A Santa Clarita Valley man who claimed to be a tax preparer was sentenced Tuesday to seven years in federal prison for defrauding his clients out of more than $4 million by falsely promising huge windfalls from a sham federal program that purportedly would issue large grants to them.
Edgardo Zeta Montalban, 70, of Valencia, was sentenced by U.S. District Judge Stanley Blumenfeld Jr., who said Montalban “exploited human frailty” in conducting his fraud. Blumenfeld said the criminal conduct in this case was “despicable, cruel and callous,” and it caused “devastating effects on numerous victims,” according to the U.S. Attorney’s Office.
Montalban has been in federal custody since April 6, when Blumenfeld found that he violated the conditions of his bond by continuing to commit the fraud even after pleading guilty in December to one count of conspiracy to commit wire fraud.
From 2013 until September 2020, Montalban, who presented himself 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.
As part 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.
“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,” prosecutors wrote in sentencing papers, adding that the defendant “repeated this process until he had bled his victims dry, or they realized they had been defrauded and stopped paying him.”
Federal prosecutors recommended Montalban receive a prison sentence of 10 years, but the judge decided to issue the seven-year sentence after considering Montalban’s significant health issues.