Running a Hustle Behind Bars

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A report issued earlier this year by the Treasury Department details how the Internal Revenue Service (IRS) is doing with detecting tax refund fraud. The IRS identified 42,148 fraudulent tax returns with $227 million claimed and prevented the issuance of nearly 80 percent or $180.6 million in fraudulent refunds. Interestingly enough, the agency identified 20,224 potentially fraudulent tax returns filed by incarcerated individuals. (It just goes to show that fraud is everywhere, even behind bars.)

An article published by the Turlock Journal tells about a prisoner who was serving time behind bars for burglary, but at the same time was filing false claims for federal tax refunds with the help of several co-conspirators on the inside and some on the outside as well. (It’s pretty common to run a hustle behind bars. Prisoners have a lot of time on their hands.)

The prisoner and three fellow inmates gathered personally identifiable information (PII) of other incarcerated individuals and gave the information to co-conspirators not in prison. The outsiders then used the data to prepare and submit bogus income tax returns to the IRS. (The prisoner at the center of this case also filed three fraudulent tax returns in his own name.)According to the story, the conspiracy caused at least 247 false income tax returns to be filed over four years.

The burglar behind bars had a track record of theft and was originally out on bail for charges related to stolen goods when he and a female companion were pulled over in the man’s truck by law enforcement. A vehicle search revealed a lock-picking kit, shaved keys, bolt cutters, a crowbar, ammunition, purses, cell phones and electronics. (The items were covered in glass – a big clue as to how they were obtained.)The traffic stop led to an arrest.

While serving time for the burglary conviction, the 34-year-old was sentenced to an additional one-and-a-half years in prison for the fraudulent tax refunds. He is also required to pay $8,938 in restitution.

Running a hustle behind prison bars is pretty common, whether it be to obtain drugs, cell phones or illegal tax refunds. However, it looks like this prisoner’s ruse has come to an end and the only legitimate thing this fraudster is going to receive for his illegal acts is a longer stay in prison.

Source: Today’s ”Fraud of the Day” is based on an article entitled, ”Turlock inmate sentenced for tax fraud,” published by the Turlock Journal on August 19, 2016.

A Turlock man serving a prison sentence for burglary has been given additional time behind bars for fraudulent tax refunds, according to the U.S. Department of Justice.

Daniel Allen Coats, 34, of Turlock, was sentenced Friday to one and a half years in prison and ordered to pay $8,938 in restitution for his role in a conspiracy to defraud the United States by filing false claims for federal tax refunds.

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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.