Calif. Federal Grand Jury Indicts 55 in $250 Million Income-tax Fraud Scheme


Fraudsters will try just about anything to make a buck—even creating a fictional world in which the government is bankrupt, the country is owned by England, and that tax refunds are available through a secret government account. That’s the latest according to a recent story in The Washington Post.

The article reports that 55 people were indicted in a $250 million income tax fraud scam following an investigation by the Internal Revenue Service (IRS) called ”Operation Stolen Treasures.” The scam allegedly involved people purporting to be attorneys, ex-IRS agents, and accountants who told their customers that tax refund dollars were available through a secret government account. Now that’s a conspiracy theory. I bet there are a few of us out there that wish there was a secret government account to help pay for social services, teachers, police officers, and fire fighters.

According to the story, firms filed 35 bogus returns seeking $19 million in refunds with one firm allegedly filing a fake tax refund claim for nearly $4.7 million. When the IRS sent letters to customers warning of the scam, the firm told customers the letters were sent because the ”IRS did not want to pay.” Five million dollars in refund checks were distributed erroneously. At least they didn’t make their $250 million target.

So the question for the day is…how can the IRS fight fraudsters?

Source: Today’s ”Fraud of the Day” is based on an article entitled, ”Calif. Federal Grand Jury Indicts 55 in $250 Million Income-tax Fraud Scheme,” by the Associated Press published by The Washington Post, October 3, 2011.

SANTA ANA, Calif. — The owners of two Southern California firms were among 55 people indicted by a federal grand jury in a $250 million income-tax fraud scheme claiming refunds were available through a secret government account, prosecutors and the Internal Revenue Service said Monday.

The defendants also claimed the United States was bankrupt, and the country was actually owned by England.

The IRS investigation dubbed Operation Stolen Treasures targeted Fontana-based Old Quest Foundation Inc. and Rancho Cucamonga-based De la Fuente and Ramirez and Associates for filing federal income-tax returns with bogus claims for refunds.

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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.