Carnell Ragan, Employee Retention Credit Tax Scheme, Delaware 2026

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Philadelphia Man Sentenced for Employee Retention Credit Tax Scheme

Carnell Ragan, 59, of Philadelphia, Pennsylvania, was sentenced to three years in federal prison for his role in assisting the filing of false tax forms. Ragan was also ordered to pay over $1.6 million in restitution to the Internal Revenue Service (IRS).

A U.S. District Court Judge in Wilmington, Delaware, pronounced the sentence. Ragan’s scheme involved recruiting over 20 individuals to participate in his Employee Retention Credit (ERC) scam, with the goal of claiming over $20 million in false tax credits. The scheme resulted in the IRS issuing checks worth over $1.6 million to entities that were not entitled to those funds.

The ERC was created to provide emergency financial assistance to businesses affected by the COVID-19 pandemic. Ragan’s scheme took advantage of this program, filing false Forms 941 with the IRS to claim credits that he knew the entities were not eligible for.

According to court documents, Ragan’s scheme involved using the information of individuals who maintained business entities that were not entitled to ERC. He used this information to file false tax forms, seeking millions of dollars in credits that were not owed to him or his associates.

U.S. Attorney Julianne E. Murray commented on the case, stating that Ragan ‘shamelessly enriched himself and his friends at the expense of the American taxpayer.’ Murray’s office will continue to investigate and hold responsible those who stole pandemic relief funds intended to help hardworking Americans.

The case was investigated by the IRS-CI and prosecuted by Assistant U.S. Attorney Jesse S. Wenger. The sentencing serves as a reminder that those who engage in fraudulent activities will be held accountable for their actions.