SAINT PAUL: A Shakopee couple pleaded guilty to federal charges in what authorities characterized as a wide-ranging, multimillion dollar income tax refund scheme that preyed on immigrants in Minnesota and Florida.
Mark Arlin Hammerschmidt pleaded guilty to conspiracy charges and has agreed to cooperate with authorities investigating the scam. He faces up to nine years in prison, under the agreement. He also agreed to repay more than $1.8 million in restitution to victims.
His wife, Ornella Angelina Hammerschmidt, pleaded guilty to filing a false claim for a tax refund and agreed to pay just over $45,000 in restitution. The agreement calls for a prison sentence of up to 21 months for Ornella Hammerschmidt. She is a native of Venezuela; she said she understood that her guilty plea may result in immigration sanctions.
Their plea agreements say the Hammerschmidts worked together and with others to file more than 1,000 bogus federal tax returns. They operated American Group, an immigration assistance and tax preparation business with offices in Shakopee and Winter Garden, Florida. Their plea agreements do not bar their prosecution in other federal jurisdictions.
Mark Hammerschmidt’s agreement describes two conspiracies, one targeting Minnesota victims generally and the other targeting Guatemalans in Minnesota and elsewhere. He made the fraud hard to spot and unravel by indicating that the victims had prepared their returns themselves; the Hammerschmidts did not sign the forms as preparers. The Hammerschmidts used their own bank accounts to receive the refunds and deducted their fees before paying the remaining funds to the taxpayers.
Mark Hammerschmidt obtained official identification papers for the Guatemalan victims and used them to obtain taxpayer identification numbers, then filed multiple years’ worth of fake tax returns in their names supported with bogus financial records, false dependents and education credits. The IRS assigns taxpayer ID numbers to people such as illegal immigrants, who are ineligible for Social Security numbers but who file tax returns anyway.
The IRS paid nearly $1.8 million on the bogus refund claims.
The IRS raided American Group’s office in downtown Shakopee in February 2012. Signs out front offered tax and accounting services, promising “The Best Refund, Guaranteed.” The Hammerschmidts declined to comment on the raid at the time and ordered a reporter to leave the office.
In addition to accounting, tax preparation and other financial services, American Group offered criminal defense and immigration services related to applications for citizenship, residency, work permits and visas.
Most of the taxpayer ID applications listed a UPS Store in Shakopee as the applicants’ residence, but the investigation indicates that most of the applicants live in Florida. That’s true for many individuals who also filed state tax returns in Minnesota through American Group, IRS agent Marissa Pitzen said in an affidavit.
One thing that raised suspicions is the fact that nearly all of the tax returns included claims for “Household Help Income,” which typically applies to wages paid for babysitting, housekeeping and landscaping. Many of the Minnesota income tax returns also included questionable dependent information and education expenses.
The Hammerschmidts first came to the attention of federal investigators in 2004 when they were running an Orlando-based company called All Kinds Services. Agents with U.S. Immigration and Customs Enforcement (ICE) alleged that the company helped foreigners to unlawfully obtain immigration benefits by arranging sham marriages.
In 2008, Ornella Hammerschmidt was indicted in Florida along with two relatives in a marriage and visa fraud conspiracy. News reports said ICE agents who raided All Kinds Services found a plastic wedding cake that “newlyweds” used as a photo prop, a fake reception hall and a rack with several wedding dresses.
At least 11 others charged separately in connection with that case pleaded guilty. But a judge threw out the charges against Ornella Hammerschmidt and her relatives after learning that an ICE agent had told a witness who was about to testify that she needed to identify a particular defendant. The judge ruled in February 2009 that the federal prosecutors could not retry the case.
Shortly before that, however, Ornella and Mark Hammerschmidt were indicted on charges of conspiracy to obstruct justice, witness tampering, and destruction of evidence during the prosecution of the marriage fraud case. They struck a bargain, with each pleading guilty to a single count of fraud and misuse of a visa. They were sentenced in the summer of 2009 to three years of probation.
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