Uncovering Tracks


According to a U.S. Government Accountability Office (GAO) report, there was $25.6 billion of attempted identity theft refund fraud in 2014. (Unfortunately, $3.1 billion of that amount was paid out for 1.3 million fraudulent returns.) Today’s “Fraud of the Day” is a perfect example of how the Internal Revenue Service (IRS) is making great strides in identifying and preventing Stolen Identity Refund Fraud (SIRF). The agency effectively shut down a Miami-Dade County, Florida resident’s tax refund fraud scheme involving the submission of more than 2,000 tax returns seeking more than $2 million in fraudulent refunds.

The fraudster at the center of this case used stolen ID’s, including personally identifiable information (PII) for prisoners and deceased individuals, to carry out his ruse. The fraudster and his co-conspirators covered their tracks by recruiting others to obtain Electronic Filing Identification Numbers (EFINs) in their names from the IRS. The EFINs were used to electronically file the bogus returns. (Sometimes, it takes a village to commit fraud, however, the more people involved, the harder it is to cover the tracks.)

Over approximately six years, the mastermind behind the scheme directed the refunds to debit cards and treasury checks, which were mailed to multiple addresses controlled by members of the illegal scam. Co-conspirators then cashed the refund checks at various check cashing stores. Funds were also withdrawn from the debit cards at Western Union locations and various ATMs.

The 36-year-old Florida man, who ran the scheme, pleaded guilty to conspiracy to defraud the IRS, to commit wire fraud and aggravated identity theft, and one count of aggravated identity theft. His participation in this SIRF scheme got him 70 months in prison and three years of supervised release. He must also pay $2,108,000 in restitution to the IRS.

While criminals think that they can cover their tracks, they tend to forget that the government is usually better at uncovering evidence of fraud than criminals are at hiding their illegal acts. Just in the past two years, the IRS has dedicated increased resources to securing agency systems and taxpayer data stored in the agency’s databases. (Their efforts have paid off.)

A crackdown by public and private organizations has helped to cut taxpayer identity theft reports by 50 percent, preventing millions of dollars in fraudulent refunds. (In 2016, the number of reports decreased from 512,278 to 237,750 over 2015.) Congratulations to the IRS and their private partners who have implemented successful measures to protect taxpayers and prevent future incidences of SIRF.

Today’s “Fraud of the Day” is based on a Department of Justice press release entitled, Florida Resident Sentenced to Prison for Stolen Identity Refund Fraud Schemepublished on August 14, 2017.

A Miami-Dade County, Florida resident was sentenced to 70 months in prison for his role in a stolen identity refund fraud scheme, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Benjamin G. Greenberg for the Southern District of Florida.

According to documents and information provided to the court, from approximately 2008 through January 2015, in Broward and Miami-Dade counties, Jean Leroy Destine, 36, and others, obtained stolen IDs, to include the personal identifying information of prisoners and deceased individuals. They used this information to prepare and file with the Internal Revenue Service (IRS) approximately 2,000 tax returns seeking more than $2 million in fraudulent refunds. Destine and his co-conspirators covered their tracks by recruiting individuals to obtain Electronic Filing Identification Numbers (EFINs) in their names from the IRS and then used these EFINs to electronically file the fraudulent returns. The conspirators directed the refunds to debit cards as well as treasury checks mailed to various addresses. The refund checks were cashed at different check cashing stores and funds were withdrawn from the debit cards at Western Union locations and ATMs.

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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.