3 from New Jersey charged with fraudulently seeking $2.9 billion in COVID tax credits

Three people from New Jersey have been charged for allegedly falsely seeking more than $2.9 billion -- yes, billion -- from the IRS by filing over 130 false tax forms claiming COVID-related employment tax credits.

Federal authorities say Rudolph Johnson, Frantz Pasteur, and Frederick Anderson, all of Irvington, Essex County, are each charged with one count of conspiracy to file false claims against the government and one count of conspiracy to commit wire and mail fraud.

Additionally, Johnson is charged with three counts of money laundering, Pasteur with two counts of money laundering, and Anderson with three counts of money laundering.

In response to the COVID-19 pandemic and its economic impact, Congress authorized an employee retention tax credit (ERC) that a small business could use to reduce the employment tax it owed to the IRS.

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According to officials, from June 2021 to November 2023, the trio established a slew of sham entities and filed fraudulent IRS forms in the names of these entities claiming fraudulent entitlement to tax refunds, including the ERC. These entities allegedly had limited tax histories, never paid any W-2 wages, and made only nominal, if any, payments to the IRS.

In total, the defendants claimed $2.9 billion in tax benefits, and as a result, the U.S. Treasury issued $1.03 billion in refunds.

That money was then used to "fraudulently enrich themselves" by purchasing things like luxury cars.

Johnson and Pasteur appeared in Newark federal court on Thursday and they were released on bail. Anderson will appear at a later date.

The conspiracy to file false claims against the government offense carries up to a decade in prison and a $250,000 fine. Conspiracy to commit wire and mail fraud can send someone to prison for up to 20 years. Each of the money laundering offenses carries a maximum penalty of 10 years in prison and a $250,000 fine.

The public is reminded that charges are accusations and all persons are considered innocent until proven guilty in a court of law.