A Queens man who was serving time in federal prison for tax preparation fraud used a smuggled smartphone to file tax returns for his clients, diverting hundreds of thousands of dollars in refunds to accounts he controlled, the authorities said.
Abdel Soliman, 54, was arrested on Monday on federal wire fraud and conspiracy charges. According to an affidavit submitted as part of an application for an arrest warrant, he took more than $470,000 from clients in 2018 and 2019 while he was incarcerated in a minimum-security camp at the federal penitentiary in Lewisburg, Pa.
“It’s all baloney — it’s not true,” Mr. Soliman, who is free on a $600,000 bond, said in an interview this week.
Mr. Soliman said he never possessed a cellphone while in prison, adding that the arrest affidavit was based on testimony from another prisoner who sought early release to home confinement.
“You wouldn’t believe how many phones are in federal prison camps,” Mr. Soliman said. “They’re all over the place.”
Messages left with Louis M. Freeman, Mr. Soliman’s lawyer, were not returned.
The affidavit, prepared by a special agent with the criminal investigation division of the I.R.S., says that while he was serving a 41-month sentence for a $2.9 million tax preparation fraud scheme, Mr. Soliman used a smuggled cellphone to commit the same crime. Mr. Soliman filled out tax forms for clients on his phone, and kept a portion of their tax returns while sending clients documents showing lower return amounts, the affidavit says.
Some clients did not know that the I.R.S. had issued refunds on their behalf, the document says, and at least one client reported being unaware that Mr. Soliman was in prison at the time. The I.R.S. interviewed 11 people it said had been defrauded by Mr. Soliman and found that he had taken more than $36,000 from them.
In other cases, according to the document, the I.R.S. found that Mr. Soliman had collected a “fee” of around $900 that he charged against his clients’ tax refunds without notifying them. The money was diverted to an account that Mr. Soliman controlled with help from unnamed “associates,” the document says.
The I.R.S. investigator also accused Mr. Soliman, a naturalized U.S. citizen originally from Egypt, of laundering the money he obtained from his clients, sending $150,000 to an account in Egypt and more than $40,000 to an account in Europe.
According to the affidavit, the Federal Bureau of Prisons provided the I.R.S. with photos of an iPhone 6S that was confiscated from Mr. Soliman on May 9 and had his contact information in its settings. The authorities were unable to further search the device because its data “was remotely erased during the inventory process,” the document says.
Federal records indicate that Mr. Soliman was released from prison on Oct. 9, and the affidavit says that he was to remain on supervised release until 2023.
In 2003, he pleaded guilty after he was accused of trying to smuggle $659,000 out of the country at Kennedy International Airport, and received a 30-month sentence.
The use of cellphones by inmates, including in the commission of crimes, is a growing concern, even though the devices have been banned in federal prisons since 2010. The New York Times reported earlier this year that inmates in a state prison in Alabama used illicit cellphones to extort money from the families of fellow prisoners.
In a statement, Justin Long, a spokesman for the Federal Bureau of Prisons, said the agency “continues to tackle the problem of contraband being introduced into our facilities, including contraband cellphones.”
Mr. Long said he was unable to speak about Mr. Soliman’s case, or say how common it was for inmates to use cellphones to commit crimes. Federal prisons, he said, use walk-through metal detectors and whole-body imaging devices to find such devices.