It's Who You Know

Federal tax refund fraud is a growing problem that has the IRS on its toes.  Over the past few years the IRS has intensifyied its efforts to combat refund fraud, but it has been a challenge for the IRS to keep pace.

Some tax criminals are unsophisticated, inexperienced solo operations that are just not very good at what they do.  These are the people we end up reading about in the news after IRS Criminal Investigation nails them.  The more successful tax fraud schemes involve multiple moving parts, or so they think.  For example, when the unsophisticated, inexperienced individual fraudster is well-connected — if he has the right kind of friends — he believes that his potential for swindling the government will increase exponentially.

And if one of his connections happens to be a banker, then he thinks he’s golden.  Hilda Josephine Hernandez-McMullen, a former employee of Wells Fargo Bank, pleaded guilty to seven felony counts of bank fraud.  She admitted to assisting members of an identity theft and tax fraud ring that had sought $25 million in false refunds.  She opened bank accounts for people knowing the information provided to her was inaccurate and she cashed fraudulent checks totalling about $38,000.

Ten members of the fraud ring were charged, and Hernandez-McMullen herself is looking at 30 years in prison for each count of bank fraud if she receives the maximum sentence.  Not so golden afterall…

Postal Workers Assisted in Tax Refund Fraud Scheme

image via imageshack.us

A multimillion dollar tax refund fraud scheme was dismantled by authorities recently, but not after the IRS paid out over $5 million in refunds based on claims made using stolen identities from citizens of Puerto Rico.  “Operation Mass Mail” finally resulted in a Complaint naming five defendants which was unsealed earlier this week.  IRS Criminal Investigation (IRS-CI) is normally assisted by other federal agencies in tax fraud investigations; this time the US Attorney and the US Postal Inspection Service.

The scheme operated more or less in this manner (allegedly):

  1. Jose Angel Quilestorres got things started from his apartment in the Bronx, filing false returns using stolen taxpayer information
  2. Refunds were received at multiple locations; some were intercepted by US Postal Service workers who accepted bribes to assist in the fraud
  3. The refund checks then changed hands again and were cashed by the other four defendants named in the Complaint

The leader of this operation, Quilestorres, faces a maximum of 32 years behind bars.

The tax problems of the Average Joe pale in comparison.  How can the IRS find time to pursue criminal charges against people who simply fail to file tax returns (even if they pile up a big tax debt) when things like this are going on around us?  Sure, they do find time on occasion, but they have bigger fish to fry.

The Ultimate Case of Refund Fraud

I’ve blogged about refund fraud before.  I’ve even blogged about inmates committing refund fraud from their prison cells, as odd as that may sound.  But the story of Jason Whitfield will Blow. Your. Mind.

Whitfield was charged with second degree murder back in November 2011.  He is accused of shooting and killing 26-year-old Michael Massaline on October 26, 2011.  Then, while in prison, Whitfield was caught putting together fraudulent refund returns in hopes of getting free money from the government.  Sometimes these refund fraud types use the identities of people they know, and sometimes inmates even sell their personal information knowing what it will be used for.  Not the case here.  At least one of Whitfield’s victims was definitely not a willing participant because it was the same guy he is accused of murdering!  Talk about adding insult to injury!  I guess once you’ve killed someone your tax problem seems inconsequential, and there isn’t much else you can feel guilty about . . . IF he’s guilty, of course.

It probably won’t surprise you to learn that this is another case out of the (now infamous) tax fraud capital of the nation, Tampa Bay, FL.  If it bothers you that inmates are surfing the internet and maintaining improper contacts with the outside world, you’re not the only one.  Prison guards and officials in Hillsborough County are in over their heads with this “epidemic.”  One deputy estimated that more than half of the inmates there are somehow involved in fraudulent refund schemes.