Adding Insult to Injury

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There ‘s nothing like trying to repair your credit record, then being victimized by the very entity that was supposed to help you do it. (Talk about adding insult to injury.) That ‘s what happened in today ‘s “Fraud of the Day,” which tells about a man who stole the identities of people his business was contracted to help, not harm, and used that information for personal gain.

The man, who operated a business that provided credit repair and credit card processing services, stole his client ‘s personal information and used it to file 92 fraudulent individual income tax returns claiming more than $1 million in refunds. (He also stole identities from people who worked for Chicago ‘s Board of Education and did the same thing with their personal information.)

The fraudster directed the tax refunds to be loaded onto prepaid debit cards, mailed to addresses that he controlled or deposited into bank accounts he had opened in the names of his victims. (Did I mention that he also filed his own fake tax return for three years?)

The former credit business owner pleaded guilty to aggravated identity theft as well as the theft of government funds. He was sentenced to five years in prison to be followed by two years of supervised release. The criminal must also pay the Internal Revenue Service $633,884 in restitution.

Let ‘s give credit where credit is due ,to the investigators who successfully prosecuted this fraudster. It ‘s ironic that this former credit repair authority is now dealing with a credit crisis of his own.

Source: Today’s “Fraud of the Day” is based on a Department of Justice press release entitled, “Illinois Business Owner Sentenced to Prison for Stealing Identities to File False Tax Returns” released on January 17, 2017.

A Northern District of Illinois resident was sentenced to 60 months in prison today announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division, and U.S. Attorney Zachary T. Fardon for the Northern District of Illinois.

From approximately January 2011 through April 2015, Carlos Smith stole personal identifying information obtained from individuals who sought credit repair or credit card processing services through CLS Financial Services Inc. (CLS), a business Smith operated, and used the information to file false individual income tax returns. Smith also stole identities of individuals who worked for Chicago’s Board of Education and used this information to file false individual income tax returns. Smith filed approximately 92 fraudulent income tax returns, claiming more than $1 million in refunds. Smith directed the fraudulently obtained tax refunds to prepaid debit cards, addresses, and bank accounts he controlled, including accounts opened in the names of individuals whose identities he had stolen. Smith also filed his own false individual income tax returns for 2012 through 2014.

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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.