TRENTON, N.J. – A Middlesex County, New Jersey, man was arrested today for his role in a scheme to defraud the IRS by making false claims for income tax refunds and conspiracy, U.S. Attorney Craig Carpenito announced.

Luis Crespo, 42, of Sayreville, New Jersey is scheduled to appear by this afternoon by video conference before U.S. Magistrate Judge Zahid N. Quraishi in connection with an indictment, unsealed today, that charges Crespo with conspiracy to defraud the United States with respect to claims and with filing false, fictitious and fraudulent claims.

According to documents filed in this case and statements made in court:

Crespo was allegedly part of a conspiracy led by Michael Watsey, who orchestrated a scheme to file false claims or cause the filing of false claims, namely the filing of 16 false tax returns in the years 2014 through 2017. Watsey created false Forms W2-G, which showed significant gambling winnings and Federal tax withheld. Participants in this scheme were Watsey, his family members, Crespo and other associates. Watsey filed or caused the filing of 16 false tax returns with false Forms W2-G, requesting a total of $3.9 million in false federal tax refunds with a total of $1.29 million actually being received. Crespo used false Forms W2-G created by Watsey in the filing of his 2016 and 2017 false tax returns. Those returns requested a total of $508,787 in false federal tax refunds with a total of $510,668 actually being paid by the IRS.

Watsey pleaded guilty before U.S. District Judge Anne E. Thompson on Jan. 3, 2020, and is scheduled to be sentenced Dec. 15, 2020.

The conspiracy count carries a maximum penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. The false, fictitious or fraudulent claims counts each carry a maximum penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense. 

U.S. Attorney Carpenito credited special agents of the IRS, under the direction of Special Agent in Charge Michael Montanez, with the investigation leading to the charges and arrest.

The government is represented by Senior Trial Counsel Jason M. Richardson of the U.S. Attorney=s Office Criminal Division in Camden.

The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

TRENTON, N.J. – A Middlesex County, New Jersey, man today admitted his role in a conspiracy to defraud the United States by filing false tax claims for gambling winnings, U.S. Attorney Craig Carpenito announced.

Michael Watsey, 43, of South River, New Jersey, pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to an information charging him with one count of conspiracy to defraud the United States with respect to claims.

According to documents filed in this case and statements made in court:

Watsey admitted that he was involved in a conspiracy with his family members and others to file 16 fraudulent U.S. Income Tax Returns for years 2014 through 2016. He and his conspirators created false W2-G forms to report gambling winnings, showing significant winnings and federal tax withheld by casinos in Atlantic City. The 16 false tax returns falsely claimed $3.9 million in federal tax refunds. The IRS paid out $1.3 million in refunds.

Watsey admitted to creating the false forms on his home computer, preparing false documents to send the IRS after tax refunds were questioned, pretending to be a casino host by phone with an IRS representative and devising a way to have false W2-G forms filed with the IRS.

The charge to which Watsey pleaded guilty carries a maximum potential penalty of 10 years in prison and a $250,000 fine. Sentencing is scheduled for April 7, 2020.

U.S. Attorney Carpentio credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge John R. Tafur, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Jason M. Richardson of the U.S. Attorney=s Office Criminal Division in Camden.

Defense counsel: Thomas Young Esq., Assistant Federal Public Defender, Camden