Two members of a Myrtle Beach family have been sentenced to federal prison for their roles in a scheme to defraud the government out of more than $500,000 by submitting false tax returns and stealing economic impact payments sent to others as part of the Coronavirus Aid, Relief and Economic Security Act, according to the U.S. Attorney’s Office for the District of South Carolina.
A third family member has been sentenced to probation.
Donna Karakatsani, 48, was sentenced to two years in prison while her son, Ivo Krasimirov Ivanov, 29, was sentenced to 18 months. Both sentences will be followed by three years’ probation.
Todor Milkov Stoenchev, 54, Karakatsani’s husband and Ivanov’s stepfather, was sentenced to five years of probation because of his more limited role in the scheme, according to a news release.
The three defrauded the government out of $530,292.60, the U.S. Attorney’s Office said.
“During a time when many families were struggling to make mortgage payments, this family was buying houses with money they stole from the American people,” said U.S. Attorney Adair F. Boroughs. “This fraud scheme was complex, lasted over several years and took place primarily during a pandemic when these funds were sorely needed. I want to thank our federal partners who followed every lead, including interviewing dozens of foreign nationals and poring through mountains of tax returns and foreign-language correspondence.”
Evidence presented showed that beginning sometime in 2020, the Internal Revenue Service and the U.S. Department of State Office of Inspector General started an investigation into the family regarding false claims for tax refunds and stolen refunds. Specifically, Karakatsani and Ivanov presented themselves as tax preparers and targeted foreign nationals, usually Bulgarians, who had spent time in the U.S. They would recruit the foreign nationals on the internet and at various locations around Myrtle Beach, the U.S. Attorney said.
They also submitted numerous tax returns in these individuals’ names, which often caused them to receive refunds, primarily education credits. As foreign workers, however, they were not entitled to these credits.
To help keep the scheme from being detected, the U.S. Attorney said the defendants enlisted others to open U.S. bank accounts where the refunds were deposited and paid these individuals $100 for each account they opened. As a result, 68 bank accounts were opened across 16 different banks in the names of 24 different people.
The scheme changed when, as part of the coronavirus relief package, the government sent economic impact payments to the bank accounts of those who qualified, according to the U.S. Attorney.
Because of the false tax returns the defendants had already filed, hundreds of economic impact payments were deposited into the fraudulent bank accounts. The defendants then used these payments for personal expenses and to buy real estate.
The government has recovered about $380,000 of stolen funds primarily through sales of the illegally purchased property, and the defendants have been ordered to pay an additional $150,893.58 in restitution.
The IRS and Department of State OIG investigated the case, with assistance from the Department of Treasury’s Bureau of the Fiscal Service, the Myrtle Beach Police Department, and the Horry County Police Department. Assistant U.S. Attorney Derek A. Shoemake, who also serves as the Office’s Coronavirus Fraud Coordinator, prosecuted the case.