Layoffs at the Fraud Factory

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38248875 - model of house made of money in male hands on gray background

Creating a rap label to cover up massive fraud fiefdom shows a level of hubris and extravagance that’s beyond the average fraudster. The Associated Press reports that a self-proclaimed ”Money King” attempted to channel more than $100 million in stolen income tax refunds into a music-less rap label, in what investigators said is one of the largest of such fraud schemes uncovered by the Internal Revenue Service.

The Florida-based ”fraud factory” operated out of a rental house in a quiet, suburban community. There, the group of five co-conspirators attempted to defraud the Internal Revenue Service of roughly $108 million by using 29,000 stolen identities to fraudulently file income tax returns. They packed the home with stacks of cash money (”dollar bills, dollar-dollar bills”), expensive shoes and jewelry, drugs, prepaid debit and credit cards, along with at least ten computers, which were reportedly used to commit the crimes.

(But when you set yourself up as a king, someone always wants to take your crown.) So when police responded to a home invasion robbery, the scene inside the home raised significant suspicions with investigators. They found that the group had managed to score $28.2 million in fraudulent refunds using the stolen identities.

The report details how the Caliph of Coins had previously been arrested for similar crimes in Georgia. Shockingly (or not), a recording from his Atlanta jailhouse phone calls captures a verbal chest puffing, when he states, ”They don’t call me the Money King for no reason.” Well, apparently, he was wrong (or just misunderstood), because the government seized his assets and federal judge sentenced him to twenty years in prison. He also must pay nearly $30 million in restitution. (Perhaps ”Destitute Dude” is a more appropriate nickname?)

It’s only a matter of time before the authorities catch up with identity theft and fraud of this breadth and scale. But I’m going to go out on a limb and suggest that offering the government a first-hand view of the extravagant lifestyle you’ve funded by defrauding IRS probably expedites that process.

Source: Today’s ”Fraud of the Day” is based on, ”Florida man sentenced for leading $100M tax-refund “fraud factory,” published by Associated Press on April 7, 2016.

FORT LAUDERDALE, Fla.– A man described by a Florida federal judge as the boss of a $100 million-plus “fraud factory” that used thousands of stolen identities to illegally obtain income tax refunds was sentenced Thursday to nearly 20 years in prison.

U.S. District Judge William Dimitrouleas imposed the sentence on Harlan “Money King” Decoste, 27, who previously pleaded guilty to fraud, identity theft and other charges. Decoste had faced even more prison time, but Dimitrouleas gave him a slight break by using a somewhat lower tax-fraud loss estimate than the government.

Still, the judge made clear Decoste got the longest prison sentence of the five men convicted in the case because he was in charge.

“I think it was a fraud factory,” Dimitrouleas said at a hearing Thursday. “He’s the boss.”

Internal Revenue Service investigators say the group used a rented house in the quiet suburb of Miramar as the hub for 10 laptop computers used in an attempt to steal about $108 million between July 2011 and May 2013. The IRS estimated the men were able to fraudulently obtain at least $28.2 million in actual refunds using 29,000 separate stolen identities.

The operation broke wide open after police responded to a May 2013 home invasion robbery at the house and found the computers, stacks of cash, closets filled with expensive shoes and jewelry, watches, bags of marijuana and other drugs, and dozens of prepaid debit cards and credit cards.

Decoste also created a purported rap label called GroundUp111 as a cover for the fraud business, Watson said. Other defendants were listed as officers of the so-called company, which did not produce any music.

Prosecutors are seizing the ill-gotten gains, including more than $174,000 in cash, the 10 computers, Rolex and other expensive watches and more than a dozen gold and diamond necklaces, chains and pendants. Most of the defendants also must pay as much as $28 million each in restitution to the government.

 

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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.