An inmate in a Kern County prison is being charged with committing over $550 million in tax fraud.
A federal grand jury returned an indictment on Thursday charging Kristopher Thomas, 36, and three others for tax fraud.
The big picture: Thomas is an inmate at Kern Valley State Prison (KVSP) in Delano, where he is serving a 50-year to life sentence for a gang-related murder that he committed in Southern California in 2010.
- The three others being charged are Kettisha Thompson-Dozier, Thomas’ mother, Charmane Dozier, Thompson-Dozier’s spouse, and Sharon Vance, one of Thomas’ girlfriends.
- They were all arrested in February on a federal criminal complaint.
Driving the news: According to the indictment, a 2022 DEA investigation found that Thomas was leading a drug trafficking organization operating in Delano from his prison cell using contraband cell phones and prison-issued tablets.
- Intercepted communications also showed that Thomas was also running a multimillion-dollar tax fraud scheme with Dozier, Thompson-Dozier and Vance.
- The scheme exploited the IRS Employee Retention Credit, which was enacted during the COVID-19 pandemic to encourage businesses to retain their employees by giving the businesses thousands of dollars in refundable tax credits per employee retained.
- The defendants filed fraudulent payroll tax returns for fabricated, existing and defunct businesses that misrepresented the number of employees the business had, and the wages paid to those employees.
- They engaged in identity theft at times to obtain information about the businesses.
Go deeper: From January 2022 through July 2023, the defendants filed hundreds of fraudulent payroll tax returns claiming over $550 million in tax refunds.
- The refunds were sought on behalf of over 100 businesses, with several million dollars actually paid out.
- The defendants used the money for personal expenses, including jewelry and trips to Disney World and Las Vegas.
- Thomas paid to have people driven to Las Vegas from Los Angeles, party for a night at a luxury penthouse, and then flown back to Los Angeles on a private jet.
What we’re watching: If convicted, each defendant faces a maximum of 10 years in prison.
- Thomas has also been indicted in a separate case involving methamphetamine trafficking. He faces a statutory maximum penalty of life in prison.
