Seven people, four of whom are imprisoned in California and Oklahoma, have been charged in federal court in Sacramento in a conspiracy that allegedly used the identification of prison inmates to make fraudulent tax refund claims.
A federal grand jury Feb. 20 returned a 10-count indictment charging the seven defendants with conspiring to defraud the United States, according to a federal Department of Justice news release. The defendants were identified as Edwin Forrest Ludwig IV, 32, Daniel Allen Coats, 32, Scott Albert Johnson, 34, and Joseph Robert Shapre, 35, all of whom were inmates at the California Correctional Center in Susanville at the time of the fraud scheme, authorities said. Also charged are Judy Ruth Mullin, 24, of Azusa and Elk Grove; Donald Loyde Harned, 68, of Oklahoma City; and Edwin Forrest Ludwig III, 57, of Tulsa.
Mullin, Harned and Ludwig III were arrested Wednesday at their residences in Southern California, Oklahoma and Tulsa, respectively. The other four defendants are incarcerated at institutions in California and Oklahoma, authorities said.
According to court documents, beginning in March 2011, Ludwig IV, with help from fellow inmates Sharpe, Coats and Johnson, obtained personal identification information of other inmates at the correctional center. Ludwig IV then provided the information to Harned and Mullin, who allegedly prepared and filed false income tax returns with the Internal Revenue Service, claiming refunds to which the inmates were not entitled.
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False tax returns also were filed in some of the defendants’ own names. The defendants allegedly caused the false refund checks to be deposited to various bank accounts that they controlled, including some controlled by Ludwig III.
According to the indictment, investigation into the conspiracy began on Jan. 11, 2012, when a correctional officer founds some records behind Ludwing IV’s personal locker.
The indictment indicates that the refunds were used for personal expenditures, the purchase of prepaid debit cards and adding money to inmates’ commissary accounts. The indictment further alleges that, as part of the conspiracy, approximately 247 false income tax returns were filed with the IRS, resulting in the erroneous issuance of approximately 138 refunds totaling more than $219,000.
The case resulted from an investigation by the Internal Revenue Service, Criminal Investigation; the Federal Bureau of Investigation; and the Investigative Service Unit at the California Correctional Center.