Placing a High Priority


The government places a high priority on prosecuting criminals who use stolen identities to file fictitious income tax returns and claim fraudulent refunds. A Department of Justice (DOJ) press release details how one man victimized a wide variety of vulnerable people by participating in one of the largest prosecutions to date involving more than 12,000 bogus tax returns and approximately $40 million in illegal tax refunds.

The press release states that the man was one of 12 people who pleaded guilty in the case. (His part of the scheme amounted to more than $1.1 million in illegal refunds.) Court records show that the fraudster was one of more than 130 participants in the scam, many of whom were receiving public assistance. He and other co-conspirators used the stolen identities of elderly victims, individuals living in assisted living facilities, drug addicts and prisoners to carry out the ruse. (The refunds were sent to more than 400 ”taxpayer” addresses in the District of Columbia.)

For over four years, the criminal’s residential address was used to receive some of the illegal tax refunds. (An earlier DOJ press release states that approximately 360 fraudulent income tax returns were filed listing addresses that the man controlled and 238 checks were received totaling more than $500,000.) He also paid others to receive illegal tax refunds. (He supposedly recruited others to negotiate 86 other refund checks. Altogether, this caused a total intended loss of more than $1.1 million to the U.S. Treasury.)

The 32-year-old male pleaded guilty to conspiracy to defraud the U.S. He will serve 41 months in prison for the crimes related to identity theft and tax fraud, which will be followed by three years of supervised release. He also will pay restitution of $636,026.

Identity-based tax refund fraud is a growing problem and is estimated to cost the government $21 billion by 2016. The Internal Revenue Service is facing the challenge of refund fraud caused by identity theft by doubling the number of dedicated staff working on preventing fraud and assisting victims. The government has made fighting this type of crime a high priority and will do whatever it takes to prevent unscrupulous individuals from taking advantage of its most vulnerable citizens.

Source: Today’s ”Fraud of the Day” is based on a press release titled, ”District of Columbia Man Sentenced to Prison for Role in Massive Identity Theft and Tax Fraud Scheme,” issued by the Department of Justice on May 13, 2015.

A 32-year-old Washington, D.C., man was sentenced today to serve more than three years in prison for various crimes he committed in a far-reaching identity theft and tax fraud scheme in which he and others filed fraudulent federal income tax returns seeking more than $1.1 million in refunds, the Justice Department announced.

James Nelson is among approximately 12 people who have pleaded guilty in the U.S. District Court for the District of Columbia to charges in one of the largest prosecutions to date involving the use of stolen identifying information. The overall case involves the filing of at least 12,000 fraudulent federal income tax returns that sought refunds of at least $40 million.

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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.