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Sunday, May 19, 2024 | Back issues
Courthouse News Service Courthouse News Service

Even Ponzi Scheme Profits Must Be Reported

SAN DIEGO (CN) - A man who obtained more than $3.94 million from the convicted operators of a Ponzi scheme has pleaded guilty to evading taxes on those funds.

Donald Lopez's scheme marks the latest fallout from a massive investment, real estate and mortgage fraud scheme orchestrated by Matthew La Madrid and Moises Pacheco in San Diego.

La Madrid sent $10 million in stolen investor funds to Lopez's company in November 2007, and Lopez took $3.94 million out of that amount, prosecutors said.

Lopez admitted Thursday that he did not pay taxes on $3.42 million in taxable income.

He entered the plea to a one-count felony information charge of willful tax evasion before U.S. Magistrate Judge Nita Stormes.

Lopez also admitted concealing his receipt and use of this money.

Prosecutors say Lopez has lied to them before, noting that he pleaded guilty in 2009 to a federal obstruction of justice charge.

Those charges stemmed from lies that Lopez told the court in a civil case seeking to recover La Madrid investor funds. Lopez lied about the true location, condition and disposition of the $10 million that La Madrid had wired to his company.

"As revealed in court records, Lopez received the $10 million by wire transfer from an account controlled by La Madrid at a San Diego branch of the Bank of America on November 14, 2007," according to the U.S. Attorney's Office. "The money was identified in other proceedings as investor funds from La Madrid's and Pacheco's fraud schemes. In total, Lopez took for himself approximately $3.94 million of the $10 million in 2007 and 2008. Lopez admitted today that, after taking these funds, he did not file tax returns for 2007 and 2008, and knowingly and willfully failed to report the funds as income for those years. As a result, the IRS lost more than $1.3 million in revenue."

Lopez, 63, of Denver, Colo., faces up to five years in prison and a $250,000 for the crime he pleaded to Thursday.

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