MIAMI, FL – October 15, 2026 (STL.News) Florida – Fraud – A Miami man was sentenced to three years in federal prison after participating in a fraudulent tax refund scheme that sought to obtain more than $4.2 million from the U.S. Treasury through false federal income tax returns involving trusts he claimed to control.
McDonald Preval, of Miami, was sentenced October 6, 2026, to 36 months in prison after pleading guilty to one count of filing a false tax return, according to an October 14 announcement from the U.S. Department of Justice (DOJ).
Federal authorities said Preval submitted numerous fraudulent tax returns for himself and purported trusts, falsely reporting substantial income and federal tax withholding payments that had never occurred. The fabricated information was designed to make the trusts appear eligible for significant federal tax refunds.
Although the fraudulent filings sought more than $4.2 million, Preval obtained more than $580,000 through the scheme. Prosecutors said he used the money to pay his home mortgage and cover other personal expenses.
U.S. District Judge Cecilia M. Altonaga ordered Preval to pay $580,647 in restitution to the Internal Revenue Service. He must also serve one year of supervised release following his prison sentence.
The sentencing comes as the Justice Department expands federal enforcement against tax fraud, fraudulent refund claims and other schemes targeting government revenue.
How the $4.2 Million Tax Refund Scheme Operated
Federal prosecutors say Preval’s scheme centered on tax returns filed on behalf of trusts he claimed to control.
The returns reported that the trusts had earned substantial income and made significant federal income tax withholding payments to the IRS.
Those representations were false.
The trusts had not earned the reported income or made the withholding payments claimed on their tax returns. Consequently, the trusts were not entitled to the refunds requested.
The scheme exploited a fundamental feature of the federal income tax system: taxpayers who have paid more in taxes than they owe may qualify for refunds of the difference.
Federal income tax withholding generally represents money collected and credited toward a taxpayer’s tax liability. When withholding exceeds the amount owed, the taxpayer may be entitled to receive the excess as a refund.
By falsely reporting substantial withholding payments, fraudulent returns can make it appear that the government owes money even when the underlying payments were never made.
In Preval’s case, prosecutors said the fabricated information appeared on multiple returns involving himself and purported trusts.
The combined fraudulent refund claims exceeded $4.2 million.
The Justice Department did not disclose in its announcement the exact number of returns involved, the names of the trusts or the period during which every fraudulent filing occurred.
However, federal authorities confirmed that Preval obtained more than $580,000 through the scheme before facing criminal prosecution.
Fraud Proceeds Used to Pay Off Home Mortgage
One of the most significant details prosecutors disclosed concerns how Preval spent the money obtained through the fraudulent returns.
According to the Justice Department, he used proceeds from the scheme to pay off the mortgage loan on his house and finance other personal expenses.
The mortgage payment is particularly relevant because it demonstrates how funds obtained through fraudulent tax refund claims can be converted into personal financial benefits.
Rather than merely trying to obtain money through false paperwork, Preval received substantial funds and used them for personal purposes.
The Justice Department did not disclose the home’s address, the amount applied specifically to the mortgage, or the breakdown of other personal expenditures.
The $580,647 restitution order establishes the amount the federal court ordered Preval to repay to the IRS.
The distinction between the money sought and the money actually obtained is important.
The more than $4.2 million figure represents the total fraudulent refunds requested through the returns. It does not mean the Treasury paid out that entire amount.
The government reported that Preval obtained more than $580,000.
The difference shows why federal investigators distinguish between attempted fraud and funds successfully obtained when evaluating a criminal scheme’s financial impact.
False Personal Tax Returns Added to the Case
Federal authorities identified more than just the fraudulent trust returns.
According to the Justice Department, Preval also filed tax returns for 2023 that omitted income he received from employment.
Taxpayers generally must report taxable employment income when preparing their federal income tax returns.
Failing to report employment income can result in an inaccurate calculation of taxable income and the amount of federal income tax owed.
When omissions are intentional, they can also create criminal exposure under federal tax laws.
In this case, prosecutors identified the omitted employment income as part of Preval’s broader pattern of false tax reporting.
The Justice Department did not specify how much employment income was omitted from the 2023 returns or the resulting tax difference.
Preval ultimately pleaded guilty to one count of filing a false tax return.
That guilty plea established his criminal responsibility for the offense to which he pleaded guilty, while the sentencing announcement described the broader fraudulent refund scheme at the center of the case.
Federal Judge Orders Prison and Restitution
U.S. District Judge Cecilia M. Altonaga imposed a 36-month federal prison sentence on October 6.
The sentence also includes one year of supervised release and $580,647 in restitution.
Restitution is intended to compensate the victim of a criminal offense for qualifying financial losses. In federal tax cases, restitution may require defendants to repay money improperly obtained from the government.
A restitution order does not, by itself, establish that the government has already recovered the full amount.
The Justice Department’s announcement did not state whether Preval had made payments toward the restitution obligation or whether any assets had been recovered.
Supervised release is a period of federal supervision that generally begins after a defendant completes the prison portion of a sentence.
Individuals on supervised release must comply with court-imposed conditions administered through the federal supervision system.
Violations can result in additional judicial proceedings and potential penalties.
The Justice Department did not provide details about Preval’s anticipated prison reporting date or the specific conditions of his supervised release.
IRS Criminal Investigation Led the Investigation
IRS Criminal Investigation investigated the case.
The agency serves as the criminal investigative arm of the Internal Revenue Service and focuses on potential violations of federal criminal tax laws and related financial offenses.
Unlike routine civil tax examinations, criminal tax investigations address suspected conduct that may warrant prosecution.
Cases involving fabricated withholding payments, false income statements, and fraudulent refund requests can require investigators to examine financial records, tax filings, and the movement of money received from the Treasury.
The Preval case demonstrates how false tax reporting can become a criminal matter when federal authorities establish that returns were knowingly falsified.
Trial attorneys Melissa Siskind and Kavitha Bondada of the Justice Department’s National Fraud Enforcement Division’s Tax Section prosecuted the case.
Assistant Attorney General Colin McDonald of the National Fraud Enforcement Division and U.S. Attorney Jason A. Reding Quiñones for the Southern District of Florida announced the sentencing.
The involvement of federal tax prosecutors and IRS Criminal Investigation reflects the government’s use of specialized resources to investigate and prosecute fraudulent tax-refund schemes.
Sentencing Coincides With National Tax Fraud Crackdown
The Justice Department publicized Preval’s sentencing as it announced a broader nationwide tax enforcement initiative on October 14.
The department said its first National Tax Enforcement Surge involved its National Fraud Enforcement Division’s Tax Section, IRS Criminal Investigation and 35 U.S. attorneys’ offices.
The initiative, conducted from early September through October 14, resulted in prosecutorial actions involving 76 defendants.
According to the Justice Department, the alleged and proven offenses involved an estimated intended loss of more than $490 million in federal government revenue.
That figure represents estimated intended losses across the initiative, not necessarily money actually stolen or recovered.
The cases encompass defendants at different stages of the criminal justice process. Some have been charged, others have pleaded guilty, and others, including Preval, have been sentenced.
These distinctions matter because criminal charges alone do not establish guilt. Defendants who have not been convicted are presumed innocent unless and until proven guilty.
The enforcement initiative reflects an effort to coordinate federal prosecutorial and investigative resources against fraudulent returns, tax evasion and related offenses.
Preval’s case is one example of the conduct covered in the broader announcement.
Federal Authorities Target Fraudulent Refund Claims
Fraudulent tax refund schemes present a particular challenge because the federal government processes large numbers of returns and refunds every year.
The refund system is designed to return legitimate overpayments to taxpayers, but false claims can create opportunities for individuals to obtain money they are not entitled to.
Schemes can involve fabricated income, invented withholding payments, false business expenses, fictitious dependents or other inaccurate information designed to manipulate tax calculations.
The method identified in Preval’s case involved fabricated income and withholding claims tied to trusts.
A trust may have legitimate tax reporting obligations depending on its structure, income, and other circumstances.
However, claiming that a trust made withholding payments that never occurred can produce an artificial refund calculation.
The underlying issue is not the use of a trust itself, but the deliberate submission of false financial information to the IRS.
Federal investigators must distinguish legitimate tax arrangements from filings designed to misrepresent income, withholding, or tax liabilities.
Preval’s guilty plea and subsequent sentencing show the potential criminal consequences when federal courts establish fraudulent filings.
What the Case Means for Taxpayers
The case also highlights several distinctions that are important when evaluating tax fraud prosecutions.
First, the amount of a fraudulent refund request may differ substantially from the amount actually received.
Preval sought more than $4.2 million through false returns but obtained more than $580,000.
Second, defendants may spend or transfer money obtained through fraudulent refunds before investigators complete their work.
In this case, prosecutors said proceeds were used to eliminate a home mortgage and pay personal expenses.
Third, a prison sentence does not eliminate a defendant’s financial obligations.
Preval must serve his prison term and remains subject to the court’s restitution order.
Finally, criminal tax cases can involve both fabricated refund claims and separate misrepresentations concerning income that should have been reported.
The Justice Department said Preval’s filings included both false trust-related refund claims and 2023 personal returns that omitted employment income.
For taxpayers and businesses, the case reinforces the importance of maintaining accurate financial records and ensuring that income, withholding and refund claims are supported by legitimate documentation.
Three-Year Sentence Closes Major Stage of Case
With Preval’s guilty plea accepted and his prison sentence imposed, the prosecution has reached the sentencing stage.
The federal court ordered three years in prison, one year of supervised release, and $580,647 in restitution.
The Justice Department has not publicly stated in its sentencing announcement whether anyone has filed an appeal or how much restitution it has collected.
The confirmed outcome remains significant: a Miami man who submitted false tax returns seeking more than $4.2 million from the U.S. Treasury has been sentenced to federal prison after obtaining more than $580,000 through the scheme.
His case is now part of a larger federal enforcement effort to protect government revenue and pursue individuals who deliberately submit fraudulent tax filings.
As federal authorities continue their nationwide tax fraud initiative, the Preval sentencing provides a documented example of how fraudulent refund claims can result in imprisonment, court-ordered repayment, and continued federal supervision.
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