Just about everyone would like to make more money. It’s the American way. We’re hardwired for capitalism. But, most people work for what they earn. Fraudsters don’t subscribe to that point of view. Instead, they are looking for easy money. Today’s Fraud of the Day from the Tampa Bay Times highlights the case of one man accused of looking for easy money through tax refund fraud.
The article reports that the defendant, a certified nursing assistant at a health care facility making $14,000 a year, allegedly found himself making $1.7 million through tax refund fraud. (If true, maybe he needs an assistant; sending my resume now.) What led authorities to accuse him of the crime?
Evidently, authorities have been watching him for over a year. It all started in July 2011, when he was stopped on a routine traffic stop. At that time, the police “discovered five prepaid debit cards in other people’s names, each loaded with about $9,650,” which set off the red flags. (Just below the IRS $10K refund limit. Convenient?) When the officers questioned him about it, he said he found the wallet. The authorities then started working with the IRS-Criminal Investigations unit on the case.
The complaint alleges that the defendant filed over 200 phony tax returns using other people’s Social Security numbers and personally identifiable information (PII). So, how do authorities think he pulled it off? The complaint says that “most electronic claims went through an IP address assigned to [the defendant’s] rental in the Lansbrook Village area of northeast Pinellas County; others, through wireless service at a [hotel] room in Tampa.” (If true, this guy needs to read Fraud of the Day! We covered this topic months ago. Anyone using this method might as well leave bread crumbs.)
Of course, the defendant has only been accused of the crime. He hasn’t been convicted and deserves his day in court. He is innocent until proven guilty.
Still, the case is a cautionary tale for revenue departments everywhere. Tax refund fraud is costing them billions of dollars. Money is literally being moved from the Internet to pre-paid debit cards all based on self-reported information. Agencies must start verifying and authenticating the identity of the individual before they send the cash. Otherwise, the government will stay in “pay and chase” mode and the fraudsters will continue to get away with billions. Or, we could rely on a routine traffic stop.