American Dollars or Canadian Bacon?

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It seems that a group of Canadians, who conspired with a California convict to cheat the United States government out of nearly $10 million dollars in federal income tax refunds, aren’t going to be heading over the border for french fries and gravy anytime soon. The Rochester Democrat and Chronicle tells the tale of how this international crime ring filed at least 18 false non-resident federal income tax returns, claiming more than $9 million in false refunds. The cross-border crooks were sent more than $3.5 million dollars in Treasury checks before they were caught.

An Associated Press report detailing the indictment states that one defendant, working on behalf of the group (he’s always been a real team player), filed false 1099-OID forms claiming that creditors – such as banks and mortgage companies – had overestimated each defendant’s income taxes, and hence over-paid the IRS on their behalf. The syrup got a little stickier after the group submitted to the IRS individual income tax returns, requesting refunds on the creditors’ excessive (and non-existent) withholdings.

Then they took a road trip. (‘Born in the U.S.A.’ was noticeably absent from their playlist. However, ‘Born to Run’ did make an appearance.) After opening bank accounts in various cities across upstate New York, the group deposited the stolen tax refunds they’d received from the IRS and then transferred the cash to Canada. They subsequently were charged with transporting money taken by fraud in foreign commerce, conspiring to defraud the IRS, stealing government funds and filing false claims against the United States.

According to a follow-up report, the American conspirator, whom the Attorney General once referred to as ”a previously convicted California fraud promoter,” currently is serving a twelve-year prison sentence following his 2012 conviction. One Canadian in the group plead guilty, in 2014; another was sentenced to 135 months (more than eleven years) in prison – and ordered to pay back the stolen funds. (Wonder how many Maple trees one must tap to earn three and a half million bucks?)

Source: Today’s ”Fraud of the Day” is based on a pair of reports by the Associated Press. The Rochester Democrat and Chronicle published ”Group of Canadians charged with tax fraud in Rochester area” on September 5, 2013, and ”Man sentenced for defrauding United States” on January 5, 2016.

A group of Canadians defrauded the U.S. government through a tax fraud scheme that involved banks in the Rochester region, federal authorities allege.

The indictment alleges that the defendants conspired to defraud the United States by filing at least 18 false non-resident federal income tax returns, claiming more than $9 million in false federal income tax refunds, according to a news release from the U.S. Attorney’s Office. The IRS sent Treasury checks totaling more than $3.5 million to the defendants in Canada, authorities allege.

 

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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.