A Prior Lake couple awaiting sentencing for a multimillion-dollar income tax refund scheme were arrested Friday after an undercover operation allegedly found them back in the tax business.
The couple pleaded guilty in November to charges that stemmed from a 2012 investigation of their immigration services and tax preparation business, American Group US Inc., which operated from offices in Shakopee and Winter Garden, Fla.
Mark Hammerschmidt faces up to nine years in prison and must repay $1.8 million in restitution to his mostly immigrant victims.
His wife, Ornella Angelina Hammerschmidt, a native of Venezuela, faces up to 21 months in prison, $45,000 in restitution and possible immigration sanctions.
As a condition of their release pending sentencing, they were barred from having anything to do with preparing taxes for others.
The Star Tribune learned on Feb. 3 that the Hammerschmidts were working at a Pro Tax RX franchise at 9732 Lyndale Av. S. in Bloomington. The firm, also known as Fartun Tax and Accounting, advertised on Craigslist and Facebook looking for college students to work as tax preparers. A reporter checked with federal authorities to see whether they had permission to work at the firm and was told that authorities would look into it.
Federal agents then conducted an undercover operation and interviewed clients of the firm, according to documents unsealed Friday. Prosecutors filed a motion to revoke their release, arguing that the Hammerschmidts “have repeatedly violated the released conditions imposed by the Court” and that no conditions could be imposed to protect the public.
A hearing on the matter is set for Monday.
Jean Brandl, an attorney representing Ornella Hammerschmidt, declined to comment. Mark Hammerschmidt’s lawyer could not be reached Friday.
Court documents say that a client identified only as J.D. visited the firm on Feb. 6 to have his taxes prepared. Ornella Hammerschmidt’s brother, Salvatore Nuccio, prepared the return with help from his sister, J.D. told authorities. Two other taxpayers, identified as “N.I.R.” and “M.P.C.,” told authorities that they were helped by a woman at the firm who consulted with Ornella Hammerschmidt, whom they knew as “Angie.” They said that Mark Hammerschmidt worked on a computer in the back of the firm but that he came out to answer questions of other employees in the office. He gave them a business card identifying himself as the firm’s general manager.
Authorities sent into the firm an undercover agent who made audio and video recordings. Mark Hammerschmidt was recorded while across the desk from Nuccio preparing tax returns for an unknown couple, prosecutors wrote in their motion to revoke his release. Prosecutors say that Ornella Hammerschmidt helped her brother prepare returns for the undercover agent. When the agent’s return showed a refund of just $1, she interviewed the agent to find additional deductions. Nuccio later secured a refund of more than $4,000 by suggesting that the agent claim a nephew as a dependent.
Fraud case in 2004
The Hammerschmidts first came to the attention of federal investigators in 2004 when they were running an Orlando-based company called All Kinds Services. U.S. Immigration and Customs Enforcement agents alleged that the company helped foreigners to arrange sham marriages.
During that case, the Hammerschmidts were indicted on charges of conspiracy to obstruct justice, witness tampering and destruction of evidence. They struck a bargain, each pleading guilty to a single count of fraud and misuse of a visa. They were sentenced in the summer of 2009 to three years of probation.
Using taxpayer ID numbers
In November, Mark Hammerschmidt pleaded guilty to two conspiracies: one targeting Minnesota victims generally and the other targeting Guatemalans in Minnesota and elsewhere. He concealed the fraud by indicating that the victims had prepared their own returns; the Hammerschmidts did not sign the forms as preparers.
He obtained official identification papers for the Guatemalan victims and used them to obtain taxpayer identification numbers, then filed multiple years’ worth of fake tax returns in their names supported with bogus financial records, false dependents and education credits.
The IRS assigns taxpayer ID numbers to people such as immigrants living in the country illegally who are ineligible for Social Security numbers but who file tax returns anyway. The IRS paid nearly $1.8 million on bogus refund claims.