Arizona man admits to $4.4 million conspiracy to defraud IRS


Date: May 23, 2024


Newark, NJ — An Arizona man admitted today that he conspired to obtain over $4.4 million by defrauding the IRS, U.S. Attorney Philip R. Sellinger announced.

Walid Khater, of Mesa, Arizona, pleaded guilty today before U.S. District Judge Brian R. Martinotti in Newark federal court to an information charging him with one count of conspiracy to commit wire fraud and one count of conspiracy to defraud the IRS. Walid Khater’s conspirator, Omar Khater, of Fairfield, New Jersey, previously pleaded guilty to the same charges and is scheduled to be sentenced on June 12, 2024.

“Walid Khater has admitted his role in an elaborate scheme that used stolen personal identifying information and fabricated tax returns to fleece the IRS of millions of dollars. With the help of our law enforcement partners, we will aggressively pursue these illegal and dangerous schemes, and those who perpetrate them will be called to answer for their crimes,” said U.S. Attorney Philip R. Sellinger.

“Investigating individuals who use stolen identities to file fraudulent returns for personal gain is a top priority at IRS Criminal Investigation,” Jenifer L. Piovesan, Special Agent in Charge, IRS Criminal Investigation, Newark Field Office, said. “We will continue working with our law enforcement partners to investigate and prosecute individuals who attempt to cheat our tax system on the backs of innocent taxpayers.”

“Khater admits he worked with his co-conspirator to steal personal information from his victims to file fake tax returns,” FBI – Newark Special Agent in Charge James E. Dennehy said. “He then used a chunk of the $4.4 million he stole to gamble. Adding to his already flagrant criminal acts, he filed his winnings as income to get tax refunds - stealing even more money from the federal government. His luck seems to have finally run out.”

According to documents filed in this case and statements made in court:

Walid and Omar Khater were relatives who worked together and with others to steal victims’ identities, which they used to file false tax returns and fraudulently receive tax refunds from the IRS. They electronically submitted tax documents to the IRS falsely claiming that the individual taxpayers listed on those documents had earned certain income or won thousands – and in some cases millions – of dollars in gambling and lottery winnings. The false filings also claimed tax withholdings on the purported income or gambling winnings that entitled the tax filer to refund payments from the IRS.

The Khaters and others typically submitted these fraudulent tax filings using the names and personal identifying information of individual taxpayers without their knowledge or permission. The fraudulent filings caused the IRS to pay lucrative tax refunds, totaling $4.49 million, which the Khaters and others directed to various bank accounts that they controlled.

The charge of conspiracy to commit wire fraud carries a maximum potential penalty of 20 years in prison and a fine of $250,000, or twice the gross gain or loss from the offense, whichever is greatest. The charge of conspiracy to defraud the IRS carries a maximum potential penalty of five years in prison and a fine of $250,000, or twice the gross gain or loss from the offense, whichever is greatest. Sentencing is scheduled for Oct. 9, 2024.

U.S. Attorney Sellinger credited special agents of IRS-Criminal Investigation, Newark Field Office, under the direction of Acting Special Agent in Charge Jenifer L. Piovesan, and special agents of FBI-Newark, under the direction of Special Agent in Charge James E. Dennehy with the investigation leading to today’s guilty plea. He also thanked the NJ Transit Police.

The government is represented by Assistant U.S. Attorneys Fatime Meka Cano of the Economic Crimes Unit and Katherine M. Romano of the Health Care Fraud Unit in Newark.

CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a more than a 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.