Iris Rabaya Au, a woman from Irvine, California, has been sentenced to 18 months in federal prison for failing to report $2.6 million in income she received between 2020 and 2023 from a cryptocurrency fraud scheme run by a man prosecutors identify as “The Godfather.” She must also pay $1,484,343 in restitution and has already forfeited a collection of luxury vehicles, designer handbags and three sculptures tied to her co-conspirator’s nickname. The case is a reminder that money obtained through someone else’s crime is still taxable income in the eyes of the IRS, and that the person who receives it — not just the person who stole it — can end up facing a federal sentence.
18 Months for Failing to Report $2.6 Million
According to a release from IRS Criminal Investigation, Au received $2.6 million between 2020 and 2023 that traced back to a cryptocurrency fraud operation run by Adam Iza, and filed returns reporting only a small fraction of what she had actually received. U.S. District Judge Percy Anderson sentenced her to 18 months in federal prison and ordered her to pay $1,484,343 in restitution to cover the resulting tax loss. Assistant U.S. Attorney Maxwell K. Coll of the National Security Division prosecuted the case, which was investigated jointly by IRS Criminal Investigation and the FBI. The release does not specify how much of the $2.6 million Au did report on her returns for those years. Restitution in a case like this is calculated to cover the tax the government would have collected had the income been reported honestly, which is why the $1,484,343 figure runs lower than the $2.6 million in underlying unreported income — it reflects the tax owed on that income, not the income itself.
When money from someone else’s fraud shows up in an account: Au’s case started with a stream of money tied to another person’s scheme, and confirming that a deposit, a caller or an unfamiliar account is legitimate before acting on it is the same first step behind most fraud recoveries. See the family code word method in The Senior Fraud Defense & First-Hour Recovery Kit.
Forfeiting Luxury Cars, Designer Handbags and Three “Godfather” Sculptures
As part of the sentence, Au forfeited a collection of luxury and high-performance vehicles, designer handbags, and three sculptures nicknamed after “The Godfather” — a reference to Iza’s own alias in the scheme, according to the release. The forfeiture is separate from the $1,484,343 in restitution she owes and reflects assets prosecutors tied directly to the unreported income. The release specifically calls out the three Godfather sculptures rather than folding them into a general list of forfeited property, which is how specific a federal forfeiture order can get once investigators trace a defendant’s purchases back to illicit proceeds. Criminal forfeiture transfers ownership of the listed items to the government outright, separate from any restitution a defendant still owes in cash — meaning Au loses both the physical property and, through restitution, an amount tied to the tax she failed to pay on the money that bought it.
The Crypto Fraudster Behind the Money: Adam Iza
Adam Iza, the source of the $2.6 million, pleaded guilty in January 2025 to one count of conspiracy against rights, one count of wire fraud and one count of tax evasion, according to the release. He has been in federal custody since September 2024 and is already serving a 15-year federal sentence for an attempted Bitcoin robbery and kidnapping in Connecticut. Iza is scheduled to be sentenced in this fraud and tax case on October 5 before Judge Anderson — the same judge who sentenced Au. The two prosecutions proceed on separate tracks: the earlier Connecticut case addressed the robbery and kidnapping directly, while the fraud and tax case now working through Judge Anderson’s courtroom addresses the scheme’s proceeds and how they moved, including to Au. The nickname “The Godfather” appears to have followed Iza from the scheme itself into the forfeiture order against Au, since the sculptures she gave up were purchased with money that traced back to him rather than any legitimate source of income.
All Income Is Taxable, Even Money Tied to a Crime
The IRS requires taxpayers to report all income regardless of its source, including money obtained illegally — a rule that applied to Au even though the underlying scheme was Iza’s, not hers. Failing to report income tied to someone else’s crime does not create an exception to that requirement, and the case shows the exposure can include both a restitution order and a prison sentence, separate entirely from whatever charges apply to the person who committed the original fraud. That principle is why prosecutors pursued Au independently of Iza’s own case: her obligation to report the $2.6 million existed regardless of how he obtained it or how his prosecution turned out. IRS Criminal Investigation and the FBI, the two agencies that built the case against Au, continue to track Iza’s sentencing on October 5. Together, the two sentences — 18 months for Au, and whatever Judge Anderson imposes on Iza next month, on top of his existing 15-year term — put a dollar figure and a prison term on both sides of the same scheme: the person who ran it, and the person who spent what it produced without reporting it.
Sorting Out Money Tied to Someone Else’s Fraud
The Au case shows how quickly money connected to someone else’s crypto fraud can turn into a taxpayer’s own legal exposure, and the same confusion shows up whenever a scam, a stolen account or an unfamiliar deposit touches a household’s finances. Working out which calls to make first, and what to keep as a record, matters before the situation gets more complicated.
The Senior Fraud Defense & First-Hour Recovery Kit opens with the first-hour recovery plan and a fraud evidence and report log for organizing exactly that kind of documentation.
Look up the fraud evidence and report log in The Senior Fraud Defense & First-Hour Recovery Kit.
This article was produced with AI assistance and checked against the primary source linked above.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
