Sean David Morton, Tax Scam and Passing Fraudulent Instruments, California 2024

A Hermosa Beach couple, Sean David Morton, 58, and his wife, Melissa Ann Morton, 50, have been convicted of a host of charges related to their participation in a scheme that filed fraudulent tax returns with the Internal Revenue Service seeking millions of dollars in refunds and used bogus financial instruments as a way to pay off debt. The charges against the Mortons stem from their participation in a ‘redemption’ scheme, which is the most common scheme used across the nation by tax defiers and ‘sovereign citizens.’

The evidence presented at trial showed that the Mortons filed income tax returns with the Internal Revenue Service that falsely claimed they had income from various banking institutions reported on Forms 1099-OID. As part of the scheme, the Mortons falsely reported large withholdings and claimed they were owed refunds from the IRS. As a result, the IRS erroneously issued a refund of $480,323 to Sean Morton for a 2008 income tax return.

On the fourth day of trial, the jury heard closing arguments and deliberated for approximately two hours before issuing the guilty verdicts. The jury convicted Sean David Morton and Melissa Ann Morton each of one count of conspiracy to defraud the United States, two counts each of filing false claims against the United States, and various counts of passing false or fictitious financial instruments.

The jury found Sean Morton guilty of 26 counts of passing false or fictitious financial instruments, and Melissa Ann Morton was found guilty of 25 counts of passing false or fictitious financial instruments. The Mortons created and submitted these bogus documents to the IRS, instructing the agency to draw upon funds with the United States Treasury to satisfy their debt.

When the IRS attempted to collect the erroneous refund from the Mortons, the Mortons presented to the IRS various ‘coupons’ and ‘bonds’ that purported to pay off their debt with the IRS. The Mortons also sold the bond scheme to others who were in debt to governmental organizations, such as the IRS and the State of California, and private bank institutions for mortgage or credit card debt.

Acting United States Attorney Sandra R. Brown stated, ‘These defendants orchestrated a scheme that used bogus ‘legal’ filings that sought to abuse the tax system and defraud the IRS out of millions of dollars.’ Special Agent in Charge R. Damon Rowe for IRS Criminal Investigation added, ‘Sean and Melissa Morton made multiple attempts to defraud the IRS and the taxpaying public.’

The Mortons’ scheme was designed to do one thing: victimize others for profit. By filing false tax returns and presenting bogus financial instruments, the Mortons sought to deceive the IRS and obtain refunds to which they were not entitled. The jury’s guilty verdicts serve as a reminder that tax scams and schemes will not be tolerated.

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