A federal indictment charges a 39-year-old man in a banking scheme to cash thousands of dollars in fraudulent federal tax-refund checks at a Lexington check-cashing store.
James Changala Kaira is charged with federal bank fraud and identity theft, according to the three-count indictment returned last week.
Kaira waived arraignment at a hearing in U.S. District Court in Lexington last week and pleaded not guilty to all three counts. A jury trial is tentatively scheduled for July 7.
Federal prosecutors say that Kaira and "others" not named schemed to illegally obtain federal tax refunds, using personal identity information of legitimate taxpayers without their knowledge or consent.
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As part of the alleged scheme, Kaira and others filed false tax returns using the taxpayers' identity information, the indictment says. Kaira and the others allegedly used the fraudulent tax returns to obtain refund anticipation loans from various banks, according to the indictment.
Prosecutors say Kaira cashed 38 refund checks — a total of $180,412.91 — at a check-cashing store in Lexington from Feb. 14 through March 7. The store is identified in court documents as the Foodland Market, a small grocery story on Versailles Road that is licensed to cash checks.
The alleged scheme operated from about January 2013 until early March, according to the indictment.
A federal criminal complaint was filed March 10, although an indictment was not returned until May 1.
The complaint was signed by David Yeager, a U.S. Secret Service agent working out of Lexington.
According to that complaint, Yeager and other agents launched an investigation in November of Kaira and others who allegedly were "engaged in a large-scale identity theft enterprise" using stolen taxpayer identity information to illegally obtain and cash tax-refund checks.
Yeager wrote in the complaint that he was contacted in early March by David Mashni, owner of Foodland Market. According to Yeager's account, Mashni said that Kaira had several tax-refund loan checks payable to people other than himself and that he wanted to cash the checks at the market.
The complaint says Lexington police officer Stacy Shannon watched Kaira arrive at the market March 7 and leave moments later with a large bulge in his pants pocket.
Agents detained Kaira as he was getting into a car. According to the complaint, Kaira said he owned a tax preparation business in Georgia and had decided to cash the checks at the Foodland Market while he was visiting friends in Lexington.
Yeager said Mashni later told him that Kaira had given him 11 refund checks worth almost $80,000 and that Mashni had paid him $69,925 for those checks.
A review of the refund checks showed they had been issued to payees purportedly located in six states, none of which was Kentucky or Georgia, the complaint said. Investigators searched Kaira's car and found the $67,925 Mashni had given him, documents say.
The complaint says agents later contacted several of the payees listed on the checks, who said they had not filed income tax returns at that time or had not authorized anyone to apply for refund loans on their behalf. Another payee said information on the check carrying his name was out of date or incorrect.
If convicted, Kaira could face up to 10 years in prison, a $250,000 fine and three years of supervised release on the first count. His punishment could be up to 30 years in prison, a $1 million fine and five years of supervised release on count two. Court three could carry a mandatory two-year prison term, a $250,000 fine and one year's supervised release.