Fraud across Water

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When it comes to fraud, state and federal boundaries and the distance between the fraudster and the target aren’t really a factor. In fact, one of the key factors in committing fraud is how easy it is to obtain and use another’s personal information. It’s a scary thought – you think you’re safe from fraudsters thousands of miles away, but in reality you aren’t safe at all. Today’s Fraud of the Day from the Gaston Gazette highlights a case of fraud that occurred not just across state lines, but across open waters.

Lincoln County, North Carolina has been working to crack down a long-distance fraud scheme involving seven county residents. The fraudster in today’s article was sentenced to three years in prison. He’ll be joining five others who previously pleaded guilty to being involved in a $5 million tax refund fraud scam they operated from January 2010 through February 2011. A seventh accused in the scam is on the run.

So, how exactly did the crew manage to obtain that much money? In essence it was easy with the help of some open water separating the fraudsters from their victims. The scammers obtained personally identifiable information (PII), including names and Social Security numbers, from Puerto Rican residents and used that information to create and submit false tax return statements. (All aboard! The cruise ship Fraud will be setting sail towards Puerto Rico – please provide PII to the fraudster upon boarding.)

Investigators found that the scammers had a specific “drop off and pick up” process for collecting the tax returns. They selected various addresses in western North Carolina targeting areas with clustered mailboxes, where the checks were sent, and used the Internet to track those mailings. After verifying the checks had been delivered, they would slyly remove the checks from the mailboxes of those addresses. (It’s sink or swim when it comes to stealing mail.) In a statement made by the Chief U.S. District Judge, the scam was, “long-term, concerted criminal activity.” Considerations were made for the extent of the criminal activity, leaving the fraudsters to serve their sentences without the possibility of parole.

Whether puddles or oceans apart, the threat of fraud is ever present. I almost see these fraudsters as “pirates” in a sea of identity fraud. Unfortunately for them, justice has been brought to their scaly-wag nature. “Walk the plank ye’ fraudsters.”

Source: Today’s ”Fraud of the Day” is based on an article entitled, “Man Sent to Federal Prison for Tax Fraud,” written by Diane Turbyfill and published by the Gaston Gazette on October 14, 2012.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.