HAMDEN, CT — A 63-year-old Hamden woman pleaded guilty Tuesday, Nov. 3, to false claims tied to IRS refunds in a pandemic relief scheme. Patch.com reported that U.S. District Judge Sarah F. Russell presided over her plea in New Haven. Federal prosecutors said nearly $800,000 in government money went toward the scheme. U.S. Attorney David X. Sullivan and IRS Criminal Investigation's New England special agent in charge Thomas Demeo announced the plea.
How the Refund Scheme Worked
Blacfoot LLC, which she owned, was a small business selling health products, lotions, oils and candles. The U.S. Attorney's Office said the company had no employees and earned little to no income.
In late 2021, acquaintances asked her to set up an account with an online tax-preparation service, and she provided the login information. They used it from March 2022 to January 2023 to submit fraudulent quarterly federal payroll tax returns for Blacfoot. The returns inflated the number of employees and wages to seek large refunds under two pandemic programs: the Employee Retention Credit and a credit for sick and family leave wages, Patch.com reported.
The IRS asked her to confirm the company's information, and she told the agency Blacfoot had five employees. The company had none. From July through November 2022, the business got nine refund checks from the IRS worth $799,052 altogether. Prosecutors said she gave some of that money back to the people behind the scheme.
The credits were created in 2020 to help businesses keep workers on payroll and cover certain pandemic-related leave costs.