San Diego Gang Members Charged With Embezzling $1.7 Million in COVID Tax Fraud Scheme

The streets of San Diego have become the scene of a different kind of brutality, as 17 individuals linked to four separate gangs have been charged with running a tax fraud scheme that embezzled more than $1.7 million in COVID relief funds. The San Diego County District Attorney’s Office unveiled the operation, which took advantage of pandemic relief measures, and alleged that the illicit profits far exceeded the $2.2 million initially sought.

In a bold move to quickly fund their operations, Stephen Pittman, Jr., 31, emerged as the orchestrator of this fraud, recruiting members across gang lines to file fraudulent tax returns. According to the San Diego County Prosecutor’s Office, between April and October 2022, these individuals manipulated Form 7202 to falsely claim Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals. Defendants filed for up to 15,678 days, exponentially higher than the 60 days allowed, resulting in refunds of up to $229,153.

Pittman used some of the stolen wealth to acquire ostentatious symbols of his ill-gotten gains, such as diamond-encrusted watches and chains. The hefty haul did not go unnoticed, as police slammed the ring with 81 felony charges ranging from conspiracy to tax fraud to money laundering. As of Tuesday, 14 suspects had been arrested; two were already in custody and one remains at large.

While these crimes initially seemed unrelated to violent street activities, it was detective work during a murder investigation that led to the unraveling of the financial conspiracy. An IRS refund message discovered on a suspect’s phone tied the cases together, suggesting a deeper connection between financial crimes and gang violence. The San Diego Police Department’s Financial Crimes Division led the investigation with the East County Gangs Task Force, working to restore justice to a community that had been betrayed.

SDPD Chief Scott Wahl, in a press release from the San Diego County District Attorney’s Office, emphasized the investigators’ diligence: “This case is a testament to the thoroughness of our investigators, whose diligence helped not only solve a murder, but also uncover a significant criminal scheme involving a network of street gangs.” The funds, he noted, were intended “for the community most deeply impacted by the pandemic, and that is fraud our department will not tolerate.”