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Offshoring

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Senior Director of Strategic Alliances
LexisNexis Risk Solutions - Government

Offshoring is the process of relocating business operations to a country other than the country in which the company is headquartered. The main reasons companies offshore are to reduce labor costs, tap into new markets, and take advantage of tax incentives. But that’s not why Stephen Jake McGonigle established his income tax filing business overseas. He just wanted to make sure no one noticed he was defrauding the U.S. taxpayer of millions of dollars.

To perpetrate his massive fraud scheme that began in 2013, this crooked tax preparer dispatched a co-defendant to Thailand to forge false identification documents using stolen victim identities. McGonigle then directed co-conspirators to use those fake identifications to obtain prepaid debit cards, which were then sent to untraceable mailboxes in Orange County, California. McGonigle and his co-conspirators would then file fraudulent tax returns using the identity theft victims’ Social Security numbers. Those fraudulent tax returns sought millions of dollars in tax refunds to be deposited into these prepaid debit cards or other bank accounts that they controlled.

Luckily, McGonigle’s winding and crooked fraud scheme relied heavily on the digital world. Prosecutors traced the IP addresses used for submitting the phony returns to McGonigle’s rented office spaces, far from California. Surveillance and travel records revealed that McGonigle and his band of fraudsters had set up shop in Costa Rica and hired local staff with the sole intention of cranking out more fraudulent income tax returns. In total, McGonigle received over $10 million in fraudulent income tax returns.
On November 28, 2023, McGonigle was found guilty of identity theft, mail fraud and conspiracy to defraud the United States.

Credit in finding McGonigle is threefold with investigative collaboration of the IRS Criminal Investigation, Homeland Security Investigations, and the United States Postal Inspection Service. Great job.

Today’s Fraud of The Day is based on article “Orange County’s Tax Wizard Convicted, Masterminded Multi-Million Dollar IRS Heist” published by Hoodline on November 29, 2023

In a breathtaking revelation of white-collar crime spanning oceans, an ex-Orange County tax guru has been convicted for masterminding a bold tax fraud plot to swipe more than $10 million from the tight clutches of the IRS and numerous state coffers.

The United States Attorney’s Office dropped the hammer on Stephen Jake McGonigle, a 66-year-old from Victorville, branding him guilty on multiple counts, including conspiracy to defraud the United States, wire fraud, and aggravated identity theft, according to a press release from the Department of Justice.

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