The Name of the Game

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11184467 - young people queuing to withdraw cash in an atm

We’ve all played games, whether it’s kickball in the school yard, craps at the casino or the newest alien warfare video game. And, we’ve all learned the lesson that not every game is fair, even if there are rules that need to be followed. A Montgomery Advertiser article revealed how one Alabama woman learned the name of the game when it comes to playing games with the federal government.

For some people, the temptation to act in order to get what they want is too much. In the case of an Alabama state worker, the temptation to access state files to steal peoples’ personal identification information proved to be a losing battle.<i? The woman pleaded guilty in U.S. District Court to one count of wire fraud and one count of aggravated identity theft, all part of a tax refund fraud scheme targeting the Internal Revenue Service (IRS). An investigation found that the scheme began in October 2009, and ran until April 2012. The woman faces between two and 22 years in prison, three years of supervised release, restitution and a maximum fine of $750,000. So, how exactly did a nearly three-year scam rack up such a penalty in jail time? (She didn’t play by the rules; you can’t take other peoples’ tax refunds for yourself.)

The three-year scam started when the fraudster used her access to state databases to obtain personal identity information from other individuals. She then used her state email address to email the identity information to co-conspirators. The co-conspirators then used what officials call an ”elaborate network” to submit false tax returns forms using the personal identity information. The tax refunds were laundered back to the source via debit cards, and returned to the co-conspirators. Court records indicate that the fraudster’s main partner in the scheme filed over 1,000 false tax returns claiming more than $1.7 million in returns. (This is a game with high stakes.) The partner was sentenced to 12 years in prison and to pay $1,291,658 in restitution. (REALLY high stakes.) The crackdown is a product of the partnership between the IRS and Justice Department’s Tax Division, as well as local authorities.

There’s only one thing I’d say to this woman after she receives her sentencing? ”That’s the name of the game.” She should have known going into her scheme that playing a game with the federal government could turn out in a big loss for her.

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Montgomerian Stole State Workers’ Identity Info for Fraud Scheme,” written by Rick Harmon and published by the Montgomery Advertiser on May 30, 2013.

A Montgomery woman, Lea’Tice Phillips, pleaded guilty Thursday to wire fraud and aggravated identify theft for using her state job to steal identity information that was then used as part of a scheme to file more than $1.7 million in fraudulent tax refunds.

The former state worker pleaded guilty in U.S. District Court in Montgomery to one count of wire fraud and one count of aggravated identity theft for her role in a scheme that used false tax returns to defraud the Internal Revenue Service, according to the Justice Department and the IRS.

 

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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.