Double Trouble

7

Among fraudsters, the most dangerous perpetrators are those who have a professional familiarity with the system they are trying to defraud. The latest example of those who see fraud as just business as usual comes to us via a press release from the U.S. Attorney’s Office, Southern District of New York.

For five years, between 2009 and 2014, a New York man and his business associates used their successful tax preparation business to enable thousands of others to commit fraud, costing the government millions of dollars as a result. Worst yet, they were able to do so primarily due to shady connections with a corrupt New York City fraud investigator, who was passing them the Social Security numbers of thousands of children in return for bribes. The tax preparation business then used the stolen information to fraudulently claim Earned Income Tax Credits (EITC) for their customers, falsely listing the child victims as dependents of their unscrupulous patrons. (And getting a cool lump of cash for their effort in return.)

However, the business’ greed did not stop there. Several business employees (apparently not content with just enabling fraud) actually filed fraudulent EITC claims for themselves. This brash activity, in addition to the business’ usual cash-for-fraud scheme, continued even after police conducted several search warrants targeting the business. (Which is usually a tip off that they’re on to you!).

After all was said and done, the business’ owner received nine years in prison, and was ordered to forfeit $3.5 million in addition to $3.5 million in restitution.

Source: Today’s ”Fraud of the Day” is based on, ”New York Man Sentenced to 9 Years in Prison for Multimillion-Dollar Child Identity Theft and Tax Fraud,” a news release from the U.S. Attorney’s Office, Southern District of New York on February 22, 2016.

Noel Cuello, the former operator of a tax preparation business was sentenced to nine years in prison for leading a large-scale identity theft and tax fraud scheme through which identifying information of minors, including Social Security numbers, was obtained through corrupt payments to a former fraud investigator with the New York City Human Resources Administration. The identifying information was then used to file thousands of fraudulent tax returns, resulting in millions of dollars in loss to the United States Treasury.

In addition to his prison term, Cuello was sentenced to three years of supervised release, ordered to forfeit $3.5 million, and ordered to pay $3.5 million in restitution.

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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.