Turlock man convicted in prison tax fraud scheme

A 34-year-old Turlock man on Friday was convicted for his role in a scheme that helped him and fellow state prison inmates receive nearly $220,000 in fraudulently obtained income tax refunds.

Daniel Allen Coats pleaded guilty to one count of conspiracy to defraud the federal government by filing false claims for tax refunds, according to the U.S. attorney’s office in Sacramento.

Federal prosecutors said at least 247 false income tax claims were filed. Although the IRS stopped some of these refunds, 138 refunds worth a total of $219,984 were given out.

Coats is scheduled to be sentenced Aug. 19. He faces a maximum sentence of 10 years in federal prison and a $250,000 fine.

Federal prosecutors said the conspiracy began in 2011, when Coats and fellow inmates housed at the California Correctional Center in Susanville obtained identification information of other prison inmates. The information was then given to co-defendants outside the prison.

That information was used to prepare and file false income tax returns with the IRS, claiming refunds to which the inmates were not entitled, the prosecutors said. Coats also filed three false tax returns in his own name.

The refund checks were deposited into various bank accounts and onto prepaid debit cards the inmates controlled. Prosecutors said the refunds were used for personal expenditures and added to the inmates’ commissary accounts.

On July 8, Edwin Ludwig was sentenced to seven years in federal prison for his role in the tax scheme, according to prosecutors. Charges against five other co-defendants are still pending.

This story was originally published June 3, 2016 at 3:38 PM with the headline "Turlock man convicted in prison tax fraud scheme."