Members of four separate San Diego-area gangs are accused of fraudulently applying for millions in COVID-related tax credits, resulting in a grand jury indictment charging 17 people with various felonies, prosecutors announced Wednesday.
The alleged scheme involved fraudulent tax claims for sick and family leave credits intended to help certain self-employed people affected by the COVID-19 pandemic. While the tax form used to apply for these credits didn't provide for more than 60 days of pandemic-related leave, the defendants allegedly entered time periods well exceeding that period. Prosecutors say some of the defendants entered amounts ranging from 790 to 15,678 days of leave for a single year.
Prosecutors say the scheme was orchestrated by 31-year-old Stephen Pittman Jr., who is accused of recruiting co-conspirators and helping them file the false claims.
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Prosecutors alleged in a news release sent out on Wednesday that "Pittman used some of the money to purchase diamond-encrusted Cartier and Rolex watches, three diamond chains, and a diamond-encrusted necklace of his gang moniker," which is "Blu Flame," with the "B" crossed out.
According to the San Diego County District Attorney's Office, the defendants claimed credits for pandemic relief totaling over $2.2 million, received about $1.75 million, and spent that money on personal items that prosecutors say benefited them and their gangs. The DA's Office says the fraudulent tax returns resulted in IRS payments ranging from $97,645 to $229,153.
The alleged fraud was first brought to light during an unrelated murder investigation, when a suspect's cell phone revealed what appeared to be evidence of a fraudulent tax refund. The DA's Office says the investigation into the 2022 Lincoln Park slaying of Tre'Von Stewart-Jordan has since resulted in a murder conviction and life without parole sentence for one defendant and murder charges against several others, including Haben Haile, who is also charged in the fraud indictment.
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The defendants are charged with 81 felony counts, including conspiracy to commit a crime, filing a fraudulent tax return, assisting in the filing of a fraudulent tax, receiving stolen property and money laundering.
San Diego County District Attorney Summer Stephan warned the public that this type of fraud isn’t just about the money lost, especially "when it’s in the hands of gangsters that they can use to purchase more guns, more drugs, sell more women in human trafficking, sell more drugs that poison our community.”
Of the 17 defendants, 14 were arrested Tuesday, according to the DA's Office. Two others were already in custody at the time and one remains at large.
