, beginning in March 2011, Ludwig and three fellow inmates at the Susanville correctional facility obtained personal identification information of other inmates at the center. Ludwig then provided the information to co-defendants on the outside, who prepared and filed false income tax returns with the Internal Revenue Service, claiming refunds to which the inmates were not entitled. False tax returns also were filed in some of the defendant’s own names.
Authorities said the defendants caused false refund checks to be deposited to various bank accounts that they controlled. According to the indictment, the investigation into the conspiracy began Jan. 11, 2012, when a correctional officer found some records behind Ludwig’s personal locker.
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Court documents indicate that the refunds were used for personal expenditures, and included the purchase of prepaid debit cards and adding money to inmates’ commissary accounts.
At sentencing, Ludwig stated that some of the proceeds had been used to purchase drugs, authorities said.
The conspiracy resulted in at least 247 false claims for income tax returns in tax years 2008 through 2011. Although the IRS stopped some of the refunds, approximately 138 fraudulent refunds totaling approximately $219,984 were issued, authorities said.
Charges against six co-defendants are pending, and they are scheduled for a status conference Sept. 2.
The case resulted from an investigation by the Internal Revenue Service, Criminal Investigation, the FBI and the Investigative Service Unit at the California Correctional Center.