Two family members federally indicted in tax refund fraud scheme

Date: March 27, 2026

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A mother and son who are tax return preparers were federally indicted on March 24, 2026, for their roles in filing fraudulent tax returns with the IRS, announced United States Attorney for the Northern District of Texas Ryan Raybould.

According to the indictment, during the years 2020 through 2024, Jessie Badillo of Lancaster, Texas, and her son, Manuel Badillo also of Lancaster allegedly conspired to file false tax returns through their businesses, JES Financial Service and Manny Financial Services located in DeSoto, Texas. The charges state that the fraudulent tax returns filed by the Badillos sought false refunds by fabricating itemized deductions, such as medical and dental expenses, and/or by fabricating businesses with large losses.

In addition to conspiracy to defraud the United States, Jessie Badillo was charged with 40 counts of aiding and assisting in the preparation of false tax returns as well as two counts of subscribing to her own false tax returns. Manuel Badillo was charged with 25 counts of aiding and assisting in the preparation of false tax returns and one count of conspiracy.

If convicted, each defendant faces a maximum penalty of five years in prison on the conspiracy charge and a maximum penalty of three years in prison for each of the other charges.

"Tax preparers occupy a position of trust in our system. We trust that they will accurately and honestly prepare tax returns. When that trust is violated, through the fictitious creation of deductions and expenses, they don't just fail their clients, they fail the American people," said U.S. Attorney Ryan Raybould. "This is theft from the honest American taxpayer. The indicted defendants are alleged to have done that, and we will vigorously prosecute this case and other tax cheats in North Texas."

"During the filing season, it is especially important that taxpayers are able to trust their return preparers," said Special Agent in Charge Christopher J. Altemus, of the Dallas Field Office, IRS Criminal Investigation. "Jessie and Manuel Badillo allegedly violated that trust in an attempt to line their own pockets. IRS-CI will continue to pursue return preparers who exploit their clients and undermine the tax system."

IRS-Criminal Investigations conducted the investigation. Special Assistant U.S. Attorney Ignacio Perez de la Cruz is prosecuting the case.

An indictment is merely an allegation of criminal conduct, not evidence. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The IRS has published the Dirty Dozen Tax Scams for 2026.

IRS-CI is the law enforcement arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money laundering, public corruption, healthcare fraud, identity theft and more. It is the only federal law enforcement agency with investigative jurisdiction over violations of the Internal Revenue Code. IRS-CI has 18 field offices located across the U.S. and maintains an international presence through attaché posts abroad.