They call it the ”’Crack Cocaine of Crime”’

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As regular ”Fraud of the Day” readers know, my commentaries usually are based on articles about fraud; but this one is a little different. Today, I’m highlighting a video (and corresponding blog) from a recent CNN Presents segment about tax refund fraud. The segment provides an overview of the fraud – what it is, where it is happening (everywhere) and how it is perpetrated.

It starts off describing how tax refund fraud works? basically criminals steal identities identity anywhere where people have to give out their personal information (e.g., hospitals, doctor’s offices car dealerships). They then use the fake identity to file a phony tax return before the real claimant has a chance to do so.

The video then shifts to highlight the arrest of a man in North Miami Beach on drug charges, where dozens of gift cards are found in his (luxury) car. According to police, the man used a debit card purchased with stolen tax refund money to buy the gift cards at area stores. The man, who is facing identity theft charges in another case, is later charged ”grand theft in connection with tax refund fraud.”

The segment highlights an interview with an officer from the North Miami Beach Police Department. When asked how easy it is to commit tax refund fraud, he replies? ”The fraudulent refunds are so easy; it is like the federal government putting crack cocaine in candy machines. It’s that easy.’? The segment also showcases the expensive cars (Fraudsters love their new cars. I happen to like watching them being towed away) and jewelry the fraudsters buy with their stolen money, including a pendant engraved with the words ”Money Hungry.”

The focus of the segment then turns to Tampa, where the correspondent says ”police estimate the fraud approached a staggering half billion dollars in the last two years,” noting that it is ”just an example of what is occurring nationwide.’? (Remember, that’s just Tampa) It reports the ”IRS identified $6.5 billion in tax refund fraud related to identity theft last year.’? The segment points out that figure only accounts for the fraud that was stopped? how much wasn’t stopped?

So here’s the question for the day? have you filed your refund yet?

Source: Today’s ”Fraud of the Day” is based on a video segment entitled, ”Refund Robbery,” which aired on CNN in its feature, CNN Presents, on March 25, 2012.

Law enforcement says it’s one of the biggest, most brazen crimes in the U.S. – criminals stealing your tax refund by stealing your identity, going online, and getting the refund money. Police even call it the new “crack cocaine of crime,” and in some Florida neighborhoods, it’s actually replaced street level drug dealing. Police officials and the Tampa mayor blame the IRS because it allows the refunds to be put on debit cards, and sends out the return before completely checking the information.

For the first time, our investigation shows the fraud as it’s happening on the streets of North Miami Beach and Tampa, Florida, we interview two police detectives who are themselves victims, and talk to a police informant who teaches people how to do tax refund fraud. In an exclusive interview, the IRS deputy commissioner says it’s a “balancing act” to get the returns out fast to legitimate taxpayers and keep fraudulent ones from going to criminals. The IRS has identified $6.5 billion in ID-related tax refund fraud last year, but does not know how much was going undetected.

 

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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.