A scheme that duped IRS of $16 million nets jail time for Huntersville man

A federal judge in Maryland on Tuesday sentenced a Huntersville man and his brother to jail terms for a scheme in which they filed 46 fraudulent tax returns, succeeding in duping the government out of more than $16 million, federal prosecutors said.

All told, Eric Maurice Gallman, 42, and his brother Sean, 39, of Upper Marlboro, Md., sought $224 million in tax refunds, the government said.

Eric Gallman was ordered to spend four years in prison, followed by three years of supervised release for his role in the scheme. Sean Gallman was sentenced to 11 years in prison and three years of supervised release.

The Gallman brothers, who pleaded guilty to conspiracy to commit tax fraud and mail fraud, as well as other felony charges last January, were ordered to pay $16.5 million in restitution to the Internal Revenue Service.

In addition, U.S. District Judge Paul Grimm in Maryland ordered the pair to forfeit to the government $11.5 million that the IRS seized from a number of bank accounts, as well as gold and silver coins that were seized from Sean Gallman’s home and nine residential properties in Maryland, North Carolina and South Carolina.

The Gallmans set up trusts and business entities and used mailboxes at multiple private commercial postal carrier stores in Maryland and North Carolina to perpetrate the scheme, and then presented themselves as trustees and agents of those enterprises in requesting refunds, evidence presented by the government showed.

For example, Sean Gallman sent the IRS a fraudulent 2012 tax return in the name of the Gallman Charitable Trust and sought an $8.2 million refund, authorities said. During the same period, the brothers mailed the IRS a 2012 tax return in the name of LEA Group Holdings Trust, requesting a refund of nearly $8.3 million, the government said.

After receiving refund checks in early 2013, the Gallmans deposited the money into bank accounts and then used cashier’s checks and other instruments to transfer it to third parties or other bank accounts, it said.

They pleaded guilty last Jan. 19 to conspiracy to commit mail and wire fraud, mail fraud and conspiracy to commit money laundering. Sean Gallman also pleaded guilty to aggravated identity theft and money laundering charges.

Caroline Ciraolo, acting chief of the Justice Department’s Tax Division, said the Gallmans “engaged in a willful and deliberate scheme to steal from the U.S. Treasury and in turn, U.S. taxpayers,” crimes that her unit will continue to pursue.

This story was originally published May 17, 2016 at 7:16 PM with the headline "A scheme that duped IRS of $16 million nets jail time for Huntersville man."