California Man Charged with Tax Refund Fraud Scheme

An indictment was unsealed last week in Los Angeles charging a California man with mail fraud and various tax crimes related to a tax refund fraud scheme.

The following is according to the indictment: from 2016 through 2025, Melvin Louis Hughes, also known as “Melvin Louis Huges” and “Bandele El,” of Los Angeles County, operated a scheme to file false federal tax returns claiming millions of dollars in fraudulent tax refunds. As alleged in the indictment, Hughes submitted fraudulent Forms 1041, U.S. Income Tax Returns for Estates and Trusts, for himself and others, claiming more than $360 million in fraudulent tax refunds based on fictitious federal income tax withholdings. These tax returns allegedly attached Forms 1099, which falsely reported that major banks, online payment platforms, and other legitimate businesses made payments from which substantial amounts of tax had been withheld and paid over to the IRS. In 2024 and 2025, as a further part of the scheme, Hughes allegedly filed false IRS Forms 1040, U.S. Individual Income Tax Returns, which claimed more than $370 million in refunds based on false tax withholdings.

Hughes allegedly received approximately $6.2 million in tax refunds. He allegedly used the funds to purchase a $1.84 million house in Malibu, California, two Tesla automobiles, and approximately $500,000 in cryptocurrency.

Hughes also allegedly promoted this scheme to at least 17 other taxpayers, collecting various fees from them in exchange for his assistance. From at least five taxpayers, Hughes allegedly demanded 10% of the refund they received but instructed that the payment be made to Brother to Brother Outreach Trust, another purported trust he created and falsely characterized as a charitable donation. As alleged, Hughes received approximately $868,704.45 from the taxpayers who had utilized his scheme.

In total, Hughes is alleged to have caused a total tax loss to the IRS of approximately $13 million. 

Hughes was charged with mail fraud, making a false claim, filing a false tax return, and assisting in the preparation of false tax returns. If convicted, he faces a maximum penalty of 20 years in prison for mail fraud, a maximum penalty of five years in prison for each count of making false claims for refund, a maximum penalty of three years in prison for each count of filing false tax returns, and a maximum penalty of three years in prison for each count of aiding and assisting in the preparation and presentation of false tax returns. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

IRS Criminal Investigation is investigating the case.

Trial Attorneys Patrick Burns and Mahana Weidler of the Tax Division are prosecuting the case.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.