If you have watched Ocean's Eleven (2001), you already know that stealing money from a casino is easy. The biggest problem is how to make it out of the building with the money and your life, intact. The same is true of identity theft and particularly tax fraud.
Identity theft and tax caper checklist (2013):
- Obtain sensitive information (social security numbers, dates of birth, etc.)
- Create and file fraudulent tax returns
- Collect and spend all the money without getting caught
The third and last of this regimen for a fraudster's success is unfortunately the greatest sticking point. Despite the extremely convenient direct deposit method that is now available to American taxpayers, identity thieves are often caught when they make a mistake in their collection and spending strategy. A considerable amount of brainpower has been deployed in overcoming this fiscal challenge.
Five Fraudulent Tax Collection Stratagems Gone Wrong
Identity thieves will commonly pretend to be legitimate tax companies in order to garner your sensitive information. The fraudulent business is occasionally used to process payments, as well. Earlier this year, Adrian Lugo was sentenced to 54 months in prison for his tax fraud scheme. The Pittsburgh resident created a shell company, called Uncle Sam's Tax Service, claiming more than a quarter-million in refunds. The business was opened in Buckeye, Arizona.
Rosa Colon chose the name X-Press Taxes and made out two tax returns for her customers. She showed customers a return claiming a lesser amount of money and then file a return for the maximum refund with the IRS. Then she attempted to pocket the difference.
Antoinette Djronet's tax fraud circle was more complex.
Djonret orchestrated a $1.7 million caper involving multiple sources for stolen identities and multiple co-conspirators to siphon payment without detection. The fraudsters requested payment in the form of pre-paid debit cards, a common means of income tax refund collection, which is now a standard service among major tax preparers.
After filing using stolen personal information, the gang arranged for the debit cards to be disbursed to to a number of previously chosen addresses. Cards were gathered and returned to Ms. Djonret.
Any good scheme requires an inside man/woman, and many of the almost-successful fraud schemes last year relied on bank representatives to digitally 'launder' tax payments. Earlier this year, Marvens Jean-Paul was convicted even though the felon managed to convince a number of bank tellers to help him process tax dollars. He also utilized pre-paid debit cards to manage some of the money.
Conspirators in Ohio received checks from the U.S. treasury. Then they auctioned off the checks at a number of businesses and banking institutions.
Find out how fraudsters try to obtain the personal information they use to falsify tax returns by reading my article.