Episode 8: The Fall of Steve Martinez: From IRS Employee to Convicted Con Artist

Tax Crime Junkies

Today’s episode reveals part one of the incredible true story of Steve Martinez, a former IRS agent and CPA turned con artist. Steve ran an intricate scheme committing tax evasion on behalf of both himself and his clients and defrauding his clients of millions of dollars. He created a dummy business which he used to embezzle his client’s tax return payments to the IRS while also filing false returns on their behalf. He then committed personal tax evasion by not reporting his illegally gained income. In 2009, Steve realized that he was being investigated and started defrauding even more people, using that money to pay off previous victims. He also tried to amend his tax returns to account for some of his unreported income. In 2011 he was finally arrested, but he managed to convince two of his clients to help him post bail. The conditions of his bail included restrictions like a strict curfew, GPS monitoring through an ankle monitor, and the inability to leave San Diego. Then things got even more twisted. Steve’s brother bought tickets for the whole family to go on a Disney Cruise, something that would require the conditions of Steve’s bail to be amended. They argued in court that this trip was for the benefit of Steve’s autistic son and that the ankle monitor and curfew were impacting Steve’s ability to be with his family. Shockingly, the court actually agreed to adjust the terms and Steve got to take a Disney Cruise while under indictment for stealing millions of dollars from his clients.

Talking Points:

• Steve’s dummy business, EFTPS, used to embezzle his client’s money and commit tax evasion on their behalf
• Steve’s double life as a respectable Christian family man and trusted CPA
• Steve schemes more than 11 million dollars from clients, committing tax evasion himself when he does not report his gains. He fails to report more than 15.8 million dollars
• In 2009, Steve amends his tax returns and reports additional income hoping to sidestep tax evasion
• Steve defrauds more people, using the illegal gains as restitution for the victims of his prior frauds
• The Supreme Court debate around whether embezzled money is taxable, settled in 1961
• April 15, 2011, Steve is arrested for tax crimes on a $350,000 secured bail
• April 21, 2011, Steve is released from custody after convincing two of his clients to post his bail and a friend to use their house to secure the bond
• The terms of Steve’s bond
• Steve continues working as a bookkeeper/consultant for clients with the approval of the court
• Steve’s brother buys Disney Cruise tickets for January 2022, causing Steve to request that his bond be amended. Steve’s defense attorney convinces the court to adjust the terms, removing the curfew and ankle bracelet, returning his passport, and allowing him to attend the family cruise
• In Part 2, get ready for things to get more twisted, with schemes involving a stolen limo and even a murder!

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