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Coming to the United States offers immigrants an opportunity to prosper in a country with more pervasive social freedoms and economic opportunities. However, The Star Tribune tells the story of a Minnesota couple who took the opportunity to use some aspiring citizens to commit tax fraud. As a result, they received more than $1.8 million from the Internal Revenue Service (IRS) by filing about 1,000 bogus tax returns.

The story states that the husband and wife tag team operated an immigration assistance and tax preparation business in Minnesota and Florida, targeting Minnesotans as well as Guatemalan immigrants. (Perhaps they spent their summer months searching for victims in Minnesota then travelled to Florida during the winter months. It looks like they had a steady supply of victims in order to generate nearly $2 million in fraudulent tax returns.)

After obtaining official identification papers for the Guatemalan victims, the man then used them to secure taxpayer identification numbers. This information was used to file multiple years of bogus tax returns in their names supported by false financial records, non-existent dependents and fake education credits. Further complicating their case, most of the victims of this fraud conspiracy lived in Florida, although their taxpayer ID applications indicated their residence was a shipping store in Minnesota. (Good try, but did they really think that wouldn’t be noticed?)

In order to receive the fraudulent refunds from their schemes, these tax preparation tricksters did not sign the tax returns verifying that they had prepared the returns, intending to place the blame on their victims if audited. The couple directed the tax refunds to their personal bank accounts. Once the funds were received, they deducted a fee before paying their clients.

The husband pleaded guilty to conspiracy charges, while the wife pleaded guilty to filing a false tax refund. As part of their sentences, the husband agreed to repay $1.8 million in restitution to victims and to cooperate with Minnesota investigators to go after other alleged participants in this scheme. The wife has agreed to pay more than $45,000 in restitution and to serve up to 21 months in prison.

Like many in the criminal justice system, the story states that these fraudsters had previously aspired to steal from the government. Their first run-in with fraud investigators occurred more than a decade ago, also in Florida where they operated a service that helped arrange sham marriages so immigrants could obtain U.S. citizenship. In that previous case, the couple struck a bargain with each spouse pleading guilty to a single count of fraud and the misuse of a visa. They ended up serving three years of probation. (Hopefully their current plea bargain, which includes more severe punishments, will provide the necessary level of discipline needed to finally stop this couple from victimizing immigrants and other honest taxpaying citizens.)

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Minnesota couple plead guilty to huge tax scam” written by Dan Browning and published by The Star Tribune on Nov. 17, 2015.

A Shakopee couple pleaded guilty to federal charges Monday in what authorities characterized as a wide-ranging, multimillion-dollar income tax refund scheme that preyed on immigrants in Minnesota and Florida.

Mark Arlin Hammerschmidt pleaded guilty to conspiracy charges and has agreed to cooperate with authorities investigating the scam. He faces up to nine years in prison. He also agreed to pay more than $1.8 million in restitution to victims.

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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.