College athletes net $400K in tax-refund fraud scheme

Jan 11, 2015

SIOUX FALLS, S.D. (AP) — He wore a hoodie and a stocking cap as he made multiple trips to an ATM on a warm day in April 2012, cutting a suspicious enough figure that a concerned citizen tipped off police in the college town. Using surveillance video, they discovered a cornerback for the University of South Dakota’s football team was using a preloaded debit card that had been issued for a tax refund.

The card, however, did not belong to Alphonso “Rico” Valdez. A scheme to defraud the IRS of $1.1 million began to unravel. After a months-long investigation, authorities busted up the fraud ring, which netted about $400,000 over nearly a year.

Six people involved in the complicated scheme were USD football players at the time, and another had once been on the track and field team and impeached as USD’s student government president over allegations of misused funds. But for the hundreds of thousands of dollars the group collected, the school’s athletic officials were never suspicious of any extracurricular activity.

All 11 involved have pleaded guilty to federal fraud charges in Sioux Falls. Valdez, the 23-year-old ringleader, and a co-conspirator are to be sentenced Monday. Those already sentenced received prison times ranging from 2 years to more than 5 years and all but three were ordered to pay $422,000 in joint restitution.

Valdez recruited students, his girlfriend and others he knew in his hometown of Tampa, Florida, to gather names, addresses, Social Security numbers and other identifying information, federal authorities said of the scheme, which went on between June 2011 and May 2012. They used the data to file fraudulent tax returns, using addresses that weren’t associated with the identity theft victims so that members of the scheme could retrieve the refunds.

The group coordinated the scheme through text messages, which contained much of the information needed to file the bogus returns, court records show. Through texts, Valdez ordered some of his accomplices, including then-defensive back Marquis Butler, to make deposits to Valdez’s bank account and check addresses for incoming tax refunds.

“Mr. Valdez had a contact saved in his phone under ‘Quis,’ and I was able to verify that it belonged to Marquis Butler,” IRS special agent Corey Vickery testified in September. Prosecutors allege Butler, 24, netted the group $85,500.

Valdez’s now ex-girlfriend, Tampa resident Melissa Dinataly, was employed by an insurance company and managed to collect more than 30 Social Security numbers. Twelve false returns connected to her were filed in 2011 claiming over $110,000 worth of refunds, and authorities caught all but one of the fakes before the defendants got the money.

“They had to get these (returns) submitted before the real person could submit it,” assistant U.S. attorney John Haak told the court during Dinataly’s sentencing hearing in June. “If successful, this thing would have gotten much bigger than it did.”

It’s unclear where the bulk of the money is or how it was spent, other than the airplane ticket that former USD cornerback Dametrius Turner bought and the money that remained on the preloaded cards. There was no Louis Vuitton, no Mercedes Benz, no Tiffany and Co. jewelry.

“I’m not even sure that any of them had a car while they were here, and if they did, it probably wasn’t a nice one,” USD athletic director David Herbster said. “They didn’t exhibit anything that you would be overly suspicious of as far as somehow coming into an excess amount of money. There were no really nice cars, there was not a lot of fancy clothes, fancy jewelry things like that that would lead you to believe, ‘How did you get that?'”

Valdez’s public defender has declined to comment previously on the case and didn’t immediately return a message left by The Associated Press.

Some of the defendants — Valdez included — have expressed remorse.

Valdez’s goal is to become a high school football coach and show children that they can “further their education” despite mistakes they may have made, he said during an October hearing. His ex-girlfriend told a federal judge that “nobody deserved” to be defrauded.

“The world is corrupt enough the way it is,” Dinataly, 24, said. “I shouldn’t have done this.”