Marvin Berkowitz had fled to Jerusalem and was arrested there in August 2009; prosecutors say scam was worth $54 million.
January 14, 2011 (CHICAGO) -- A former Chicago man who fled to Israel in 2003 faces up to 25 years in federal prison after pleading guilty on Friday to an elaborate $54 million fraudulent federal and state income tax scheme which he orchestrated amongst his family members and others.
Marvin Berkowitz admitted directing a fraud ring that obtained at least $4.5 million in actual tax refunds from the IRS and the tax agencies of at least 28 states, a release from the U.S. Attorney's office said.
Berkowitz admitted he orchestrated a group of family members and others who tried to obtain at least $54 million in fraudulent federal and state income tax refunds using the identities of at least 2,900 prisoners and deceased people, the release said.
Berkowitz, 63, fled to Israel in 2003 and was arrested in Jerusalem by Israeli authorities in 2009, the release said.
He admitted directing at least 58 people who controlled some 90 different addresses and 42 bank accounts in obtaining bogus tax refunds.
The IRS was able to detect, freeze or intercept the additional false claims for refunds totaling about $50 million that were not actually paid.
Berkowitz, two of his sons, a son-in-law and seven other defendants were indicted and arrested in 2009.
On Friday, Berkowitz pleaded guilty to one count of conspiracy to defraud the IRS and to commit mail and wire fraud, as well as one count of mail fraud. He faces a maximum sentence of 25 years in prison and a $500,000 fine or a fine totaling twice his gain or twice his loss, as well as mandatory restitution.
U.S. District Judge Virginia Kendall set sentencing for 1:30 p.m. on June 15.
Berkowitz also agreed to a forfeiture judgment of $4.5 million and agreed to relinquish an unspecified amount of funds being held in accounts at financial institutions in Israel, as well as real estate in Israel owned in the name of or for the benefit of Berkowitz or his family members.
Berkowitz's son, David Berkowitz, of Hollywood, Calif., previously pleaded guilty in the case, while charges remain pending against another son, Yair Berkowitz, and Marvin Berkowitz's son-in-law, Eric Berkowitz, both of Chicago, a well as seven other defendants.