Criminal Defense Lawyers

Albuquerque Tax Fraud Lawyers

George Martinez was the Unit Supervisor and Bureau Chief of the Questionable Refund Unit at the New Mexico Taxation and Revenue Department. His job was catching tax fraud. He committed the largest tax fraud in the department’s history instead. For nine years – from 2009 to 2018 – Martinez used his position to alter tax refunds and direct them to bank accounts he controlled. The man hired to spot suspicious refund activity created the suspicious refund activity. Forty-two counts of wire fraud. Forty-two counts of aggravated identity theft. Six counts of money laundering. His sentence: 94 months in federal prison – nearly eight years. The court ordered $1,216,205 in restitution and a forfeiture money judgment of $689,797. The fox guarding the henhouse stole $1.2 million worth of chickens.

The District of New Mexico has seen tax fraud at scales that destroyed careers and institutions across the state. A tax evasion scheme that created 192 LLCs and moved $41.7 million through 114 bank accounts. A revenue agent who extorted taxpayers to reduce their tax bills. A tax attorney who helped clients hide trust income for years. When federal prosecutors in Albuquerque bring tax charges, the defendants often include the people hired to prevent tax fraud – and their sentences reflect the depth of that betrayal.

The Fraud Detective Who Committed The Fraud

George Martinez worked at the New Mexico Taxation and Revenue Department from 2009 through 2018. His title was impressive – Unit Supervisor and Bureau Chief of the Questionable Refund Unit. His job was specifically to identify and investigate suspicious tax refunds. Instead, he created them.

Heres the thing about insider fraud at this scale. Martinez had the access, the knowledge, and the authority to manipulate refunds without triggering the alerts he was supposed to monitor. He knew exactly what patterns his own unit looked for. He knew how to avoid those patterns while stealing. The system designed to catch fraud was run by someone committing fraud.

For nine years, Martinez altered tax refunds and directed them to bank accounts he controlled. Nine years of fraud by the head of the fraud detection unit. The refunds that should have gone to legitimate taxpayers went to Martinez instead. The oversight that should have caught him was performed by him. The irony is almost too perfect – the questionable refunds were being processed by the person whose entire job was questioning refunds.

The charges reflected the scale of the betrayal:

• Forty-two counts of wire fraud
• Forty-two counts of aggravated identity theft
• Six counts of money laundering

Each wire fraud count represented a seperate fraudulent refund. Each identity theft count represented a real taxpayer whose information was used without there knowledge.

U.S. District Court sentenced Martinez to 94 months in federal prison – nearly eight years. The court ordered $1,216,205 in restitution to the victims and the state. The court also issued a forfeiture money judgment of $689,797. The total financial consequences exceeded $1.9 million. The state employee whose salary was meant to protect the tax system will spend most of a decade in federal prison for exploiting it.

For anyone in Albuquerque dealing with tax issues, the Martinez case reveals an uncomfortable truth. The people hired to enforce tax laws can become the people who violate them. The security access that enables fraud detection can enable fraud. The expertise that should protect taxpayers can be turned against them. If the head of the fraud unit could steal for nine years undetected, the vulnerabilities in any system run deeper then anyone wants to admit.

192 LLCs Created To Beat The IRS

David Wellington and Stacy Underwood founded National Business Services, LLC in New Mexico in January 2005. The business promised clients they could “beat the IRS” by evading taxes. For ten years, they delivered on that promise – untill federal investigators shut them down.

Heres the irony of the Wellington scheme. The business model was selling tax evasion as a service. Clients paid National Business Services to create Limited Liability Companies that would hide there income from the IRS. The anonymity that LLCs provide for legitimate business purposes became a tool for systematic tax fraud.

The numbers are staggering:

• Wellington and Underwood created 192 LLCs in New Mexico
• They opened 114 bank accounts for these entities
• Underwood served as the sole signer on 99 of those accounts – allowing clients to conduct financial transactions without there names appearing anywhere
• Approximately $41.7 million was deposited into accounts under Underwood’s control

Thats $41.7 million in concealed income that was never reported to the IRS.

Think about that structure. A single person signs for 99 different accounts representing dozens of different clients. The clients names never appear on the accounts. The transactions leave no trail connecting them to the money. The LLC system designed for legitimate business privacy became a money laundering operation for tax evaders.

From 2005 to 2015, this operation ran openly. Clients seeking to hide income found Wellington and Underwood. They paid for LLC creation. They deposited money into accounts they didnt technically control. They paid there taxes on far less income then they actualy earned. The scheme worked – untill it didnt.

U.S. District Court sentenced Wellington to 40 months in federal prison. The court ordered over $5.5 million in restitution. Three years and four months for operating a decade-long tax evasion factory. The restitution amount – $5.5 million – represents tax loss to the IRS from the scheme that promised clients they could beat the IRS.

For anyone in Albuquerque who used similar LLC structures to reduce there tax burden, the Wellington case raises questions. Were the LLCs legitimate? Was the income properly reported? The schemes that seemed like smart tax planning may actualy be tax evasion. The “beat the IRS” promise that seemed attractive eventualy became federal prison and millions in restitution.

The Revenue Agent Who Extorted Taxpayers

Larry Mendoza was a Revenue Agent for the New Mexico Taxation and Revenue Department. His job was collecting taxes owed to the state. Instead, he approached taxpayers with a different proposition – pay him directly, and he would reduce there tax bills.

Heres the inversion that makes the Mendoza case significant. Revenue agents are supposed to ensure taxpayers pay what they owe. Mendoza ensured taxpayers paid what they could hide from the state – by paying him instead. The tax collector became the tax reducer for personal profit.

In February 2017, Mendoza approached a business owner with a proposal. Pay him $500 a month, and Mendoza would lower the business owner’s tax obligation to New Mexico. The business owner paid $500 in February 2017. Another $500 in March 2017. Then on May 11, 2017, Mendoza logged onto his work computer and reduced the business owner’s tax liability by $8,000.

The scheme was almost absurdly simple. For $1,000, the business owner saved $8,000 in taxes. Mendoza had the system access to make the adjustment. He had the knowledge to make it look legitimate. The revenue agent whose job was maximizing tax collection was minimizing it for bribes.

But the business owner reported Mendoza to federal investigators. The scheme that seemed like a good deal for the taxpayer was actualy Hobbs Act extortion – federal corruption charges that carry serious prison time. The business owner who thought he was getting a discount was actualy getting caught up in federal investigation.

U.S. District Judge Martha Vazquez sentenced Mendoza to 46 months in federal prison for his Hobbs Act extortion conviction. The court ordered $43,380 in restitution. Nearly four years in prison for a scheme that generated about $1,000. The revenue agent who thought he could sell tax reductions discovered that federal prosecutors take state employee corruption extremly seriously.

For business owners in Albuquerque approached by government employees offering “deals,” the Mendoza case is a warning. What looks like an opportunity is actualy a crime. Both the employee AND the person paying can face charges. The $500 payment that seemed like smart business is actualy evidence of bribery that federal investigators will trace.

The Tax Attorney Who Helped Hide Income

Robert Fiser was an Albuquerque attorney specializing in tax law and the preparation of federal income tax returns. His professional expertise was helping clients comply with tax obligations. He used that expertise to help a client evade them instead.

Heres the paradox of the Fiser case. Tax attorneys understand tax law better then almost anyone. They know what must be reported. They know how income is traced. They know what triggers audits. When a tax attorney helps hide income, the willfulness is impossible to deny. The professional who understood compliance chose noncompliance.

From October 2009 to November 2013, Fiser assisted a client in preparing income tax returns for tax years 2007 through 2011. The returns omitted taxable income from a testamentary trust. Fiser signed each return knowing that the income was excluded. Four years of returns. Four years of hidden trust income. Four years of tax evasion enabled by the attorney whose job was tax compliance.

Fiser pleaded guilty to conspiracy and aiding and assisting in preparation of a false and fraudulent return. U.S. District Court sentenced him to 15 months in federal prison – one year and three months. The sentence might seem light compared to Martinez or Wellington. But for an attorney, the consequences extend permanantly beyond prison. Professional license implications. Reputational destruction. The attorney who helped clients with taxes now has a federal conviction for tax fraud.

For attorneys in Albuquerque considering helping clients hide income, the Fiser case demonstrates the exposure. Professional credentials dont provide immunity – they provide evidence of intent. The attorney who knows the law and violates it anyway has demonstrated willfulness that makes prosecution more likely and sentences more severe. The expertise that should enable compliance becomes proof of deliberate noncompliance.

Diverting Half A Million Through Nominee Accounts

Arturo Archuleta operated ABQ Injury Clinic in Albuquerque. Between 2014 and 2018, he failed to report more than $200,000 in income to the IRS. But the unreported income was only part of the scheme.

Heres the hidden structure that made Archuleta’s evasion work. He diverted over $500,000 in payments made to ABQ Injury Clinic to a nominee bank account he controlled. The payments were made to the clinic. The money went to an account that wasnt in his name. The income that should have been reported disappeared into accounts that werent connected to him on paper.

Think about how this works practicaly. Clients pay ABQ Injury Clinic for services. The payments go into the clinic’s account. Archuleta moves the money to a nominee account – an account controlled by him but not in his name. The income that the IRS would trace to the clinic becomes untraceable. The business income that should appear on tax returns vanishes.

The scheme ran from 2014 to 2018. Four years of diverting payments. Four years of nominee accounts hiding income. Four years of tax returns that didnt reflect the reality of what Archuleta earned. The clinic that appeared legitimate was actualy a conduit for tax evasion.

Before his sentencing hearing on March 22, 2024, Archuleta paid approximately $140,000 in outstanding tax obligations to the IRS. He also faced:

• Approximately $90,000 in restitution to Medicaid
• A $75,000 fine
• 100 hours of community service
• Required enrollment in the New Mexico Gaming Control Board’s “self-exclusion” program – suggesting gambling issues may have basicly driven the evasion

U.S. District Court sentenced Archuleta to two years in federal prison. Two years for the clinic operator who diverted half a million dollars through nominee accounts. The payments to the IRS before sentencing may have helped – but couldnt eliminate prison time entirely.

For business owners in Albuquerque using nominee accounts or diverting business income, the Archuleta case illustrates the exposure. The nominee accounts that seem to hide income create paper trails that investigators follow. The diversions that seem invisible are actualy documented in bank records that prosecutors subpoena. The scheme that works for years eventualy gets traced when investigators examine were the money actualy went.

New Mexicos Dual Prosecution Reality

New Mexico has a state income tax ranging from 1.7% to 5.9%. Unlike Texas with no state income tax, New Mexico has BOTH state AND federal tax fraud enforcement. The New Mexico Taxation and Revenue Department investigates state tax crimes. Federal prosecutors in the District of New Mexico handle IRS cases.

Heres what that means practicaly. A single fraud scheme can trigger investigation by New Mexico tax authorities AND the IRS simultaneosly. Cases can be prosecuted at the state level, the federal level, or both. The same conduct that violates federal tax law may also violate New Mexico tax law. Dual exposure that dosent exist in no-income-tax states.

The Martinez case demonstrates how state and federal authorities coordinate. Martinez defrauded the state tax system – but faced federal charges including wire fraud, identity theft, and money laundering. The Wellington case similarly involved state LLCs but resulted in federal prosecution and $5.5 million in federal restitution. State tax fraud often becomes federal tax fraud when investigators trace the full scope.

State tax evasion in New Mexico can result in felony charges carrying prison time and substantial fines. Federal tax evasion carries up to five years per count. The dual exposure means defendants can face charges from multiple jurisdictions for conduct that would be prosecuted once in states without income taxes.

And the corruption of state tax employees creates completly unique exposure in New Mexico. The Martinez case – the fraud unit chief who committed fraud. The Mendoza case – the revenue agent who extorted taxpayers. These cases show that the system designed to enforce tax compliance can be corrupted from within. The agencies that should protect taxpayers sometimes employ people who exploit them.

Defense Strategy In Albuquerque

If your facing tax fraud exposure in Albuquerque, the calculus involves understanding how the District of New Mexico operates.

The Martinez case shows that insider access magnifies both fraud potential and sentences – 94 months for the fraud unit chief who exploited his position. The Wellington case shows that tax evasion schemes sold to clients result in decades of prison and millions in restitution. The Mendoza case shows that corruption by state employees gets prosecuted as federal extortion. The Fiser case shows that professional credentials become evidence of willfulness.

Heres what these cases have in common. By the time defendants faced prosecution, there options had narrowed dramaticaly. The investigations were complete. The evidence was gathered. The schemes were documented. The 90% federal conviction rate means fighting the charges rarely succeeds. The only questions were conviction and sentencing.

The time to address tax fraud exposure is before any of that happens. Voluntary disclosure programs exist. Coming forward before the IRS finds you creates opportunities to resolve issues civily – with penalties and interest, but potentialy without prison. And in New Mexico, addressing issues proactivly can prevent state prosecution from developing alongside federal exposure.

If an investigation has already begun, damage control becomes the priority. Understanding what investigators know. Protecting against self-incrimination. Navigating toward the least damaging outcome possible in a district that has prosecuted state tax employees for the very fraud they were hired to prevent.

Why Albuquerque Specificaly Creates Exposure

Albuquerque’s tax environment creates particular fraud exposure. The state tax department where employees like Martinez and Mendoza exploited there access for personal gain. The business services industry where operators like Wellington sold tax evasion to hundreds of clients. The professional services sector where attorneys like Fiser helped clients hide income they understood had to be reported.

The Martinez case reveals how insider fraud can operate for nearly a decade within the agency designed to detect it. The Wellington case shows how LLC structures designed for legitimate purposes can be weaponized for systematic tax evasion. The Archuleta case demonstrates how nominee accounts create false separation between income and taxpayers.

And New Mexicos state income tax creates exposure that dosent exist in no-income-tax states. The New Mexico Taxation and Revenue Department pursues violations of state tax law. Federal prosecutors handle IRS cases. Both systems are active. Both coordinate regularely. The corruption cases show that even the agencies themselves can be compromised.

If theres tax fraud exposure in your situation – returns prepared by someone now under investigation, income you didnt report, schemes you participated in – the time to address it is before investigators start looking. Not after the investigation begins.

Heres the thing about prosecution in Albuquerque. The District of New Mexico has shown through the Martinez case, the Wellington case, the Mendoza case, and others that it pursues tax fraud aggressivly. The sentences can be extraordinary – 94 months for Martinez, 46 months for Mendoza, 40 months for Wellington. The 90% federal conviction rate means most people charged get convicted. Your exposure persists untill you address it. The dual prosecution system New Mexico creates means the question isnt just wheather you face federal charges – its wheather you face state charges too.