Crystal Ball

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28424505 - benjamin franklin on the one hundred dollar bill framed by other banknotes

Crystal balls are typically used by fortune-tellers or those who claim to have a supernatural ability to see the future. Today’s article reveals a self-proclaimed psychic and his wife from Hermosa Beach, California. They defrauded the Internal Revenue Service (IRS) by committing tax fraud through a “redemption” scheme, causing an erroneous tax refund of $480,323. (If he had peered into his crystal ball before launching the scam, he would have known that it would not go well.)

 The couple’s fraud was perpetrated through a “redemption” scheme, which is commonly used by “sovereign citizens” or people who protest paying taxes. Those who participate in the scam promote the idea that the U.S. government controls bank accounts for citizens that can be accessed by submitting paperwork to state and federal authorities. (This husband and wife team carried out their scheme to victimize others for profit by presenting ‘legal’ financial documents that appeared legitimate. Their intent was to abuse the tax system and steal millions of dollars from the IRS.)

The man and wife filed income tax returns with the IRS, falsely claiming that they had income from various banks. They falsely reported large withholdings and claimed they were due a refund from the IRS. Due to their bogus claims, they received a $480,323 refund, which was immediately deposited into a joint bank account. (They didn’t waste any time trying to conceal the illegally gained funds and transferred over $360,000 to two new accounts and withdrew $70,000 in cash. Apparently, the financial institution and the government took notice.)

Thankfully, the IRS recognized the error and tried to collect the erroneous refund. However, the couple tried to block their efforts by sending a barrage of fake documentation that instructed the agency to withdraw funds from the U.S. Treasury to satisfy their debt. They also sold the bond scheme to others who had debt with government agencies including the IRS, the State of California and private bank institutions regarding mortgage or credit card debt. (They charged their clients thousands of dollars to prepare the useless documents that certified their “strawman” status and to create and send false bonds to the government or financial institutions to pay off their debt.)

The couple was arrested in a Desert Hot Springs, California hotel while watching the Solar eclipse on August 21. (I guess the sun, moon and planets didn’t align properly for their scam to be successful.) After a four-day trial, the 59-year-old man and his 51-year-old wife were convicted on multiple accounts of tax fraud by passing fake checks and bonds and conspiring to defraud the U.S. government. The California man was sentenced to six years in federal prison, while his wife received two years behind bars.

The man, who advertises himself as the host of the internet program, “Strange Universe Radio,” claims that his psychic skills have garnered him worldwide recognition. (That is for sure after news has spread of his less than stellar skills as a psychic and fraudster.) Interestingly enough, he was scheduled to be sentenced at an earlier date, but he failed to show up. (Perhaps he was waiting on a lift from a UFO?)

While on the run, the psychic made comments via social media to brag about his status as a fugitive and advertised a “Go Fund Me” page to help his wife and their cats to relocate. (He also posted a few endearing cat videos on Twitter.) The government doesn’t need a crystal ball to see that this self-proclaimed psychic is really just a fraudster who will be spending his future behind bars.

Today’s “Fraud of the Day” is based on an article entitled, Hermosa Beach ‘Psychic’ Sentenced For Tax Fraud,” posted on Patch.com on September 18, 2017.

HERMOSA BEACH, CA – A Hermosa Beach man who is a self-proclaimed psychic was sentenced Monday to six years in federal prison and his wife received two years behind bars for a filing fraudulent tax returns and passing bad checks in an effort to pay of their debts.

Sean David Morton, 59, and his wife Melissa, 51, were convicted in April of multiple counts of conspiring to defraud the Internal Revenue Service by passing bogus checks and bonds and conspiring to defraud the United States. As a result of the scheme, the IRS issued a refund of $480,323 to the couple in error, prosecutors said.

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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.