A certified public accountant with expertise on tax compliance and due diligence matters, Timothy Trifilo has held partner or managing director positions at several firms for over four decades. He also taught courses in taxation and real estate as an adjunct professor, the original Department of Justice indictment said. Trifilo was hired as a managing director with consulting firm Alvarez & Marsal earlier this year. 

The fraud allegations resulted from a 2023 purchase, when Trifilo applied for a $1.4 million mortgage on a Washington property. When the unidentified issuing bank advised that they could not locate recent tax returns nor approve his application without them, Trifilo submitted copies of 2021 and 2022 IRS filings to the lender, who then originated the loan.  

Investigators later discovered that, in reality, Trifilo had neither filed returns nor paid taxes for any year beginning in 2012 despite income over the subsequent decade totaling more than $7.7 million. His annual earnings ranged between $636,051 and $948,252 during that time, amounts that required him to file individual tax returns each year.

On documentation delivered to the lender in support of the mortgage application, a former colleague of Trifilo was identified as responsible for preparing, reviewing and signing the falsified returns purportedly submitted to the Internal Revenue Service.  

"This individual did not prepare the returns, has never prepared tax returns for Trifilo and did not authorize Trifilo to use his name on the returns and other documents that Trifilo submitted," a DOJ press release said.  

A grand jury originally indicted Trifilo in September on seven counts, including bank fraud and failure to file tax returns, as well as aggravated identity theft. His actions led to a tax loss for the IRS of $2.1 million. 

He faces a maximum sentence of three decades in prison for defrauding the lender, as well as one year for failure to file tax returns. Sentencing is scheduled for May 19. 

In addition to potential prison time, Trifilo may be required to forfeit the original loan amount and property acquired through bank fraud, the original indictment stated. He also faces a period of supervised release, monetary penalties and restitution. 

Attorneys from the DOJ's tax division prosecuted the case, with evidence based on findings from the IRS criminal investigation unit. 

Submission of phony forms and documents have played a role in multiple fraud cases this year, pointing to a pain point in the mortgage process that could end up costing lenders. Problems in income and employment data specifically had a defect rate of 37.01% to lead all underwriting categories between March and June this year, according to Aces Quality Management. The number surged from 23.42% in the first quarter.

Aces' report found overall defect rates of originated mortgages rising in both the first and second quarters.