FILEDT SUPERIOR coua DINO FSAN BERNAR Raciabi'aggucmnowepi lg}? 23 2019 SUPERIOR COURT OF THE STATE OF CALIFO A FOR THE COUNTY OF SAN BERNAW U. PEOPLE OF THE STATE OF CALIFORNIA, CASE WVMOO 3? 03/ Plaintiff, v. DECLARATION IN SUPPORT OF ARREST WARRANT MADE GEORGE MARTINEZ, UNDER 2015.5 CCP AKA: JORGE MARTINEZ PONCE, Defendant. The undersigned, Senior Special Agent Maribel Davila, hereby declares: That she is currently employed as a Peace Of?cer with the State of California, Franchise Tax Board and has been so employed throughout this investigation. That pursuant to her employment, she has been assigned to investigate allegations that the herein above named defendant did commit the offenses of FILE A FALSE TAX RETURN in violation Of REVENUE AND TAXATION CODE Section l9705(a)(1) - Tax Fraud (5 Counts) and FILE A FALSE TAX RETURN WITH INTENT TO EVADE A TAX in violation of Section 19706 - Tax Evasion (2 Counts). That pursuant to this assignment, your declarant has Obtained information from those who have knowledge of said Offenses, whose reports are attached here and incorporated by reference. She has reviewed each of these written reports andstatements. They were prepared by persons known to your declarant to be law enforcement Of?cers (and others). The investigative report (Attachment A) consists Of _l(L pages. The reports and statements contain information from victims, witnesses, and others concerning the commission of the criminal Offense(s) for which the Complaint is being sought. Each of these documents is presently an Of?cial record of a law enforcement agency. Wherefore, your declarant prays for the issuance Of a warrant for the arrest of the above- named defendant. DefendantS? Address: Descri tionlof Defendant: Recommended Bail: $140,000 I declare under penalty of perjury that the foregoing is true and correct. DATED: W) San Bernardino County, California Dedlarant Maribel Davilav TY OF SAN BERNARDINO R??t?lio CUCAMONGA DISTRICT SUPERIOR COURT OF THE STATE OF CALIFORNIAEP 2 3 2019 FOR THE COUNTY OF SAN BERNARDINO WW PEOPLE OF THE STATE OF CALIFORNIA, CASE NO. lam/Moo? [017 Plaintiff, v. DECLARATION IN SUPPORT OF ARREST WARRANT MADE DEBORAH LYNN MARTINEZ, UNDER 2015.5 CCP AKA: DEBBIE LYNN MARTINEZ, DEBBIE LYNN ANAYA, Defendant. The undersigned, Senior Special Agent Maribel Davila, hereby declares: That she is currently employed as a Peace Of?cer with the State Of California, Franchise Tax Board and has been so employed throughout this investigation. That pursuant to her employment, she has been assigned to investigate allegations that the herein above named defendant did commit the Offenses Of FILE A FALSE TAX RETURN in violation of REVENUE AND TAXATION CODE Section l9705(a)(1) - Tax Fraud (2 Counts) and FILE A FALSE TAX RETURN WITH INTENT TO EVADE A TAX in violation Of Section 19706 - Tax Evasion (2 Counts). That pursuant to this assignment, your declarant has Obtained information from those who have knowledge of said Offenses,'whose reports are attached here and incorporated by reference. She has reviewed each of these written reports and statements. They were prepared by persons known to your declarant to belaw enforcement Of?cers (and others). The investigative report (Attachment A) consists of pages. The reports and statements contain information from Victims, witnesses, and others Concerning the commission Of the criminal Offense(s) for which the Complaint is being sought. Each of these documents is presently an Of?cial record of a law enforcement agency. Wherefore, your declarant prays for the issuance Of a warrant for the arrest of the above- named defendant. Defendant's Address: Descri tion of Defendant: Recommended Bail: $80,000 I declare under penalty of perjury that the foregoing is true and correct. DATED: (Masha mmlei San Bernardino County, California Declarant Maribel Davila Attachment A INTRODUCTION This report relates to a Franchise Tax Board (FTB) investigation involving a tax fraud case wherein the subjects, George Martinez and Deborah L. Martinez, filed false California Resident Income Tax Returns (personal income tax returns) for the tax years 2012, 2013, 2014 and 2015. George Martinez also filed a false Limited Liability Company Return of Income (LLC income tax return) for the tax years 2012, 2013 and 2014. Mr. Martinez received millions of dollars in payments from Caltrans contracts via his businesses, Alliance Distributing and Alliance Building Maintenance LLC. According to a Caltrans audit, Mr. Martinez was paid in excess of from 2012 through 2015 through his businesses. FTB's investigation revealed that George Martinez failed to report income for Alliance Building Maintenance LLC in excess of for the tax years 2012 through 2015. In addition, George Martinez and Deborah L. Martinez failed to report income from the sole proprietorship Alliance Distributing and income from the aforementioned LLC on their personal returns; the unreported income exceeded for the years 2012 through 2015. As a result, Mr. and Mrs. Martinez evaded the payment of personal income taxes in excess of for the years 2012 through 2015. EVIDENCE FOR USE IN CRIMINAL PROCEEDINGS PERSONAL HISTORY According to Department of Motor Vehicles' (DMV) records, Geor Martinez was born on and was issued California Driver License number i. George Martinez is described as 5?8? tall, weighing 190 pounds, with black hair and brown eyes? Accordin to De artment of Motor Vehicles' (DMV) records, Deborah nn Martinez was born on ?and was issued California Driver License number i. Deborah L. Martinez is described as 5?02? tall, weighing 150 pounds, with brown hair and brown eyes? BUSINESS HISTORY CA Secretary of State Alliance Building Maintenance, LLC Per California Secretary of State (SOS), a Limited Liability Company Articles of Organization was filed on September 12, 2007 for Alliance Building Maintenance, LLC with LLC Number? A Statement of Information (Limited Liability Company) in the name of Alliance Building Maintenance, LLC was filed on February 1, 2012 and listed the name George Martinez as Chief Executive Officer (CEO), Manager/Member, and Agent for Service of Process. The type of business description lists Cleaning Services. The statement was signed and listed the name George Martinez, Sole/Executive Officer as the person completing the form dated Jan. 25, 2012? A Statement of Information (Limited Liability Company) in the name of Alliance Building Maintenance, LLC was filed on August 5, 2014 and listed the name George Martinez as CEO and Agent for Service of Process. It further listed the name Deborah Martinez as Manager/Member. The type of business description lists Cleaning Services. The statement was signed and listed the name George Martinez, President as the person completing the form dated 8-1-2014 COMPUTATION OF TAX DEFICIENCY George and Deborah L. Martinez 2012 2013 2014 2015 Total Revised Taxable Income 1,806,774 1,154,360 539,496 147,754 3,648,384 Tax Deficiency $204,235 $116,737 $44,939 $8,476 $374,387 Details of this computation are set forth in Appendix II. Proof of Nonfilinq - Alliance Building Maintenance LLC A Certification of Lack of Record dated November 6, 2017 shows that a search of the FTB's records failed to disclose an LLC income tax return in the name of Alliance Building Maintenance, LLC, Identification Number?and federal employer identification number (FEIN) for the tax year 2015 Proof of Payments Alliance Building Maintenance LLC A Certification of Search and Certificate of Search Worksheet, dated November 6, 2017, show that a search of FTB's accounting records revealed records of taxes paid by Alliance Building Maintenance, LLC, Identification Number_ in the amounts of $1,049.18 forthe tax year 2012, $972.48 for the tax year 2013, $898.62 for the tax year 2014, and $800.00 for the tax year 2015 Proof of Pavments/Non-Pavments George and Deborah Martinez A Certification of Search and Certificate of Search Worksheet, dated November 2, 2017, show that a search of FTB's accountin records revealed no records of taxes paid by George Martinez, Identification Number for the tax years 2012 and 2013. However, the search did reveal records of taxes paid by George Martinez in the amounts of $500 each for the tax years 2014 and 2015, as well as a transfer applied of $500 from the tax year 2015 to 2016 A Certification of Search and Certificate of Search Worksheet, dated November 2, 2017, show that a search of FTB's accountin records revealed no records of taxes paid by Deborah Martinez, Identification Number for the tax years 2012 and 2013. However, the search did reveal records of taxes paid by Deborah Martinez in the amounts of $500 each for the tax years 2014 and 2015, as well as a transfer applied of $500 from the tax year 2015 to 2016 Analysis of Returns Filed - Alliance Building Maintenance LLC A 2012, 2013 and 2014 Limited Liability Company Return of Income in the name of Alliance Building Maintenance LLC with California Secretary of State file number? and federal employer identification number (FEIN) _was received the FTB. The 2012 and 2014 LLC tax returns list the paid preparer as Excelsior Partners LLP, h, Arcadia, CA 91006. The 2013 LLC tax return lists the paid preparer as Nestor T. Mora CPA with the same preparer address as listed on the 2012 and 2014 tax returns. The 2012, 2013 and 2014 tax returns all list George Martinez, with social security number as the sole owner of the single member LLC, a disregarded LLC. The 2012 and 2013 tax returns are both signed under penalties of perjury and dated 01/20/15? The 2014 tax return was electronically filed with the FTB and is dated 10/12/15? The table below contains the dates the 2012 through 2014 tax returns were filed with the FTB, the document locator numbers (DLNs) assigned to each return, and the income as reported on the returns: 2012 2013 2014 DLN Filed Date 01/20/15 01/20/15 10/12/15 Total CA income from LLC Income Worksheet 35,540 122,516 128,756 Analysis of Returns Filed - George and Deborah Martinez A 2012, 2013, 2014 and 2015 California Resident Income Tax Return was electronically filed (e-filed) with FTB in the names of Geor Martinez and Deborah Martinez with social security numbers (SSNS) and respectively and a filing status of Married/RDP filin jointly. The 2012 and 2013 tax returns list the paid preparer as Nestor Mora CPA, d, Arcadia, CA 91006? The 2014 and 2015 tax returns list the paid preparer as Jason Koshi of Excelsior Partners LLP with the same preparer address as listed on the 2012 and 2013 tax returns The 2012 through 2015 tax returns all report two forms Schedule C, Profit or Loss from Business, one listing George Martinez as the proprietor of the business Alliance Distributing with FEIN and the other listin Geor Martinez as the proprietor of the business Alliance Building Maintenance LLC with The table below contains the dates the 2012 through 2015 tax returns were filed with the FTB, the DLNs assigned to each return, and the items of income and itemized deductions as reported on the returns: 2012 2013 2014 2015 DLN Filed Date 10/14/13 10/09/14 10/12/15 04/07/17 Wages: Santa Anita Family Service 69,410 25,259 Alliance Building Maintenance 24,500 8,000 Taxable interest 16 22 Sch. Alliance Building Maintenance LLC: Gross receipts 35,540 122,516 128,756 135,878 Sch. - Alliance Distributing: Gross receipts 158,406 203,246 314,469 295,811 Sch. - Anitas Mexican Restaurant LLC: Nonpassive Loss (Sch. K-1) (80,620) Itemized Deductions 32,212 33,223 32,806 36,201 Caltrans Reports re: Alliance Distributing and Alliance Buildinq Maintenance As part of a California Department of Justice (DOJ) investigation, various records were obtained from Caltrans and the California State Controller's Office. DOJ also executed search warrants to obtain bank records. DOJ provided FTB with the various records. Documents from Caltrans included a Department of Transportation Audits and Investigations Entrance Conference report with attached questions and answers that indicates a meeting was held on December 1, 2015 with the owners, Geor and Deborah Martinez, of Alliance Distributing and Alliance Building Maintenance at h, Monrovia. The report states that Mrs. Martinez logs all incoming and outgoing checks. It also states that Mrs. Martinez is responsible for the accounting recordkeeping, personnel, and administrative work. She uses QuickBooks for the separate recordkeeping for each business. Mrs. Martinez keeps a separate manual log to log in invoice numbers with dates and dollar amounts of all customers. Mr. Martinez deals with sales, solicits business with Caltrans, and receives Caltrans' purchase orders. The report states that after receiving purchase orders from Caltrans, they write up sales orders and Mr. Martinez delivers the goods and gets a signature from the person receiving the goods. An invoice is then generated for payment and once paid, Mrs. Martinez logs in the payment? A Caltrans Background Information report indicates a trend analysis was performed of all purchases Caltrans made through Alliance Distributing and Alliance Building Maintenance for fiscal years 2011/2012 through 2015/16 which revealed total purchases in excess of A Caltrans Vendor Transaction History report of Alliance Distributing, Vendor Number ending 1467, for the period 1/1/12 6/30/16 lists purchase order payments made to Alliance Distributing totaling $5,566,816.41. Included are certified copies of State of California warrants payable to Alliance Distributing that correspond to the listed purchase order payments. A Caltrans Payments 4 report for Vendor Number ending 1467 lists payments for the period 1/23/2012 12/24/2015 totaling $159,777.43? lnvoices and business records of Alliance Distributing and Alliance Building Maintenance were obtained during a Caltrans audit conducted at the business location of Alliance Distributing in December 2015. Business records obtained during the audit include a sign-in sheet dated December 1, 2015, listing the names and titles of six individuals including an Audit Manager, three Auditors, Deborah Martinez as Office Manager and George Martinez as Sales; a Transaction Detail by Account report of Alliance Building Maintenance, for the period January 1, 2012 through December 2, 2015, listing deposit amounts for services to State of CA DOT totaling $173,343.91; a Transaction Detail by Account report of Alliance Distributing, for the period January 1, 2012 through December 1, 2015, listing deposit amounts for sales to Caltrans and State of California totaling $5,346,215.27, as well as, redacted, handwritten journals of Alliance Distributing's Sales for January 2012 through November 2015, showing only the line items for sales to the State of CA and Caltrans, which when totaled exceed CA State Controller's Office Pay Warrants DOJ Special Agent Daniel Torres obtained certified copies of pay warrants issued to Alliance Distributing and Alliance Building Maintenance between 2012 and 2015 from the CA State Controller's Office Wells Fargo Bank Wells Fargo Bank Business Account Application dated 01/16/2003, for Basic Business Checking account number ending 1636, lists the business name as Alliance Distributing, the entity as Sole Proprietor, taxpayer identification number (TIN) with George Martinez listed as owner and authorized signer? Wells Fargo Bank Addendum to Certificate of Authority dated 02/01/2003, for account number ending 1636, lists George Martinez as customer name, authorized signer and owner, requesting to add Deborah Martinez as an authorized signer? Wells Fargo Bank Addendum to Certificate of Authority dated 06/14/2007, for account number ending 2170, lists George Martinez as customer name, authorized signer and owner, requesting to add Deborah Martinez as an authorized signer? Wells Fargo Bank Business Account Application dated 08/02/2011, for Advantage Business Package Checking account number ending 6066, lists the business name as Alliance Building Maintenance, Sole Proprietor, TIN with George Martinez listed as owner and authorized signer and Deborah Martinez listed as Admin. Manager and authorized signer? Wells Fargo Bank Customer/Account Information Change Request dated 08/09/2011, for account numbers ending 6066 and 2170, indicates the reason for change as Error Correction/Conversion Error, with the correct information listed as Alliance Building Maintenance as Sole Owner and George Martinez and Deborah Martinez as signers? Opus Bank Opus Bank Account Agreement dated 08/13/2014, for Basic Business Checkin account number ending 7694, lists the account title as Alliance Building Maintenance LLC, TIN with the owner/signer listed as George Martinez, President and Deborah L. Martinez, Vice-President- Proof of Unreported Income On September 20, 2016 and May 24, 2017, the DOJ executed search warrants on multiple financial institutions including Wells Fargo Bank and Opus Bank, to obtain the bank account records of accounts held under the name of or with signatory authority of George Martinez, Alliance Distributing and/or Alliance Building Maintenance. In response to the search warrants, bank account records that included Alliance Distributing's and/or Alliance Building Maintenance's Wells Fargo Bank account numbers ending in 1636, 2170 and 6066, and Opus Bank account number ending in 7694 were seized and provided to FTB. Per the bank account signature cards of the aforementioned accounts, Mr. and Mrs. Martinez are the only authorized signers on the accounts. DOJ also provided certified copies of State of California issued warrants paid to Alliance Distributing and Alliance Building Maintenance. FTB Forensic Auditor Linda Martinez analyzed the seized financial documents and state issued warrants to determine the income of Alliance Building Maintenance LLC, Alliance Distributing and Mr. and Mrs. Martinez. As part of her analysis, FTB Forensic Auditor Martinez created schedules listing all deposits, including checks payable to Alliance Building Maintenance and Alliance Distributing from the State of California, from 2012 through 2015, Into the aforementioned businesses' Wells Fargo Bank and Opus Bank accounts under the control of Mr. and Mrs. Martinez. During her analysis, Forensic Auditor Martinez realized that not all of the state issued warrants had been deposited into the aforementioned business accounts; as a result, to account for those monies she listed state warrants paid to Alliance Distributing that had not been deposited, but that were endorsed with a signature and referenced Wells Fargo Bank account number ending 1636 on the back Alliance Building Maintenance LLC According to FTB's analysis of the bank accounts of Alliance Building Maintenance LLC, gross receipts for the LLC were determined from taxable deposits into the LLC's Wells Fargo Bank accounts ending 6066 and 2170 and Opus Bank account ending 7694 as follows? 2012 2013 2014 2015 Total Income per Investigation: Opus Bank, acct. #7694 24,832 36,843 61,675 Wells Fargo, acct. #6066 35,154 16,290 20,239 4,093 75,776 Wells Fargo, acct. #2170 75,850 241,882 238,769 207,699 764,200 Total Income per Investigation 111,004 258,172 283,840 248,635 901,651 In comparing the taxable deposits to the income reported on the tax returns by the LLC, the taxable deposits/income per FTB's investigation exceeded the reported LLC income resulting in unreported income for 2012 through 2015 of $614,839 as shown below? 6 2012 2013 2014 2015 Total Total Income per Investigation 111,004 258,172 283,840 248,635 901,651 Less: Income as Reported 35,540 122,516 128,756 286,812 Unreported LLC Income 75,464 135,656 155,084 248,635 614,839 Pursuant to Section 17941(a), a LLC doing business in this state shall pay annually to this state a tax of $800 for the privilege of doing business in this state. In addition, pursuant to Section 17942(a), every LLC subject to tax under Section 17941 shall pay annually to this state a fee dependent on the amount of total income per year. Alliance Building Maintenance LLC has paid the minimum tax of $800 for 2012 through 2015 and the unreported income does not result in an additional tax liability. However, per Section 17942(a)(1), every LLC shall pay annually to this state a fee equal to $900, if the total income from all sources derived from or attributable to this state for the taxable year is $250,000 or more, but less than $500,000; hence, for tax years 2013 and 2014, the unreported income placed the LLC's total income within that threshold resulting in a state fee of $900 per year? Georqe and Deborah Martinez Alliance Building Maintenance LLC's tax returns indicate the LLC is a disregarded entity with George Martinez as the only member and sole owner. Generally, the owner of a disregarded single member LLC reports all income, loss, deductions, and credits of the entity on the single member's income tax return in the same manner as a sole proprietorship (CA Code Regulation Section Hence, Mr. Martinez is required to report the income/loss and deductions/credits for the years 2012 through 2015 on his personal income tax returns. The Martinez's 2012 through 2015 personal income tax returns each report a form Schedule listing Alliance Building Maintenance LLC's income and expenses. It is noted that a 2015 LLC return was not filed, however, Mr. and Mrs. Martinez reported a Schedule C, Profit or Loss From Business, for Alliance Building Maintenance LLC listing gross receipts of $135,878 on their 2015 personal income tax return. Hence, when comparing the Schedule C: Alliance Building Maintenance LLC gross receipts per FTB's investigation to the gross receipts it reported on the personal income tax returns, the Martinez's failed to report gross receipts from Schedule C: Alliance Building Maintenance LLC for 2012 through 2015 of $478,961 as shown below? 2012 2013 2014 2015 Total Sch. - Alliance Building Maintenance LLC: Gross Receipts per Investigation 111,004 258,172 283,840 248,635 901,651 Less: Sch. - Alliance Building Maintenance LLC: Gross Receipts as Reported 35,540 122,516 128,756 135,878 422,690 Sch. - Alliance Building Maintenance LLC: Unreported Income 75,464 135,656 155,084 112,757 478,961 Furthermore, to determine additional unreported income for Mr. and Mrs. Martinez, a bank account analysis of the sole proprietorship's, Alliance Distributing?s, WFB account number ending 1636 was conducted along with a review of state warrants paid to Alliance Distributing. According to FTB's analysis of the bank account of Alliance Distributing, taxable deposits into the sole proprietorship's Wells Fargo Bank account ending 1636 plus State of California warrants paid to Alliance Distributing that were negotiated through/against the Wells Fargo Bank account ending 1636, but not deposited into the account were as follows 2012 2013 2014 2015 Total Sch. C- Alliance Distributing: Gross Receipts per Investigation Wells Fargo, acct. #1636 2,438,754 1,880,685 907,617 689,803 5,916,859 State of California Warrants 36,024 43,625 79,649 Sch. - Alliance Distributing: Total Gross Receipts per Investigation 2,438,754 1,916,709 951,242 689,803 5,996,508 When comparing the sole proprietorship's total gross receipts per FTB's investigation to its income reported on the tax returns, it was determined that the Martinez's had unreported gross receipts from Alliance Distributing for 2012 through 2015 of $5,024,576 as shown below? 2012 2013 2014 2015 Total Sch. - Alliance Distributing: Gross Receipts per Investigation 2,438,754 1,916,709 951,242 689,803 5,996,508 Less: Sch. - Alliance Distributing: Gross Receipts as Reported 158,406 203,246 314,469 295,811 971,932 Sch. - Alliance Distributing: Unreported Income 2,280,348 1,713,463 636,773 393,992 5,024,576 During FTB's investigation, it was determined that Alliance Distributing had additional expenses not reported on the Martinez's income tax returns. Forensic Auditor Martinez scheduled checks Alliance Distributing paid to vendors (Earthworks Soil Amendments, Inc. and Plant's Choice, Inc.) for mulch and determined $1,868,180 of additional allowable expenses, totaling expenses to $2,821,563 Review of the Martinez's personal and LLC tax returns for tax years 2012 through 2015 revealed that the amount of income reported was less than the amount of monies actually deposited into the businesses' bank accounts and the warrants paid from the State of California. investigation revealed that the Martinez's had unreported income totaling $2,355,812 for 2012, $1,849,119 for 2013, $791,857 for 2014 and $506,749 for 2015 Even after the additional allowable expenses, the Martinez's evaded personal income taxes of $204,235, $116,737, $44,939 and $8,476 for the years 2012, 2013, 2014 and 2015, respectively? STATEMENT OF TAX PREPARER Jason Koshi, CPA of Excelsior Partners LLP was interviewed on May 16, 2018? Mr. Koshi confirmed that he and/or the previous owner of his business, Nestor Mora, prepared the 2012 through 2015 personal tax returns for George and Deborah Martinez, as well as, the 2012 through 2014 LLC tax returns for Alliance Building Maintenance LLC that were filed with the FTB. Mr. Koshi does not recall preparing and did not locate any amended tax returns for the Martinez's or the LLC. Mr. Koshi located and provided copies of the Martinez's tax year 2012 through 2016 federal and state personal tax returns, the 2012 through 2016 CA LLC tax returns, the originally signed Forms 8879 and 8453-LLC for the 2014 through 2016 tax years, as well as, some notes/work papers and a 2016 engagement letter? According to Mr. Koshi, for the preparation of the Martinez's personal tax returns and the LLC's tax returns, Mr. Martinez usually dropped off their paperwork, which included QuickBooks reports, W-23 and Forms 1098 Mortgage Interest. However, he has met with both Mr. and Mrs. Martinez to go over their returns. Usually, after the paperwork is dropped off, he prepares the returns and emails them to the Martinez's for review and signatures. Per Mr. Koshi, other than QuickBooks, no records are provided to substantiate/support those amounts. He indicated that he tells his clients that it's their role to provide accurate amounts and he does not verify them. Mr. Koshi believes the Martinez's do their own bookkeeping. No bank statements or other source documents are provided. STATEMENT OF SUBJECT George Martinez and Deborah L. Martinez have not been interviewed by any agent of the Franchise Tax Board. ITEMS RELATING TO 0 George and Deborah L. Martinez have demonstrated knowledge of income taxes by filing personal (2012 2015) tax returns and making payments (2014 2015) toward their owed tax liabilities. 0 Mr. Martinez has demonstrated knowledge of LLC income taxes by filing LLC (2012 2014) tax returns and making payments (2012 - 2015) toward the LLC's owed tax liabilities. - Mrs. Martinez is listed as the Office Manager for Alliance Distributing and Alliance Building Maintenance LLC and logs in the checks received as payments by the businesses. 0 Mrs. Martinez is responsible for the accounting recordkeeping of both businesses demonstrating knowledge of the businesses' income and expenses. 0 Mr. Martinez deals with the sales for Alliance Distributing and Alliance Building Maintenance LLC, solicits business with Caltrans, receives purchase orders from Caltrans and delivers the goods per their sales orders demonstrating knowledge of the businesses' sales to Caltrans. Caltrans paid Alliance Distributing and Alliance Building Maintenance LLC in excess of during the fiscal years 2012 through 2015 for the purchase of mulch. 0 Mr. and Mrs. Martinez deposited in excess of of income into their businesses' bank accounts, where they were both authorized signers, for the years 2012 2015, while only reporting approximately and willfully failed to report in excess of of income with the intent to evade additional tax due and owing of $374,387 for the years 2012 2015. 9 0 Mr. and Mrs. Martinez knew their 2012 2015 personal tax returns and the 2012 2014 LLC tax returns were false since they dealt with their businesses' sales, did their own bookkeeping, were the only authorized signers of the businesses' bank accounts where the majority of the Caltrans checks were deposited, and they failed to report all their income to their tax preparer for the accurate reporting on their tax returns. RECOMMENDATION It is recommended that criminal charges be filed against George and Deborah L. Martinez for filing false California Resident Income Tax Returns for the tax years 2012 through 2015, and against George Martinez for also filing a false Limited Liability Company Return of Income for the tax years 2012 through 2014, all in violation of California Revenue and Taxation Code Sections 19705(a)(1) or 19706, felonies. Maribel Davila Date Senior Special Agent 10