Pair Sentenced Over Bogus Tax Returns

Two operators of a small Moorpark environmental firm were sentenced Monday to federal prison for using bogus tax returns to cheat the U.S. and California governments out of more than $300,000.

Onsi Amin Malaty received a 37-month sentence and Sohir Nozhyaziz Metry was given 18 months in prison by U.S. District Court Judge Dickran Tevrizian.

Both defendants also must pay back what they took from the IRS and the California Franchise Tax Board, said Assistant U.S. Atty. Kimberly Dunne. Upon their release from prison, Malaty and Metry also will serve three-year probationary periods in which they must report to a probation officer, submit a financial statement and file legal tax returns, Dunne said.

The pair had shared a house in Rancho Palos Verdes and operated a small Moorpark company called AWS Environmental. Malaty is a U.S. citizen, but he and Malaty are natives of Egypt.

The pair filed state and U.S. tax returns for the years 1989 through 1993 in a variety of names, including those of Metry’s husband and two children, Malaty’s brother, sister-in-law and nieces, and other relatives and friends, witnesses testified at trial.

The tax agencies mailed out refund checks of more than $300,000, which the pair then squirreled away in 20 bank accounts under the names of the ghost taxpayers, witnesses testified.

As the IRS Service Center in Fresno was preparing to pay out another $400,000 on the phony returns, inspectors there red-flagged some of the cases, prompting an investigation that ended in the arrest of Malaty and Metry, investigators said.

At a sentencing hearing Monday, Metry pleaded that she was sorry for what happened, but did not understand she was joining in a fraud, said her attorney, Arthur Avazian.

“She claimed naivete,” he added.

Malaty also apologized, said his lawyer, Walter Urban, who had offered unsuccessfully before trial to settle the case by having his client pay back the ill-gotten refunds.

“He basically told the judge he was wrong . . . and he was just stunned that he would find himself going to prison,” Urban said. The case should have been settled as a civil matter, he said, adding, “There’s no guns or drugs. It’s just a stupid little paper case.”

Malaty and Metry will probably serve about 85% of their sentences, their attorneys said.