Carnell Ragan, a 59-year-old resident of Philadelphia, has been sentenced to three years in federal prison for his role in filing false tax forms related to the Employee Retention Credit (ERC). In addition to the prison term, Ragan was ordered to pay more than $1.6 million in restitution to the Internal Revenue Service (IRS). The sentence was handed down by Chief U.S. District Judge Colm F. Connolly.
The ERC was established by Congress as part of emergency financial measures during the COVID-19 pandemic. It was designed to help businesses continue paying employees through tax credits if they were affected by government shutdowns or significant declines in revenue.
Court documents reveal that Ragan recruited over 20 individuals who owned business entities not eligible for the ERC because their businesses were either non-operational or had no paid employees during the pandemic. Despite knowing this, Ragan used their information to file fraudulent IRS Forms 941, seeking more than $20 million in credits. As a result of these filings, the IRS issued checks totaling over $1.6 million to various entities, including more than $800,000 to a Delaware-based business that did not qualify for such funds.
U.S. Attorney Julianne E. Murray stated: “Ragan took advantage of pandemic relief funds that were intended to help those harmed most by the pandemic. He shamelessly enriched himself and his friends at the expense of the American taxpayer. My office and our law enforcement partners will continue to investigate and hold responsible all those who stole COVID-19 pandemic relief funds that were intended to help hard working Americans cope with the financial fallout from the pandemic.”
Yury Kruty, Special Agent in Charge at IRS Criminal Investigation’s Philadelphia Field Office, commented: “Today’s sentencing is a strong reminder that those who find ways to fraudulently benefit from government programs meant to help struggling businesses will be brought to justice,” said Yury Kruty, Special Agent in Charge, Philadelphia Field office, IRS Criminal Investigation. “Those who line their pockets with profits from these schemes should know they will not go undetected and will be held accountable.”
The investigation was conducted by IRS-CI and prosecuted by Assistant U.S. Attorney Jesse S. Wenger.
Additional details about this case can be found on the website of the U.S. Attorney’s Office for the District of Delaware as well as through court records available via PACER under Case No. 25-CR-0009-CFC.
