Assistant U.S. Attorney Karen Klotz told the judge that an IRS computer system in December 2010 detected irregularities in the company's tax returns. A high number of returns were generating refunds and an unusually high number of returns were claiming certain credits, she said.
Undercover agents posing as clients then went into Medmans in 2011, and after that search warrants were obtained for the company's two offices, she said.
Further investigation found that children who were part of the foster-care system - whose cases were managed by Catholic Social Services - were fraudulently being listed as dependents on Medmans' tax returns, she said. By doing this, tax preparers generated larger-than-deserved refunds for clients, she noted.
Conteh, who pleaded guilty to three counts of aiding in the preparation of false income-tax returns, is to be sentenced Sept. 29.
The owner of Medmans, Mohamed Mansaray, has a plea hearing scheduled for next Wednesday.
Conteh and Mansaray were both charged by criminal information, a process that indicated that they were likely to plead guilty.
On Twitter: @julieshawphilly