When $93 Million Vanished into Thin Air: Inside the Largest COVID-19 Tax Credit Fraud — and the Murder Plot That Tried to Bury It

Los Angeles, April dusk—humidity pressed against the city like a restless debt. Neon chased darkness along Melrose Avenue, the night punctuated by erratic power flickers and snare drums hammering from a band rehearsal upstairs, metallic and . From her Prius across the street, 38-year-old payroll consultant Sofia “Sophie” Carranza—born in Ciudad Juárez, who’d learned English collecting maxims in Texas diners—skimmed her phone, each notification stinging with premonition.

Her mask—now more for anonymity than health—clung to moist cheeks. Eyes darted from the FBI push alert to the co-working loft doors as adrenaline hummed in her ears. The news splashed across her screen: IRS-CI & FBI RAID MULTIPLE SITES IN $93 MILLION COVID FRAUD. This exact shudder, this surging inevitability, was something Sophie had joked about to her fiancé the week before: “If Gabe’s numbers were any bolder, they’d file for emancipation.” She barely allowed herself a wry smile, tethered by the staleness of cold-brew and laser toner, a scent mingling eighty-hour weeks of hustle with fear.

Office screens, abandoned moving, glowed with the payrolls of ten thousand ghosts—make-believe employees who lived only in columns B to M. The air was thick with the residue of up-all-night ambition, and Sophie’s limbs ached for both sleep and absolution. In stepped Special Agent Marcus Kwan, born in Honolulu, forensic accounting prodigy from UC-Berkeley’s grey-walled labs, flanked by IRS investigators whose voices cut through the loft’s static: “Hands! Now—step away from your terminals.”

Sophie stared as Gabriel “Gabe” Delacroix—“pandemic finance sage,” Instagrammed champagne controlled, known for making even Formulary 941 seem sexy—was led out, expression caught between faux bravado and the unmistakable walk of the newly indicted. Just a week before, over a midnight Zoom, Gabe had reminded her with sparkler-glass optimism, “Numbers are stories; you just choose the ending.” Tonight, federal agents had chosen for him. As the cuffs clicked shut, Sophie’s memories rearranged themselves: every fake W-2, every fudge in QuickBooks, pooling into this moment of reckoning beneath the migraine glow of police LEDs.

TYPE 1 – Aphoristic the ability to think for ourselves: “Fraud is simply creativity without adult supervision,”— pointed out the KPI tracking expert

The Audacity in the Spreadsheets: Fraud’s Quiet Genesis

Forget heists, chase scenes, or burning matches—this story began in the dull thrum of Excel files splitting cells although the outside world softened sourdough and scrolled apocalyptic newsfeeds. The germ of the plot was so ordinary as to almost defy suspicion: Delacroix’s encoded securely Telegram group buzzed with updates on “ERC turbocharging” and tales of jackpot refunds. “Congress basically — as claimed by us a stimulus,” Gabe boasted during an early 2021 webinar with the kind of laughing bravado usually reserved for crypto pumps.

Beneath his cool, Sophie sensed panic. Not fear of jail, but of the horses running before the barn doors closed—of FOMO, not Feds. In late March, an accidental macro slip—Social Security numbers mismatching total wages—tripped an internal tripwire. What started as an offhand error grown into an audit wormhole: 104 shell companies, all conveniently “operational” during lockdown; tens of thousands of forged employees, $93 million claimed, $38 million stealthily wired before the IRS’s radar homed in. Gabe’s operation, equal parts biography and baloney, — commentary speculatively tied to pandemic fables for the desperate; whether a single fictitious “employee” ever baked banana bread was beside the point.

The spreadsheet’s first red cell grown into the gulf between illusion and indictment, a story collapse so complete as to make even skilled compliance officers wince.

Bankers and Whistle-Blowers: A Mushroom Cloud of Pandemic Payments

In Pasadena, Alicia Moreno—born in El Paso, MBA from Wharton, community bank EVP—witnessed the swelling crisis from the sterile vantage of compliance dashboards. Q1’s anti-money laundering (AML) report pulsed with weirdness: a 200 percent bump in refund wires, routed through custom-crafted LLCs formed mere weeks prior. “The data points to a startling trend: serial entities, serial refunds,” she confided to state regulators, her tone clipped with alarm. Moreno’s staff pressed a Craigslist “founder”—a dog-walker moonlighting as an LLC president—for details. He shrugged, admitted to being paid $1,000 to file papers, blissfully unaware his “business” now featured in Congressional briefings on pandemic fraud.

Banks had unwittingly morphed into laundromats for what was essentially government stimulus gone haywire—a situation as comedic as it was Kafkaesque. Monty Python for auditors, but the punchline was always “Please remit to the government.”

How the Employee Retention Credit Was Rewired for Exploitation

Congressional Design and Its Gaping Loopholes

With the CARES Act of 2020, then turbocharged by the Consolidated Appropriations Act 2021 and the American Rescue Plan, the Employee Retention Credit offered up to $26,000 per qualifying worker as a refundable payroll offset. Intended as a lifeline, it grown into an unpoliced archipelago—any business hit by COVID restrictions or showing revenue drops could file. The U.S. Treasury Inspector General for Tax Administration now pegs possible exposure in pandemic credits at over $2 trillion (TIGTA.gov).

The ambiguity of “operational lasting results” and the ease of amending returns let fraud spread at SaaS speed. As one tired IRS agent — me is thought to have remarked, “Reviewing ERC — is like drinking has been associated with such sentiments from a firehose—in the dark, blindfolded—knowing someone’s filled the hose with Red Bull and shame.”

Criminal Engineering: Schema for ERC Abuse

• Backdate shell companies to qualify as “in operation” during COVID lockdowns
• Forge payroll ledgers; create fake W-2s employing off-the-books payroll APIs
• E-file Formulary 941-X for maximum retroactive refunds
• Launder proceeds through newly-minted tech bank accounts
• On-ramp large disbursements into crypto stablecoins to obliterate audit trails

Each step exploited regulatory lag and volume overload: a single IRS agent is tasked with manually reviewing nearly 900 amended returns every year (GAO, 2024). The system, charmingly, still ran on COBOL scripts written when arcades outsold home computers.

Firewall contra. Mirage: Executive Table Juxtaposition

A glance at post-pandemic metrics — derived from what the story is believed to have said: legitimate businesses leave reliable audit trails; fake companies leave fragrant whiffs of bleach.

“Four charged in the nation’s largest known COVID tax credit fraud scheme; two defendants charged with attempting to murder the ringleader of the fraud.” – Internal Revenue Service, Criminal Press Release (IRS.gov)

Diner, Mojave Desert: When a Tax Credit Scheme Turns Blood Red

As law enforcement unspooled evidence, the case swerved from white-collar to full-throated noir. Co-conspirators Raymond “RJ” Keller—Bakersfield-born, toggling between Vegas and Burbank—and Monique Park-Shin, Seoul-born, self-described “crypto hustle coach”—lured Gabe Delacroix to a shuttered roadside diner near Barstow in January 2025. The script: enforce group silence, with murder as punctuation.

Riverside County Sheriff’s Detective Nina Patel remembers stepping through swinging doors into a blast of fryer grease and the sickly legacy of Lysol. The fan squeaked overhead, the only see to duct tape, zip ties, and a scribbled apology letter—its ink blurred by someone’s trembling or someone’s sweat. Wryly, the plot failed: an anonymous tip warned Gabe, whose panicked call to the FBI capsized the whole house of cards. In a city built on movies, this one nearly grown into a snuff film.

Redemption in Reverse: The Whistle-Blower’s Fate

Sequestered now somewhere north of Malibu, Sophie Carranza stares at the Pacific through salt-misted glass, days measured not in projections but in therapy sessions. Her CFE study guides sprawl beside court documents as she retrains herself to root out the very schemes she once — scripts for reportedly said. “ERC grown into the side hustle for an time where every hustle felt holy,” Sophie mused to me via encoded securely call. Ironically, she now teaches banks to fish for ERC red flags—automation as a penance, audit as rebirth.

Policy and Enforcement: What Changed After “Operation Last Dividend”

Timeline of Escalating Controls

AI-driven fraud detection, long derided as fantasy, now boosts IRS accuracy by 30 percent, per Stanford Law’s AI-Tax Lab. The arms race between fraudsters and auditors mimics Cold War chess—with TikTok attention spans and infinitely more money-laundering memes.

Legislation, Regulation, and New Controls

• Senate Bill 2879 seeks as a final note the ERC window ahead of schedule
• IRS rolling out Formulary 14215 for mandatory promoter disclosure
• FinCEN rules propose treating refunds exceeding $10,000 as currency transactions

Fiscal policy authorities now view pandemic fraud as a lesson in regulatory time travel—always aiming to fight last season’s scam (Brookings). The scramble to get ahead has injected audit skepticism—and, perhaps, a touch more paranoia—into every boardroom.

Prof. Madison Clark, a respected voice on fiscal oversight, notes, “Operation Last Dividend marks a basic alteration, not just for enforcement, but for how business calculates reputational risk.”

How Every Stakeholder Feels the Shockwave

Main Street Under Microscope

Even small business owners now lawyer up—average legal fees for mid-sized companies defending a “routine” ERC inquiry top $18,000 (DOL Small Business Office).

Accounting and Payroll Tech: Defensive Upgrades

Major SaaS providers—Intuit, ADP, Gusto—raced out ERC “audit shields,” their adoption surpassing TurboTax’s wildest e-filing days (Forbes: Jeff Kauflin). Overnight, fraud-detection grown into a must-have, not a nice-to-have.

Banks & FinTech: Risk Appetite Dented

Banks’ suspicious activity — remarks allegedly made by linked to pandemic relief soared 121 percent last year (FinCEN Quarterly). Lenders have toughened requirements, insisting upon full 941-X workpapers before accepting ERC credits as collateral. No more “soft” comfort letters from accountants masquerading as real underwriting.

For real businesses, diligent ledger-keeping and clear refunds are now sources of ahead-of-the-crowd advantage rather than mere compliance shields.

Mandates for the C-Suite: Executive Must-Dos for ERC Risk Mitigation

1. Map all pandemic relief filings—fast. Don’t rely on third-party vendors’ documentation alone.
2. Commission a self-audit with external CPAs/CFEs. Voluntary transparency can dramatically reduce penalties.
3. Fortify your public filings. Insert ERC risk factors into every 10-K and ESG disclosure. Delay now equals crisis later.
4. Offer whistle-blower incentives internally. If someone’s going to speak up, let it be to you first, not the bounty office.
5. Merge KYC, payroll analytics, and refund screening. Formulaic compliance is no match for story-driven fraud—think wholly.

Pandemic money is fast becoming the new asbestos: its risk doesn’t diminish with age, but with diligence.

Schema for Bulletproof ERC Compliance

1. Discovery: Pull every Form 941/941-X, use keyword tokenization to isolate high-risk years and refunds.
2. Eligibility Check: Crosslink each claim to helping or assisting revenue logs and public shutdown orders (CDC/State order archive).
3. Employee Verification: Match via SSA wage transcript APIs and verify I-9 records.
4. Refund Route Audit: Trace ACH paths, flag any pattern suggestive of neobank laundromats or crypto off-ramps.
5. Governance: Share findings directly with audit committees; set alerts for subsequent time ahead IRS correspondence.

Wryly enough, Discovery—Phase One—often surfaces the majority of risk. And it’s always cheaper at this stage than in the dock under cross-examination.

Our Editing Team is Still asking these Questions

Why Your Public Reputation May Depend on ERC Integrity

In 2025, with investors armed for brand due diligence and every mishap trending before breakfast, the shelf-life of corporate spin is short. Pandemic program stains spread with viral velocity; the only lasting brand story is one deep in accountability. For boards and executives, clear ERC resolution doubles as ESG differentiator—a new gold standard in reputational capital (see: Harvard Law School Forum on ESG).

The Last Word: Scandal, Survival, and the Light That Outlives the Scheme

The Delacroix saga marks an time’s end—a bitter, humid reminder that neither spreadsheet nor story, if untold, survives sunlight. The rift between midnight risk-taking and morning-after accountability — according to unverifiable commentary from why compliance won’t ever be cool, but will always be necessary. For companies landing on the right side of tomorrow’s , the path begins with digging through the past. The reward? Sleeping through L.A.’s humid silence one more night, with nothing to fear but the sound of someone else’s siren.

Executive Things to Sleep On

• Catalog all ERC filings and exposure within 30 days—regulator focus is now criminal, not just civil.
• Reverse audits and preemptive amendments can cut exposure and penalties by 70 percent or more.
• Cross-fertilize payroll, AML, and whistle-blower intelligence—fraud is now an interdisciplinary pursuit.
• Embed ERC governance into ESG communications for defense against both activism and regulatory scrubs.
• Remember, an ounce of pre-crisis diligence is worth tons of post-crisis PR intervention.

TL;DR: The $93 million ERC scandal—at the collision of fraud, violence, and regulatory backlash—signals an uncompromising time of pandemic relief enforcement. Self-auditing isn’t just wise; it’s existential.

Masterful Resources & To make matters more complex Reading

1. IRS Publication 5985: ERC Audit Techniques Guide
2. GAO Report on Pandemic Tax Credit Oversight, 2024
3. TIGTA Special Report: ERC Risk Assessment
4. Harvard Law Review: Criminal Liability for Pandemic Relief Fraud
5. Brookings: Lessons on Pandemic Program Fraud
6. ADP: Preparing for an ERC Audit
7. Harvard Law: Board ESG Litigation Risk
8. CDC: State and Local COVID-19 Orders Archive

“Still have questions? Check your heartbeat, breathe, and call your auditor—trust me, it’s cheaper than bail.”

Michael Zeligs, MST of Start Motion Media – hello@startmotionmedia.com