Posted on November 25th, 2013 No comments
More fraudulent refunds were sent to Miami than any other U.S. city — but 655 were sent to a single address in Lithuania, according to an inspector general’s report.
The Internal Revenue Service issued $4 billion in fraudulent tax refunds last year to people using stolen identities, with some of the money going to addresses in Bulgaria, Lithuania and Ireland, according to an inspector general’s report released Thursday. The IRS sent a total of 655 tax refunds to a single address in Lithuania, and 343 refunds went to a lone address in Shanghai.
In the U.S., more fraudulent returns went to Miami than any other city. Other top destinations were Chicago, Detroit, Atlanta and Houston.
The IRS has stepped up efforts to fight identity theft, but thieves are getting more aggressive, said the report by J. Russell George, Treasury’s inspector general for tax administration. Last year, the IRS stopped more than $12 billion in fraudulent refunds from going to identity thieves, compared with $8 billion the year before.
“Identity theft continues to be a serious problem with devastating consequences for taxpayers and an enormous impact on tax administration,” George said in a statement. The fraud “erodes taxpayer confidence in the federal tax system.”
Thieves often steal Social Security numbers from people who don’t have to file tax returns, including the young, the old and people who have died, the report said. In other cases, thieves use stolen Social Security numbers to file fraudulent tax returns before the legitimate taxpayer files.
The IRS, which takes pride in issuing quick refunds, often sends them out before employers are required to file forms documenting wages, the report said.
“The constantly evolving tactics used by scammers to commit identity theft continues to be one of the biggest challenges facing the IRS, and we take this issue very seriously,” the IRS said in a statement. “The IRS has a comprehensive and aggressive identity theft strategy that focuses on preventing refund fraud, investigating these crimes and assisting taxpayers victimized by it.”
Despite budget cuts, the agency said, agents have resolved more than 565,000 cases of identity theft this year, three times the number of cases resolved at the same time last year.
A separate report by George said the number of identity theft victims is on the rise as thieves get more aggressive.
Through June, the IRS identified 1.6 million victims whose identities were stolen during this year’s tax filing season, the report said. That compares with 1.2 million victims in 2012.
Many of these people didn’t realize they were victims until they submitted their returns only to learn from the IRS that someone else had already used their Social Security number to file and claim a refund.
The IRS does a good job of eventually identifying the proper owner of Social Security numbers, but the process can be lengthy, the report said. For cases closed between August 2011 and July 2012, it took an average of 312 days to resolve the case and issue a proper refund, the report said.
The IRS said it has resolved most of this year’s identity theft cases within 120 days.
Last year, the IRS issued 1.1 million refunds to people using stolen Social Security numbers, the inspector general’s report said. Those refunds totaled $3.6 billion. By comparison, the IRS issued $5.2 billion in refunds to people who stole Social Security numbers in 2011, the report said.
Additionally, the IRS issued 141,000 refunds last year to people using stolen taxpayer identification numbers, which are typically used by foreign citizens who earn money in the U.S. Those refunds totaled $385 million, the report said.
Florida is a big target of identity theft in part because of the large number of older residents living there. Older and younger people can be targets for identity theft because many don’t meet the income requirements to file a federal tax return.
Nearly 38,000 potentially fraudulent refunds, totaling $147 million, were sent to addresses in Miami, the report said.
Among individual homes, one address in Orlando received 580 tax refunds totaling $870,000, the report said. Another Orlando address received 291 refunds totaling $466,000.
Sen. Bill Nelson, D-Fla., has introduced a bill that would toughen criminal penalties for people who file fake tax returns under someone else’s name. The bill would also require the IRS to get legitimate taxpayers the refunds they’re due within 90 days.
“While these reports show that some progress is being made in reducing tax fraud, it’s also clear that there is still much to be done and there are still a number of improvements that need to be made to protect both taxpayers and the U.S. Treasury,” Nelson said.
Posted on November 25th, 2013 No comments
We are now entering the seventh week since Obamacare’s exchanges went live, and several big problems remain clear.
- First, the website where people are supposed to buy insurance — or be penalized by the IRS for not doing so — is still plagued by technical problems and security concerns.
- Second, despite hundreds of millions of dollars devoted to a Spanish-language Obamacare propaganda campaign, the Spanish-language Obamacare website hasn’t even been launched yet.
- And, most troubling, is that millions of Americans are now being notified that they will lose the health plans they were happy with, along with the doctors they know and trust — something President Obama promised would never happen under Obamacare, although recent revelations show his administration has known for at least three years this was inevitable.
All this means millions of Americans now have to shop for new health-insurance plans, but the websites they are supposed to buy insurance don’t work. In response, President Obama and his administration have steered people toward a 1-800 help line and in-person enrollment through Obamacare’s network of so-called “navigators.”
This is a troubling proposition for the American people who are now being forced into other Obamacare enrollment options that could make them more susceptible to fraud and personal identity theft. As Health and Human Services Secretary Kathleen Sebelius admitted last week, there is no uniform standard of background checks conducted on navigators, and nothing to prevent convicted felons from becoming navigators.
Americans know all too well the high personal and economic costs of fraud in our healthcare industry. For example, each year in Florida, we see hundreds of billions of taxpayer dollars vanish into the hands of Medicare and Medicaid fraudsters, many of whom have found refuge from the American justice system in places like Cuba. And Hispanics in particular should be wary of entrusting just anyone to help them fill out government applications, as so many in our community have been victimized by so-called notarios, who take immigrants’ money and immigration paperwork, and then do nothing for them.
As Obamacare’s website failures push more people toward non-web enrollment options, the same kind of con artists who have been defrauding Medicare, Medicaid and immigrants will be inclined to do the same through Obamacare’s navigator network.
And as time goes on, we will inevitably see more cases of people fraudulently posing as navigators, collecting personal information and then exploiting innocent victims. And while some states like Florida have taken proactive steps to raise standards for aspiring navigators and toughen consumer protection safeguards, many states have not.
This is a recipe for people falling prey to fraud, identity theft or gross incompetence by those operating as Obamacare navigators.
It is unacceptable that President Obama is forcing the American people to blindly trust the federal government’s website security and its network of navigators to help them comply with Obamacare. As consumers are being pushed to shop for insurance through Obamacare, navigators and other non-online options, they proceed with great care and caution against fraudsters intending to do them harm.
Congress should also act, which is why I have introduced common-sense legislation to protect Americans from Obamacare-related identity theft committed by fraudulent navigators, crack down on fraudsters and raise background-check standards for people applying to be navigators.
While this is not a fool-proof solution to address Obamacare’s problems, it is one that will provide a greater degree of protection and relief to the people dealing with the Obamacare’s consequences. While I believe Obamacare as a whole should be repealed and replaced, until we can do so, we must protect our people from its flaws.
Republican Sen. Marco Rubio represents Florida in the U.S. Senate.
Posted on October 12th, 2013 No comments
Miami, FL (1888PressRelease) October 04, 2013
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Officials say they’re tightening security of the Florida prescription drug database, after the disclosure last week that names, prescription history and other personal information of 3,300 individuals were released to lawyers of six defendants in a prescription drug fraud sting.
Wednesday’s announcement by Department of Health officials regarding stricter security measures came the same day that the state attorney who released the records revealed details about how an investigation into a drug trafficking ring last month netted so many names of people apparently unrelated to the sting.
Department of Health officials said they are working with law enforcement and Attorney General Pam Bondi, to explore additional safety measures for the Prescription Drug Monitoring Program. The safeguards will include limiting the number of people from agencies allowed to use the database, requiring all agency administrators to be notified when someone queries the program and cutting access to those who wrongfully disclose information.
The database first went into use in 2011, as a way to prevent drug-abusers from doctor shopping.
“The PDMP works daily to save the lives of those with prescription narcotic addiction and privacy is job one,” said State Surgeon General and Secretary of Health John Armstrong. “The Department is taking steps forward to put additional safeguards in place to prevent any unauthorized use of information that is intended to save lives.”
Concerns about law enforcement agencies’ use of the database and distribution of records came to light after Daytona Beach attorney Michael Lambert discovered his name was among about 3,300 others whose drug history, doses, pharmacies and home addresses were released to five lawyers representing defendants in a drug sting in May.
Lambert sued State Attorney C.J. Larizza over the list of names and is challenging the constitutionality of the database, calling it an unconstitutional invasion of privacy that subjects individuals to unreasonable searches and seizures.
The list of names was part of a multi-county drug trafficking investigation by state, local and federal agents.
According to court documents filed by Larizza, Drug Enforcement Administration agent Sean Tucker and other investigators queried the database for the prescription drug history of four doctors and their pharmacies, along with six individuals accused of forging prescriptions for hydrocodone and other addictive narcotics.
The search netted 3,300 names and drug histories, including Lambert’s. Agents then asked the doctors to verify the data. The investigation identified 63 fictitious names and seven people whose identities had been stolen by the accused fraudsters, according to the court filings.
“Essentially, the trafficking ring was utilizing false identities and identity theft to procure and distribute narcotic prescription medications. The investigation revealed that thousands upon thousands of narcotic pills were being illegally distributed on the streets of our state,” Larizza wrote in his response.
State law requires that the information from the database remain confidential and makes it a felony to knowingly disseminate the records to unauthorized recipients.
Larizza’s office gave five of the six lawyers representing defendants in the drug cases disks containing the names. One of the lawyers recognized Lambert’s name and alerted him of the possible security breach. Lambert sued, asking Larizza to retrieve the disks and to notify all of the individuals whose names had been released through certified mail.
In Wednesday’s court filing, Larizza said none of the other four lawyers had viewed the data and that only Lambert had not returned the disk to the state attorney’s office.
But the case has raised questions about the security of the database and prompted concerns from some GOP lawmakers who said they want to hold hearings on the issue.
Lambert contends Larizza was wrong to release all of the records to the defense lawyers and asked the judge to block the law regarding the use of the database.
But Larizza argued that Lambert failed to make his case.
“There is sparse, if any, legal precedent providing guidance on what limitations should be placed on the release of discovery materials to the defense under these circumstances. Essentially, the Court must balance the privacy rights of the citizens against the due process rights of the defendants,” he wrote.
Lambert said he had no problem with investigators casting a broad net to identify potential prescription drug fraudsters. But, he said, prosecutors should have redacted the names of the individuals who were not accused.
“Those six people have been identified. I’m not one of those people. Nor were the other 3,300 people…Why does somebody need to know that I’m a legitimate patient lawfully prescribed medication from one of these doctors?” Lambert said.
Lambert said that the new security measures being considered by health officials won’t ensure that innocent patients’ data remains private.
The ACLU, which opposed the database from the beginning, filed a public records request regarding the release of the data but was told the database query is exempt from public records because it is part of an active investigation. ACLU lawyer Maria Kayanan, who requested the records, said she intends to fight for the records and is considering asking the DEA and the Justice Department to investigate.
“To me this is an admission that there have been no accountability standards and there still won’t be until these new rules are adopted and put in place. But at least the Department of Health is aware of the problems and has taken steps to begin addressing the sweeping violations of privacy that have occurred,” Kayanan said. “This is damage control. I think they’re trying to save a database that shouldn’t exist in the first place.”
The Lambert case does not yet have a judge. A circuit judge asked the Florida Supreme Court to assign a judge from outside Larizza’s 7th Circuit jurisdiction, which includes, Flagler, Putnam, St. John’s and Volusia counties.
WEST PALM BEACH, Fla. – David Sanders is a victim of identity theft. He told us, “They had made a credit card with my number and name on it.” He says it didn’t take long for him to find out someone was using his identity and spending his money in another state. “I got an email that I had a charge from a Kohl’s in Dallas, Texas of all places, and I was right here in Delray Beach.”
According to the Federal Trade Commission, South Florida is number one on the list for identity theft complaints, which includes Palm Beach County. Port Saint Lucie ranks number 7.
Reggie Montgomery, a retired police officer, has advice on how to protect your identity.
“Make sure that their wallet does not get out of their sight, number one.” He says don’t give out your date of birth or social security number to someone over the phone.
“If you go into your doctor’s office, they don’t need your social security number. You see it on every form in every doctor’s office, they don’t need it. They have your insurance information,” said Montgomery.
When you throw out personal information in the garbage, such as credit cards or canceled checks, shred them.
He says the best shredder is the cross shredder, which makes the paper look like confetti.
Montgomery says “And when you throw the shredding out, put liquid on it so that nobody is going to go through it and try to put it back together.”
You can also protect yourself with the right mailbox. “Have a locking mailbox, make sure that nobody can get into your mailbox, that’s another way people get your information,” he said.
Coral Gables police arrested convicted felon Mark Lodigensky in connection with a number of apartment burglaries in the city.
Lodigensky, 59, faces a series of charges, including numerous counts of burglary of an occupied dwelling, trespass, third-degree grand theft and criminal mischief. He was arrested on June 5.
In May, the police department released images of a man caught on surveillance video at an apartment complex in Coral Gables as he peered through the front glass doors. Residents from several high-rise complexes had complained of thefts since the new year, including a break-in in February at a building on Madeira Avenue that led to the loss of $10,000 in jewelry, a Rolex watch and $1,500 in damages to an apartment’s front door.
Police arrested Lodigensky, who has a criminal record dating to the late 1970s, including a series of break-ins in Fort Lauderdale and Miami-Dade in 1986, after receiving a tip. An individual said he called Crimestoppers when he recognized the man from an image that ran with a Miami Herald story in May on the apartment break-ins.
“I don’t know the guy, per se, but I’m good with faces,” the caller said Tuesday, asking that his identity be withheld.
Lodigensky was last released from prison in December. He is being held at Metro West Detention Center. His bond totals $250,000 on the Gables charges but, in addition, there is a federal marshall’s hold on his release and more charges are expected, said Gables police spokesman Dean Wellinghoff.
“This was a good case, a good arrest,” Wellinghoff said Wednesday.
The arrest of Jerry Frank Townsend on Sept. 5, 1979 ended the hunt for a brutal serial killer and rapist who had terrorized a predominantly African-American neighborhood in northwest Fort Lauderdale, Fla.
But it began an enduring miscarriage of justice.
Townsend spent 22 years of his life in prison until he was exonerated by DNA tests that did not exist when he was arrested. Eddie Lee Mosley remained free to continue to rape and kill until his 1987 arrest and confinement in a state hospital for the criminally insane.
The deaths of 10 women and children who were murdered after Townsend’s wrongful arrest have been linked to Mosley by DNA testing or other evidence.
Now, relatives of three of those victims are calling on longtime Broward State Attorney Mike Satz – who is up for re-election – to finally investigate the actions of police detectives whose testimony convicted Townsend.
“It matters a hell of a lot,” said Clarice Tukes, 72, whose 20-year-old daughter, Arnette, was raped and strangled five months after Townsend’s arrest. “My daughter would still be alive if they hadn’t arrested the wrong man.”
“I want this reopened,” said Jacquelyn D. Miller, the daughter of Geraldine Barfield, whose body was found in a field adjacent to the Immanuel Church of God in Christ near Sunland Park on Dec. 19, 1983. She was 35.
“I’ve carried this with me 28 years. I want Michael Satz to tell me why he allowed this to happen, why a killer was allowed to remain on the streets,” she said.
Compared to Jack the Ripper
Satz was in his first term as Broward’s top prosecutor when Townsend was arrested.
The case captured the public’s imagination: A black serial killer compared by police to Jack the Ripper. Townsend, they said, had admitted to wanting to “rid the world of prostitutes.”
The victims, however, were not prostitutes.
Townsend, a grown man with the mental capacity of a child, was led by detectives to confess to a string of rapes and murders he did not do. He was convicted of six murders and a rape in 1980 and sent to prison for life.
In 2009, eight years after DNA proved his innocence, the Broward Sheriff’s Office agreed to pay $2 million over five years to settle a civil rights lawsuit alleging that its detectives fabricated evidence, concealed exculpatory evidence, tampered with witnesses and coerced false confessions out of Townsend.
Miami, where city detectives were accused of similar wrongdoing against Townsend, paid $2.2 million to end another suit before trial in 2008. Taxpayers spent at least $1 million more to pay lawyers to defend the police.
Broward Bulldog reported in 2009 that transcripts of Townsend’s Broward trial and hearings contain disturbing evidence of crimes like perjury and the falsification of police reports by BSO detectives and other officers. Several relatives recently saw the story.
For example, BSO detectives testified that Townsend led them to the scene of four Broward murders, and provided them with details only the killer would have known.
But Townsend wasn’t the killer. So the detectives’ damning testimony takes on new meaning.
There is no statute of limitations on perjury in an official proceeding that relates to the prosecution of a capital felony. Whether the law could be enforced regarding original police testimony against Townsend is unclear because today’s statute is somewhat different than what was on the books in the 1980s.
Nevertheless, neither Satz, Broward’s state attorney since 1976, nor the Broward Sheriff’s Office has investigated the actions of the BSO detectives whose testimony sent Townsend to prison, Mark Schlein and Anthony Fantigrassi.
The settled lawsuit contended those detectives framed Townsend to advance their careers. Schlein has declined to discuss the case. Fantigrassi has said he never lied to convict Townsend.
Fantigrassi retired as head of BSO’s Criminal Investigations Unit in 2005. Schlein retired in 1993 as a lieutenant colonel, later worked for the state and is today an attorney in private practice in Tallahassee.
The lawsuit said Mosley is believed to be responsible for 41 rapes and 17 murders between 1973 and 1987, when he was declared incompetent to stand trial for the 1983 Christmas Eve rape-murder of Emma Cook, 54.
Victims and their families Katrenna Bentley, a hedge fund accountant, was 11 years old the day her grandmother died. She still vividly recalls seeing her battered body on a slab at the Mizell Funeral Home.
“I remember her laying on the table and seeing skin under her nails and hair in her mouth. They said she fought back, bit him in the head,” Bentley said. DNA from that trace evidence was matched two decades later to Mosley.
Katrenna and her mother, Mary Bentley, Emma Cook’s daughter, both said they want the state to investigate the actions of the police who handled the Townsend case.
“Every Christmas I relive this and get a sick feeling in the bottom of my stomach,” said Mary Bentley, 61. “If they had investigated it properly from the beginning they could have caught Mosley earlier and he wouldn’t have ended up killing my mom or the other people. They should pay.”
“I would love to see that happen,” said Calvin Sapp, 68, a semi-retired construction worker and older brother of victim Geraldine Barfield. “It seems like very seldom that people of color get the type of justice that they give everybody else.”
The victims’ relatives are not alone in wanting an investigation.
Broward’s elected public defender, Howard Finkelstein, said, “The fact that these officers were allowed to lie and cheat to frame an innocent man, and then were allowed to go on with their lives as though they did nothing wrong and nothing happened is not only illegal, it’s a sin.”
Finkelstein said Townsend’s case is “the best example” of a local criminal justice system where authorities have for decades often ignored the crimes of police officers that plant evidence or commit perjury to make cases against suspects.
“That they turned a blind eye to such a heinous crime is the exact reason that most minorities in Broward feel they don’t get a fair shake – and they’re right,” said Finkelstein said.
Satz, who rarely talks to reporters, referred a request for comment to a subordinate who said prosecutors reviewed the Townsend case before the DNA tests were done and found insufficient evidence of perjury.
“In regards to the officers involved in that case, we know what it takes to charge someone with perjury,” said Assistant State Attorney Carolyn McCann. “People on the outside don’t know about the elements of the crime. They just think that if it smells bad and looks bad it’s a crime. In a perfect world, that would work. But we have to follow the law and can’t just harass people.”
Broward prosecutors, however, have made little effort to actually make such a case. Asked if her office ever confronted Fantigrassi or Schlein about their graphic testimony at Townsend’s trial, McCann said, “Not that I’m aware of.”
A study released in May by the National Registry of Exonerations showed that Broward accounted for nine of Florida’s 32 exonerations since 1989 – more than twice as many as any other county in the state. Most of those exonerated defendants were black.
Townsend, who lived in Hallandale Beach at the time of his arrest, is one of two Broward men cleared of murders now attributed to Mosley. Frank Lee Smith spent 14 years on Death Row for raping and killing 8-year-old Shandra Whitehead in her bed in 1985. He died of cancer on Jan.30, 2000, less than a year before DNA tests identified Mosley as the girl’s killer.
Three weeks before Townsend’s 1979 arrest, Fort Lauderdale police Det. Doug Evans identified Mosley – known around his northwest area neighborhood as “The Rape Man” – as the prime suspect in the rape-murders in his jurisdiction. Evans based his case on witness testimony and physical evidence, but the BSO detectives blew him off.
Evans later helped catch Mosley and free Townsend. Before his death in January 2011, Evans told the Broward Bulldog that he was disappointed authorities had never investigated police misconduct that had caused Townsend’s wrongful arrest and conviction.
Evans’ friend and colleague, ex-Fort Lauderdale Det. Roy Brown, said, “Doug always pushed for an investigation, always wanted one, but it’s been a hard rock. They let it sleep, they let it lay and they moved on and there’s no justice and nobody is held accountable for it. You’ve got to want to pursue them.
“The public should have a right to know this stuff: A serial killer running around killing people and nobody cared,” said Brown.
Clarice Tukes, whose daughter Arnette was murdered not long after Townsend’s arrest, was Doug Evans’ cousin.
“They knew who it was that did it. They knew Townsend didn’t do it, Mosley did. Doug told the whole family he did it. He said he didn’t know why they won’t take his word. That hurts,” said Tukes.
Her grandson, Dominick Richardson, was 3 years old when his mother died. He’s grown now, with three children of his own. His daughter Arnette is named in his mother’s honor, Tukes said.
Posted on April 16th, 2013 No comments
MIAMI (CBSMiami) – A Miami woman was found guilty on Monday in a Miami courtroom for a tax refund scam that enabled her to receive thousands of dollars in fraudulent refunds from the government.
Prosecutor said 30-year old Natoya Mashea Handy used stolen identities of past or current inmates to submit phony federal tax returns.
Handy was found with 15 social security numbers, names, and dates of birth belonging to people who were incarcerated in the state of Florida. Prosecutor said she used 17 stolen social security numbers to file fraudulent taxes for the 2011 tax year. Each of the tax returns received hundreds of dollars in a refund, according to the U.S. Department of Justice.
She was convicted of one count of access device fraud and five counts of aggravated identity theft.
Handy’s sentence is scheduled for June 24.
Posted on April 15th, 2013 No comments
An epidemic of tax-related identity theft continues to plague the Internal Revenue Service despite efforts by the agency and law enforcement officials to combat the fraud, witnesses told a Senate panel Wednesday.
“We are losing $5 billion each year to this crime, and now the problem is getting worse,” said Sen. Bill Nelson, D-Fla., the chairman of the Senate Special Committee on Aging.
Criminals use stolen personal information to file fraudulent tax returns, usually in January, before the real taxpayers have a chance to file. By the time the victims send in their returns, it’s too late: The IRS already has mailed refund checks to the identity thieves. It can take months – even years – for the IRS to untangle the mess and send the taxpayers the refunds they’re owed.
Nine of the 10 U.S. cities hit hardest by the scam are in Florida. The Miami metropolitan area tops the list, with 35,914 cases of tax-related identity theft reported last year and the highest per capita rate of complaints, 645 per 100,000 residents.
Miami was followed by Atlanta, which had 12,992 complaints, Tampa, Fla., with 9,805, and Orlando, Fla., with 4,991.
Nationwide, cases of tax-related identity theft surged 650 percent from 2008 to 2012. In 2011, thieves filed 1.5 million undetected fraudulent tax returns and received $5.2 billion in refunds, according to an audit last year by the Department of the Treasury’s inspector general.
Witness Marcy Hossli, 57, of Lake Worth, Fla., has been a victim of identity theft through tax fraud three years in a row.
“I should never have to go through anything like this, nor should anyone else,” Hossli said. “I feel violated. It’s hard to concentrate in work. I am stressed constantly.”
Hossli told senators she still is waiting for her 2012 tax refund. She suffers from cancer and owes $4,000 in medical bills. “I really need the money,” she said.
Senators expressed frustration that the IRS hasn’t been able to do a better job at catching fraud even though criminals often use the same addresses to file multiple returns.
Republican Sen. Susan Collins of Maine said thieves used the same address in Lansing, Mich., to file 2,137 tax returns, and they received $3.3 million in refunds. An address in Chicago was used to steal $900,000 in refunds through almost 800 fraudulent returns, Collins said.
“Criminal gangs have figured out that it’s cheaper and easier for them to steal taxpayers’ identities and hijack their refunds than it is to traffic in drugs, rob banks or fence stolen property,” Collins said.
“The IRS has an obligation that obviously they’re not meeting,” said Sen. Claire McCaskill, D-Mo. “How in the world can there not be a system in place that the IRS could not catch that they’re sending 2,000 refunds to the same address?”
Tax refund thieves commonly target senior citizens, as well as low-income people and students, who might not be required to file returns.
The audit by the Treasury Department’s inspector general estimated that 76,000 senior citizens likely were victims of tax fraud identity theft in 2010, resulting in $374 million in fraudulent tax refunds.
Victims often have their identities stolen by corrupt employees at nursing homes and hospitals, Kathryn Keneally, assistant attorney general for the Department of Justice’s tax division, said in her testimony before the committee. In other cases, criminals take names from public death lists to file tax returns, she said.
“For the public the risk is clear,” Keneally said. Such crimes “can and do arise in any setting where the lure of fast money puts at risk personal identifying information, including at state agencies, student loan providers, the military, prisons, companies servicing Medicaid programs – the list is growing all too long.”
Postal workers have been compromised, robbed and in one case killed in order to steal refund checks, she said.
Prosecuting tax-refund identity theft is a national priority, she added.
Legislation Nelson introduced this week would increase jail time and fines for people convicted of tax-related identity theft and direct the IRS to close identity theft cases within 90 days. Last year, it took an average of 196 days for the IRS to close such cases.
The delays are unacceptable, Nelson said. He said victims of identity theft shouldn’t have to wait six months for their refunds, much less two years, as at least one woman in Parkland, Fla., had to do.
“Many Americans rely on getting those tax refunds back so they can pay their bills,” he added.
Nelson’s bill, co-sponsored by fellow Democratic Sens. Dianne Feinstein of California and Charles Schumer of New York, also would ensure that victims don’t have to explain their plight to different IRS employees every time they contact the agency. Instead, the IRS would give each victim a single point of contact to help track the case.
Other provisions include restrictions that would make it harder for thieves to load stolen refunds onto prepaid cards, language that allows identity theft victims to opt out of electronic filing and prohibitions on printing Social Security numbers on Medicare ID cards and communications.
Posted on April 10th, 2013 No comments
Identity thieves thrive at tax time, but the IRS is cracking down.
Last-minute tax filers used to just fear that they’d owe far more money than they could afford. Oh, for the good old days.
Now, taxpayers also worry about what happens if their tax return is automatically rejected as we near April 15 because an identity thief already filed a fake return for a fat, fraudulent refund.
Earlier this year, IRS auditors and criminal investigators visited 197 money service businesses in 17 high-risk areas nationwide to make sure the check-cashing centers were not assisting in refund fraud when they cash tax refund checks.
Identity crooks typically file early. The fake return means that the real taxpayer will face a much longer wait for a tax refund — and more headaches.
Betty L. Harris has no idea how anyone got ahold of her ID to file a fake tax return in 2012. What she does know is that she sat for three hours at the IRS resolution center in downtown Detroit in early February to figure out how she’d file her return this year.
She paid $4 for parking, drove about 25 miles one-way and left unable to e-file her return then.
“I did everything they asked me to do,” said Harris, who lives and works in Clinton Township.
But Harris, 57, was dealing with extra paperwork headaches a full year after crooks filed a fake tax return for 2011. Harris had to wait about eight months, until October last year, to receive her refund of about $3,000.
Despite multiple crackdowns and convictions, the tax headaches continue. The total extent of tax refund fraud using stolen identities unknown.
What is interesting is how many individuals were not simply sloppy with how they protected their identities. “Often times, these are innocent taxpayers who don’t even know they’ve been victimized,” said U.S. Attorney Barbara McQuade.
Thieves may hack into computer systems or paper files at schools, employers or financial institutions. Or they can trick taxpayers on the phone into revealing too much information, according to the Government Accountability Office.
Or thieves steal mail that has financial information out of a mailbox, or they dumpster dive for paperwork that’s been thrown out, McQuade said.
In previous identity theft cases, McQuade recalled one scam where thieves would target cars at fitness centers, knowing that people felt safer locking their wallets in a car than taking the wallet into the gym.
The thief in this case would copy credit card numbers and leave the cards in the wallet in the car.
Leave a Social Security card in a wallet and the thief could copy that number, too.
Since the start of 2013, the IRS says, it has worked with victims to resolve and close more than 200,000 cases of identity theft.
That’s in addition to an expanded Identity Protection personal identification number (PIN) pilot program to protect victims in previous tax-related identity theft cases. The IRS said it has issued more than 770,000 identity protection PINs to victims at the start of tax filing season.
The IRS had identified almost 642,000 incidents of identity theft as of Sept. 30, 2012, that impacted the tax administration in 2012 alone, according to the U.S. Government Accountability Office.
One more scary number: The IRS said in fiscal 2012 the agency prevented issuance of more than $20 billion in fraudulent returns – up from $14 billion the year before.
But another government agency estimated in July that $5.2 billion in bogus refunds could be getting through in a year. The IRS said the estimate is too high.
Federal authorities announced an identity theft crackdown in metro Detroit in early February that included charging six people in federal court. One person was in possession of more than 50 credit cards and more than 100 pages containing names, dates of birth, Social Security numbers and addresses.
The fraudulent returns produced fraudulent tax refunds of more than $2.3 million, according to the Detroit charges. The investigation included the IRS, the U.S. Postal Service and the Secret Service.
Quite often, a con artist is targeting large batches of identities at once.
There are reports in other states of criminals who have their girlfriends get jobs in medical offices to steal Social Security numbers that can be used to file false tax returns that are crafted to generate large tax refunds.
“This is becoming a bigger and bigger tax problem,” said Adam Levin, chairman of Identity Theft 911.
While the IRS is trying its best to crack down, Levin said, criminals are targeting fake tax refunds as a way to make money. Fake returns are designed to generate fraudulent refunds around $1,500 to $4,100 a pop.
Where are the thieves stealing identities? The IRS shows some interesting examples:
Frantz Auguste, an owner of a Florida dry cleaner, was sentenced to 45 months in prison on March 1. The dry cleaning business in North Miami Beach was searched in October 2012 where handwritten notes with Social Security numbers of about 100 people were found.
“Several of these lists appeared to have originated from a local nursing home and rehabilitation center,” according to the IRS summary.
In a case in Alabama, the IRS noted that Natacia Webster, who was sentenced to 50 months in prison and ordered to pay $113,000 in restitution had been an employee in the central records office of an Alabama state agency. She stole information from state databases, according to the IRS.
A Chicago man, Yair Berkowitz, was sentenced to 62 months in prison and ordered to pay about $4 million in restitution. He reportedly submitted fake state and federal tax returns using identities of prisoners and the deceased from 2003 to 2009.
Elsewhere, more than 100 U.S. Marines were hit in one tax-related scam, many of whom were serving in the same unit in Afghanistan as the ID thief.
Another tax fraud involved a stolen warrant book from the Memphis Police Department.
Two people in Detroit, Valerie Butler, 48, and Gary Young, 25, allegedly worked together to file at least 299 false returns, which generated refunds of more than $1 million, according to a statement by the IRS and the U.S. Attorney’s office in Detroit.
The federal government charged that Butler and Young attempted to hide their involvement by failing to sign the returns as preparers.
The 12-count indictment involves false tax returns filed from 2009 to 2011.
“Butler and Young had all of the refund money deposited to bank accounts they controlled,” the statement said.
“They split the refund money with some taxpayers, but most of the taxpayers never received any of the refund.”
And what about the identities of children?
How many children under the age of 14, after all, are walking around with Social Security cards in their backpacks? But questionable tax returns filed for 2010 that appeared to be filed by an identity thief showed that 2,274 children under age 14 had almost $4 million in refunds issued, according to November testimony by the Treasury Inspector General for Tax Administration before a subcommittee of the House Oversight and Government Reform Committee.
The IRS is attempting to lock such accounts and add more filters.
For Harris to clear up the mess, she went to the DTE Energy offices in Detroit to get proof that she lived in her house, she called Social Security offices, she went to the police station to report the ID theft, and she called the credit bureaus and the Federal Trade Commission.
By March, she figured out a way to file by mail – not e-file.
“It’s a lot of running around,” said Harris, who works at a nursing home.
Seven Tips To Avoid ID Theft During Tax Season:
- Your identity may have been stolen if the IRS notifies you that someone has already filed a return using your information. Another bad sign: If the IRS notifies you that you were paid wages from an employer where you did not work.
- If you think you may be at risk for identity theft due to a stolen wallet or questionable credit activity, contact the IRS Identity Protection Specialized Unit at 800-908-4490. A taxpayer guide to ID theft is on the IRS web site www.irs.gov.
- Run the other way, if a tax preparer asks you to sign a blank return. Never sign a blank tax return.
- Skip using the Wi-Fi at a coffee spot, hotel or fast food location to file tax returns online.
- Some tax apps require users to take a photo of a W-2 form, but you want to make absolutely sure to delete that image afterwards, according to the Experian ProtectMyID’s list of tips for tax time.
- Do not leave your tax returns or any of the key paperwork in the car, on the kitchen counter or on top of the desk at home. It’s too easy for thieves to get your information.
- Take a look at your Social Security earnings statement each year. If that number is off, you need to connect with the IRS immediately, said Adam Levin, chairman of Identity Theft 911.