Surprise!

11

Sometimes it is nice to be surprised. Who doesn’t like a surprise birthday party or an unexpected bonus at work? An article published by The Virginian-Pilot tells about some federal investigators who raided the home of a business owner looking for evidence of one crime, but discovered way more than they could have ever imagined.

The story reports on a woman who operated a landscaping and cleaning business out of her home. Investigators assumed she was also running a small operation selling fraudulent ID cards to illegal migrant workers.

When the Department of Homeland Security (DHS) raided the woman’s home, they found evidence way beyond their expectations. Investigators found 17 banker boxes filled with 1,754 fraudulent tax returns and 777 tax refund checks ranging from $4,000 to more than $7,000 each. (She even had them organized in folders and labeled with names.) They also found485 letters from the Internal Revenue Service (IRS) regarding assignments of ID numbers and several templates that could be used to make fraudulent W-2 forms and Mexican passports. (It looks like they hit the jackpot!)

The overwhelming evidence pointing to a larger tax fraud crime warranted the assistance of the IRS. Investigators discovered that the woman, who previously worked as a tax preparer, and her co-conspirators either purchased or otherwise obtained W-2 forms from migrant workers using assumed identities. She then concealed the names, Social Security numbers (SSN) and addresses of the assumed identities and wrote in different information. (That’s not all she did.)

She also applied for Individual Taxpayer Identification Numbers, which are issued by the IRS to people who have to pay taxes, but don’t have or are not eligible to obtain SSNs. Then she served as the notary on the identification number applications and used the fraudulently obtained ITINs on the W-2s. (It sounds like she was running a one-stop tax fraud shop.)

Court documents showed that the woman stole $7.2 million through her con; however, she spent all of her take on a gambling habit, an indoor soccer business, expensive birthday parties and NFL season tickets. (Her negative net worth can be mostly attributed to one casino she visited over 281 times in three years.)

The article states that the 50-year-old woman collapsed in court when she was sentenced to 12 years in federal prison for her role in the tax fraud scheme that involved more than 1,700 fraudulent tax returns over a six-year period of time. (She was definitely surprised by the Judge’s decision.)

According to the story, during Fiscal Year 2014 the IRS received more than 7,600 identity theft leads involving approximately 1.47 million returns claiming more than $6.8 billion in refunds. Congratulations to DHS and the IRS for putting an end to this woman’s scam. (It looks like she’ll be in for many more surprises while serving out her time in prison.)

Source: Today’s ”Fraud of the Day” is based on an article titled, ”E. Shore Business Owner Sentenced for $7.2M Fraud,” written by Scott Daugherty and published by The Virginian-Pilot on May 20, 2015.

Federal agents raided the home of an Eastern Shore business owner last year hoping to find evidence of identity theft and tax fraud.

What they ultimately found was beyond their expectations: Seventeen bankers boxes filled with fraudulent and doctored documents, much of it organized in folders and labeled with names.

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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.