John Castro jailed for 15 years for scamming Aussies through tax fraud scheme in the US

A long-shot presidential candidate who tried to knock out Donald Trump has been thrown behind bars for a tax fraud scheme that harmed Aussie expats.

A failed Republican presidential candidate who led the charge to disqualify Donald Trump from next week’s election has been jailed for 15 years for a massive tax fraud scheme that ripped off Australian expats.

But American authorities are facing questions over why it took them six years after sending in an undercover agent to investigate the rogue accountant to lay charges and stop his US$15m (A$22.8m) criminal scheme.

A four-month investigation by this masthead revealed in September how John Castro targeted Australians living in the US with promises of generous tax refunds, before filing falsified returns they often never approved and keeping much of the money paid out to them.

He was also exposed for falsely claiming to be a lawyer and a veteran, after attracting national attention for his bid to disqualify the former president from this year’s campaign.

John Castro was exposed for falsely claiming to be a lawyer and a veteran. Picture: X

Castro – who loaned US$20m (A$30.3m) to his longshot presidential run – launched dozens of ultimately unsuccessful lawsuits claiming Mr Trump was ineligible under the Constitution’s ban on insurrectionists holding public office.

This week, the 40 year old was sentenced to 188 months in prison for falsifying tax returns, and ordered to pay US$277,243 (A$421,213) in restitution.

“Far from an international tax expert, this defendant was an international fraudster, plain and simple,” US Attorney Leigha Simonton said.

“Not only did he defraud the US government, he bullied and berated clients who dared question his methods.”

But experienced tax lawyer Anthony Diosdi, a founding partner of Diosdi & Liu, said the Internal Revenue Service “should have went ahead and acted on this sooner”.

“They had a duty to protect the general public … I think they let this go too far,” he said.

John Castro received widespread publicity for his legal bid to disqualify Donald Trump from running for president again. Picture: Supplied

Castro wanted to knock out Trump on his way to becoming the US president. Picture: AFP

An undercover IRS agent sought Castro’s tax advice in February 2018, with the accountant fraudulently claiming tens of thousands of dollars in deductions for them a month later.

Investigators also alleged that employees regularly left his business “because they were concerned about the legality and ethics of Castro’s practices”.

Charges were not laid, however, until January this year. Castro submitted hundreds of tax returns during that time, with some of his Australian victims also questioning why he was not stopped sooner.

In a letter to the judge handling his case last week, Castro said his wife sent US$35,338 (A$53,688) on his behalf to refund the fees of four victims who were witnesses in the case against him.

“If there is anyone else with uncompensated tax loss, I will ensure they are compensated,” he said.

Mr Diosdi encouraged Castro’s Australian clients to seek professional advice to determine whether they could be exposed to penalties if their returns had been falsified.

Originally published as John Castro jailed for 15 years for scamming Aussies through tax fraud scheme in the US