Life on the Inside

12953783 - closeup of an handcuffed person. vignetting in the corners.

Life inside of prison can create a tedious mixture of fear, isolation and boredom, which can consequently lead to more criminal activities. (Idle hands are usually not a good thing.) An article published by The Sacramento Bee tells how a former California prison inmate managed to lead a tax return scam that stole nearly $220,000 from the Internal Revenue Service (IRS).

The article states that the former inmate masterminded the scam with the help of three other inmates who collected personal identification information from prisoners at the correctional center. He then provided the information to more co-conspirators on the outside, who prepared and filed approximately 247 false income tax returns over four tax years. The tax return scam was exposed after a correctional officer discovered some records behind the ringleader’s personal locker. (Fraudsters always make a mistake at some point.)

Some of the returns were filed in the names of the defendants and refunds were deposited in various bank accounts that they controlled. (Luckily, the IRS was able to stop about half of the fraudulent refunds from being disbursed.) Court records show that the tax refunds were used on personal expenditures, prepaid debit cards and inmate commissary accounts. (Prisons have a store where inmates can purchase a variety of personal items. The right to purchase goods from the store can be taken away for infractions.)

The 34-year-old, who is currently an inmate in an Oklahoma state prison, pleaded guilty to conspiring to defraud the U.S. government and filing false claims for federal tax returns. He is facing a maximum penalty of 10 years in prison and a $250,000 for the conspiracy count. He may also receive an additional maximum sentence of five years in prison and another $250,000 fine for each of the two filing false claims counts.

The story does not mention why the fraudster is currently serving time in an Oklahoma prison and the impending sentence doesn’t bode well for getting out any time soon. (It looks like the inmate will have plenty of time to ponder where things went wrong and how he can accept responsibility for his illegal actions.)

Source: Today’s ”Fraud of the Day” is based on an article entitled ”California Ex-Con Pleads Guilty to $220,000 Income Tax Fraud” published by The Sacramento Bee on April 26, 2015.

A former inmate of the California Correctional Center in Susanville, described as the ringleader of a prison tax fraud scheme, has pleaded guilty to conspiring to defraud the U.S. government and filing false claims for federal tax returns.

Edwin Ludwig IV, 34, currently an inmate in an Oklahoma state prison, entered the guilty plea Wednesday in federal court in Sacramento, according to a U.S. attorney’s office news release.

Read More

Previous articleBackground Check
Next articleGolden Ticket
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.