Starving Artist


Stolen Identity Refund Fraud (SIRF) is estimated to cost the U.S. Treasury more than $2 billion a year. This type of fraud involves using stolen Social Security Numbers and personal identifying information to file false tax returns with the Internal Revenue Service. In today’s ”Fraud of the Day,” we learn about the prosecution of the last defendant involved in a SIRF fraud ring that stole more than $2 million in federal income tax refunds.

A story published in The Record states that the defendant in this particular case is among eight people charged in a scam that involved filing false tax returns and diverting refund checks from postal routes. (Apparently, one of the charged is still on the run.)

The fraud ring members carried out the ruse by using stolen identity information from Puerto Rican citizens. They filed 1040 forms in the victims’ names, declaring bogus withholding and earnings information. The tax refund checks were directed to addresses in New Jersey and New York where ring members intercepted the checks from the mail. (Postal carriers were paid bribes of $400 for each check they intercepted.)

Once the checks were in the hands of ring members, they were then sold to other co-conspirators such as the defendant in this case. He cashed the checks at financial institutions or businesses run by other fraud ring members, then deposited the funds in other co-conspirators’ bank accounts for a fee.

Over 18 months, the fraudster admitted depositing tax refund checks worth $554,387 into accounts under his control, then laundering the money through other accounts. The 45-year-old man was sentenced to one year in prison for his part in the fraud ring, and he was ordered to pay $554,000 in restitution to the government. (It’s important to note that this man also had a prior state fraud conviction involving food vouchers – this is actually his second offense.) The article also mentions that a postal carrier involved in the scam received a sentence of eight months of home confinement for accepting bribes.

The judge offered some wise words to the fraudster recommending that he use his time in prison to learn how to read and write and become a better person. Let’s hope that he’ll take the judge’s advice to heart and have a fresh start to a law-abiding life when he gets out of prison. (Unfortunately for him, it may be back in the Dominican Republic because he could face deportation after serving out his sentence.)

Source: Today’s ”Fraud of the Day” is based on an article entitled, ”Newark man sentenced for role in $2M fraud ring,” published by The Record on on June 15, 2016.

The last defendant in a fraud ring that used stolen identities and Social Security numbers to pilfer more than $2 million in federal income tax refunds was sentenced on Wednesday to a year in prison.

”I would like to say I made a bad decision and that I apologize for what I did,” said Angel Fernandez, 45, of Newark, speaking through a Spanish interpreter.

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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.