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Santa Clarita Valley Man Sentenced to 7 Years in Prison for $4 Million Con Where Clients Were Falsely Promised Government Grants

Publication date: 
Tuesday, April 27, 2021

          LOS ANGELES – A man who claimed to be a tax preparer was sentenced today to 84 months in federal prison for defrauding his clients out of more than $4 million by falsely promising them huge windfalls from a sham federal program that purportedly would issue large grants to them.

          Edgardo Zeta Montalban, 70, of Valencia, was sentenced by United States District Judge Stanley Blumenfeld Jr., who said Montalban “exploited human frailty” in conducting his fraud. Judge Blumenfeld said the criminal conduct in this case was “despicable, cruel and callous,” and it caused “devastating effects on numerous victims.”

          From 2013 to September 2020, Montalban, who held himself out as an accountant and tax preparer, asked some of his clients to invest in a federal grant program he called “Suppressed IRS Accounts.” Montalban told his clients that if they paid him in cash, the federal government would issue them grants many times larger than what they paid. In reality, no such grant program existed.

          In furtherance of the scheme, a co-conspirator made counterfeit Treasury checks payable to the victim clients for tens of millions of dollars, which Montalban used as props to entice the victims to pay him. Montalban explained to the victims that they had to pay him in cash to protect the federal grant program’s secrecy.

          After his victims paid him, Montalban made up excuses as to why the Treasury checks had been delayed, and tricked the victims into paying him more money, purportedly for expenses necessary to overcome the obstacles to their checks’ issuance.

          “[Montalban] would promise his victims a huge windfall from the government in exchange for a modest payment up front to [Montalban] in cash,” prosecutors wrote in their sentencing memorandum. “Because the windfall was a fraud, each purported difficulty overcome by an additional cash payment had to lead to yet another difficulty, requiring yet another cash payment. [Montalban] repeated this process until he had bled his victims dry, or they realized they had been defrauded and stopped paying him.”

          Montalban has been in federal custody since April 6, when Judge Blumenfeld found that he violated the conditions of his bond by continuing to commit the fraud even after pleading guilty in December 2020 to one count of conspiracy to commit wire fraud.

          Federal prosecutors recommended Montalban receive a prison sentence of 120 months, but Judge Blumenfeld decided to issue the seven-year sentence after considering Montalban’s significant health issues.

          The FBI investigated this case with assistance from the U.S. Secret Service and the U.S. Treasury Inspector General for Tax Administration (TIGTA).

          Assistant United States Attorney Andrew Brown of the Major Frauds Section prosecuted this case.

Additional Details
URL
Component
USAO - California, Central;
OIG
Treasury IG for Tax Administration