Stockton Woman Sentenced to over 5 Years in Prison for Criminal Tax Case and Money Laundering

SACRAMENTO, Calif. — Terrylyn McCain, 67, of Stockton, was sentenced today by United States District Judge Troy L. Nunley to five years and 10 months in prison for tax fraud, making false claims against the United States, and money laundering, United States Attorney Benjamin B. Wagner announced. In addition to the prison term, Judge Nunley ordered McCain to pay $156,373 in restitution, the amount she received early in her false refund scheme.

On March 13, 2015, after a five-day trial, a jury found McCain guilty of four counts of mail fraud for mailing false tax returns, four counts of making false claims against the United States by falsifying personal income tax returns for tax years 2005 to 2008, and three counts of money laundering for buying gold with proceeds of the fraud.

According to court documents and evidence introduced at trial, McCain mailed tax returns to the IRS and claimed that banks, tow truck companies, department stores, interior designers and even her gardener had withheld income due to her. To support her scheme, she utilized false documents that indicated significant tax withholdings, including 1099–OID forms that were purportedly issued by financial institutions such as the Bank of Stockton and national retailers such as Costco and Target. In reality, funds were never withheld, the 1099–OID forms were fraudulent, and McCain’s tax returns were falsely inflated by hundreds of thousands of dollars.

In total, McCain filed at least 12 fraudulent returns that sought nearly $3 million in tax refunds. In just one instance, early in the scheme, the IRS refunded $156,373 to McCain. Within the month, she had used the refund money to purchase approximately $62,000 in gold coins, forming the basis for the money laundering charges.

In sentencing McCain, Judge Nunley told the defendant, “You are a cheat, a liar … you stole from the government and others.”

This case is the product of an investigation by the Internal Revenue Service-Criminal Investigation. Assistant United States Attorneys William S. Wong and Kevin Khasigian are prosecuting the case.