College athletes ran tax-refund fraud scheme, netted $400G

SIOUX FALLS, S.D. (AP) -- A former University of South Dakota football player who recruited student-athletes, his girlfriend and others to defraud the IRS was sentenced Monday to more than five years in prison.

Alphonso "Rico" Valdez received the 61-month punishment from U.S. District Judge Karen Schreier along with an order to help some of the other defendants pay $421,000 in restitution. Valdez pleaded guilty in October to federal charges of conspiracy to defraud the U.S. and aggravated identity theft.

"The bad decision I made has haunted me for about three years now," Valdez said. "I was raised with better morals."

He has until February to turn himself in and start serving his sentence.

The 11 people involved in the scheme to defraud the IRS of $1.1 million by filing bogus tax returns have pleaded guilty to charges now. Prosecutors have singled out Valdez, 23, of Tampa, Florida, as the leader of the group since the indictments against the fraud ring came more than two years ago.

In court Monday, Assistant U.S. Attorney John Haak drew parallels between the CEO of a company and Valdez's duties in the ring. Haak said Valdez was an "organizer, recruiter" in the scheme and the mastermind behind bringing the fraud to South Dakota in 2012, after meeting with two other men - who later became his co-defendants - in Tampa to discuss how to carry out the criminal activity.

"The thought was that he was going to get rich," Haak said.

But Valdez's attorney, Jason Tupman, said it's unfair to portray his client as the leader. He said Valdez "profited substantially less" than others involved in the scheme and did not recruit everyone involved.

Tupman said to treat Valdez different from those "who claimed a greater share of the funds" is inaccurate.

IRS special agent Corey Vickery testified Monday that Valdez took in about $6,000 while others received between $15,000 and $50,000. The larger amounts went to the men who physically filled out and submitted the tax returns.

Most of the other defendants, like Valdez, are from the Tampa area.

Valdez and five others involved were USD football players while the scheme was going on. USD athletic director David Herbster told The Associated Press last week that the student-athletes "didn't exhibit anything that you would be overly suspicious of as far as somehow coming into an excess amount of money."

Judge Schreier said 117 people were affected by the ring, including a person who ended up being evicted and losing a vehicle.

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