Posted on May 1st, 2013 No comments
Agents confiscated more than $780,000
A 52-year-old Pompano Beach man was convicted of identity theft and tax refund fraud, U.S. Attorney Wifredo A. Ferrer announced Thursday.
Nael Dawud Sammour was found guilty of the identity theft charges after a three-day jury trial in Fort Lauderdale federal court. Before the trial, he pleaded guilty to the eight tax refund fraud counts, prosecutors said.
Undercover IRS agents posed as Sammour’s refund check cashers. They seized 75 U.S. Treasury tax refund checks totaling $750,369 and another $30,128 in cash from Sammour during his arrest, according to court records.
Several unknown suspects used stolen identification — including the names, birth dates, and the social security numbers of unsuspecting taxpayers — to fraudulently apply for and receive U.S. tax refunds. Sammour received many of these refund checks and later gave them, along with counterfeit driver’s licenses and Social Security cards, to the undercover IRS agents who were expected to cash them, according to trial evidence and testimony.
Sammour faces up to 10 years in prison on each of the eight tax refund fraud counts, as well as mandatory two year consecutive terms on the aggravated identity theft charges when sentenced July 1, prosecutors said.
Posted on May 1st, 2013 No comments
FORT LAUDERDALE, Fla. — Two South Florida women have been sentenced to lengthy prison terms for identity theft and tax fraud involving some 2,000 false income tax returns.
U.S. District Judge James Cohn in Fort Lauderdale sentenced 36-year-old Alci Bonannee on Thursday to more than 26 years behind bars. The judge sentenced 40-year-old Sonyini Clay to 10 years in prison. Bonannee was convicted in January of several charges and Clay pleaded guilty.
Prosecutors say the scheme operated from December 2010 to 2012 and involved returns submitted to the Internal Revenue Service seeking refunds of about $11 million. Of that, the IRS paid out about $3.5 million.
Trial testimony showed most of the stolen IDs came from a hospital nurse.
A third woman was sentenced in March to more than three years in prison.
Posted on September 6th, 2012 No comments
How easy is it to steal the identity of a business? Just ask Roger Lee Shoss and Nicolette Loisel, two Houston-based attorneys who turned hijacking the identities of publicly traded companies into a cottage industry.
According to the Department of Justice, the two took advantage of loose public and private filing systems for more than a year, fooling regulators in Ireland, the UK and the U.S. and stealthily taking control of dozens of dormant firms. The scam calls attention to a little-known, but growing problem in the U.S. and elsewhere: business identity theft, and the way that lax business filing systems aid would-be thieves.
By all accounts, Shoss and Loisel were masters of the art of corporate identity theft. According to a federal indictment, the two were part of a three person legal team operating within an octopus-like international conspiracy spanning the U.S., U.K. and Spain. After using online business registries to identify dormant, publicly-traded companies in the U.S., Shoss and Loisel would resurrect the firms: filing certificates of amendment for the firms’ articles of incorporation that folded the existing, publicly traded firm into sham shell companies they had set up.
By manipulating business registration systems in Florida and Delaware as well as filing systems at organizations like NASDAQ and the SEC, the scammers took control of the companies and then obtained legitimate CUSIP numbers and stock trading symbols that were then used to push the worthless stock on unsuspecting investors. In all, the scheme raked in close to $100 million through bogus stock sales of 54 separate firms to gullible investors, mostly in the UK, before regulators and law enforcement got wise to it.
The scheme was larger in scope than similar business identity theft operations, but not unusual in its details. The success of the perpetrators underscores the gulf in awareness that exists between the well-known problem of consumer identity theft, and the lesser known problem of business (or corporate) identity theft, according to experts interviewed by ITworld. “This is something that goes on quite regularly,” said Ricky Harper, the Director of Florida’s Division of Corporations.
Harper said that business identity theft is often a lurking problem that slips under the radar of both state officials and law enforcement. Harper said that officials – himself included – often don’t know what to look for. “I was asked by our previous Secretary of State, Curt Browning, to look into the problem. I read some articles on it but didn’t see much evidence of it here in Florida,” Harper told ITworld.
Then Harper said a case came across his desk that woke him up to the corporate identity theft problem. “We had a business – an aviation company – that had been dissolved by the owners. It was then reinstated by some identity thieves. Soon after, they applied for a $140,000 federal fuel tax credit, which was delivered as a check. The scammers and the money disappeared and the previous owners only learned about it when the IRS came knocking on their door.”
Harper said that, when learned about the scam, he realized that the Division of Corporations wasn’t looking for the right clues. Rather than trying to identify fraudulent filings, the Division instructed its employees to start looking for innocuous-seeming changes that correlated with business identity theft scams. Those included sudden changes in the registered agent or mailing address of a company. “Once people started looking for that, we discovered a fairly high amount of (identity theft),” Harper said.
In the last decade, secretaries of state across the U.S. have moved business registries and filing systems online as a convenience to taxpayers and also to save money. Unfortunately, that move online hasn’t gone hand-in-hand with tighter security. Lax business registration systems are the norm in the U.S., and they’re also a common denominator in business identity theft scams, say officials in other states that have confronted the problem.
In Florida, officials at the Division of Corporations uncovered 40 known cases of fraudulent business filings with damages of up to $360,000 in one case, said Karen Ellis who was hired by the State of Florida in May to spearhead its efforts to stem the business identity fraud and abuse.
Ellis says that poor communication between law enforcement and secretaries of state, who often manage corporate filings, is one major obstacle to stopping identity theft. Since starting work for the State of Florida in May, Ellis says that she has improved communication between the Division and law enforcement. But bigger changes that can actually stop identity theft have been slower coming, she said. “Right now in Florida we still have fair faith filing. That means I can get on a computer and go and alter things on an LLC, NPO or corporation. I just need to send in the form and pay my $25 charge for the amendment,” she said. “We’ve left ourselves wide open.”
The loose security around business filings is no accident. In many states, secretaries of state are confined by law to a “ministerial” role with regard to business filings, without the authority to question the details of filings that meet the state’s guidelines. When fraud occurs, secretaries of state are often hamstrung in investigating suspicious filings, according to a January, 2012 report by the National Association of Secretaries of State (NASS).
That means that, despite increased awareness of the problem of identity theft, would-be identity thieves can easily exploit online registries of corporations to glean the information needed to impersonate the firm, and then abuse Web- and fax-based filing systems to hijack the firms’ identities without concern about getting caught.
In Oregon, the problem has been identity thieves reinstating old mining companies to steal their corporate identity, said Tom Wrosch, that state’s Commercial Registries Manager. In response, the state set up limits on how long a company could be dormant before it is reinstated, he said.
Colorado Secretary of State Scott Gessler said that his state has seen a spike in cases of corporate identity theft stretching back to 2009 and 2010, under his predecessor. The problem was big enough to become an issue in a hotly contested political race for the Secretary of State’s seat, with Gessler promising to be more aggressive in combating corporate identity thieves if elected.
Since winning the race, he said he has made good on his campaign promise: getting legislative approval and funding to expand an existing program to notify business owners by e-mail if their business registration information changed. Business owners in Colorado can now protect their business filings with a password protection – the first such system in the nation.
“The password feature is straightforward, but it’s new and unusual in the context of central business registries,” Gessler said. The system went live in January and, to date, just over 26,000 businesses have registered for Secure Business Filing accounts, according to data provided by the Secretary of State’s office. The system is voluntary for business owners and Gessler admits that cajoling established businesses to set up an account has been a challenge. But Colorado has made it a default option when citizens set up a new business, with most taking advantage of the feature.
The data, so far, is encouraging. Reports of business identity theft average about six per month so far in 2012, down from an average of 11 per month in 2011 and 18 a month in 2010.
But Colorado is the exception rather than the rule. Even with greater attention to business identity theft, most states have little or any security built into their business registries. In states like California, for example, the form to amend a limited liability company (LLC) can be downloaded from the Secretary of State’s Web page and mailed- or faxed in with payment, but no proof of identity. That allows identity thieves to act without fear of getting caught.
Texas doesn’t provide either an e-mail notification program or a way to password protect a business entity record, though the state is constantly reviewing its procedures in an effort to maintain the security of business records and appropriate public access to them, said Richard Parsons, the Communications Director for Secretary of State Hope Andrade.
Even states that have implemented security features often fall short of the mark. Massachusetts’ Secretary of State’s office has password protected online filing. However, scammers can obtain a user name and password from the Secretary of State’s office with nothing more than a valid e-mail address and the name of the LLC or LLP they are targeting.
Don Huntting, the president of Huntting Investigative Services in Westlake Village, California said that California, like other states, is behind the curve, with state agencies mired in bureaucracy and slow to process changes in business filings – let alone spot fraud in real time. He said that, in his state, it often falls to banks, which have higher standards of proof when setting up business accounts – to actually spot and stop business identity theft fraud. “The state is dropping the ball,” Huntting said.
Wrosch of Oregon said the same is true in his state, acknowledging that the state’s business registry can be manipulated or out of date, and shouldn’t be the final word on the ownership of a company.
“We tell businesses: if you’re relying on our database to show ownership or authority (of a company), then you’re enabling business identity theft. Our registry is not the best indicator or the sole indicator of who is the owner or person in charge of a business.”
Business identity theft wouldn’t be a problem, he said, if “the people who had the money – whether that’s a bank or a credit card company – didn’t rely on the business registration … what they see on our system.”
That’s a shocking admission, but Wrosch’s sentiment is backed up by data. The firm Dun & Bradstreet estimates that approximately 20 percent of the registration data in government databases is inaccurate, complicating tax collection and enabling fraud.
Besides, Wrosch said, business identity theft isn’t a front burner issue in his state. “We’re not hearing about it from local law enforcement or anecdotally,” he said. That could be because there are no crimes to report, or because businesses are loath to admit when they’ve been defrauded. Whatever the case, with few reports, it’s hard to justify dedicating the resources and money to address the problem, Wrosch said. Add to that the fact that, in many states, implementing new and more secure business registries requires legislative action of some kind to approve the additional budget to fund the new system. In Colorado, despite public attention to the problem, it’s still a year to win funding to implement business registry security features, said Secretary of State Gessler.
A 2011 position paper by the firm Dunn & Bradstreet said that online business registries have improved the speed and ease of registration over older, paper-based processes and can “strengthen agencies’ mission capabilities in such areas as regulation and oversight, collection of revenue and fees, transparency, and economic development.” But state agencies must fix the problem of what D&B called “inadequate data-quality checks” that have “enabled criminals to use government websites to steal the identities of legitimate businesses to perpetrate crimes.”
The firm said states should take a number of steps to secure their filing systems and make them more akin to private sector systems. Those steps include proving the identity of those registering a new business or attempting to alter data for an existing firm, then providing them with a unique identifier and password to limit access to that data. But states will also need to invest significantly in support, management and oversight to ensure the continued integrity of their business registries and the data in them, D&B said.
The NASS also recommended a series of changes in their report, chief among them the establishment of cyber security policies and practices to secure online business records and prevent unauthorized changes. NASS also called for better reporting and tracking of business identity thefts and new laws that empower secretaries of state to investigate fraudulent filings, raise the burden of proof for those seeking to resurrect a dissolved business entity and impose stiff penalties for cases of proven business identity theft.
The efforts of NASS and others appear to be working. Colorado’s Secretary of State, Scott Gessler, who chairs the NASS Business Identity Theft Taskforce, said that awareness of the problem has grown tremendously in the states where NASS has held workshops. “We have a lot of people who are interested in doing the things we’re doing in Colorado,” he said.
That’s as it should be because criminals will be quick to shift from higher- to lower security states when changes start to be implemented. “I tell my counterparts in other states that there’s no question that if we stymie crooks in our state, they’re coming your way instead,” Gessler said.
Posted on August 30th, 2012 No comments
Frustrated identity theft victims are swamping the Plantation office of the Internal Revenue Service, forming long lines to wait hours to speak to a representative – with one woman complaining of being told to come back at 4:30 a.m. to begin a new wait.
About 50 people waited outside in the hot sun for a chance to speak to a federal tax representative at 9:30 a.m Tuesday, an hour after the IRS office opened. Some brought umbrellas.
“It’s totally ridiculous. You should see the lines, how people have to stay in the lines,” said Broward retiree Hannah O. Singleton, an identity theft victim who said she waited four hours one day last week only to be told to come back another day. “There I was at the front of the line,” Singleton fumed.
IRS spokesman Mike Dobzinski said his agency is bringing in additional employees and taking other steps to shorten the wait. “We’re aware that there have been longer lines recently at the Plantation office, and we apologize for the inconvenience to taxpayers,” he said in an email.
Part of the reason for the long lines are that identity theft victims are coming into the IRS to find out why they still haven’t received their refund check four months after the tax season ended. Many of last year’s victims waited more than a year for their refunds, but the IRS promised to speed up the checks this year.
South Florida leads the nation’s metro areas in reports of identity theft. Nationwide, a record 1.1 million Americans were tax-related identity theft victims in 2011 – a 155 percent jump in just a year, according to a recent report issued by the Treasury Inspector General for Tax Administration.
In May, the Inspector General found that the IRS was acting too slowly and giving confusing instructions, “resulting in increased burden for the victims.”
A guard outside the Plantation IRS office said Tuesday morning all those waiting would be able to get in to talk to an agent. But one identity theft victim said she had already been turned away that morning by an IRS worker saying all the specialists who could help her were already booked.
“He said ‘You have to be here at 4:30 a.m.,'” said Ana Moise, of Margate. She said she took that to mean she had to get in line to wait at least four hours before the office opened – all for a chance to speak to someone that day.
Moise is still waiting to file an amended return. She said she forgot to list one of her former employers on her 2011 returns after someone beat her to filing a tax return in her name for a fraudulent refund.
“This is really tough,” Moise said. She had been hoping to get her taxes settled before her four kids go back to school on Monday. Plus, she said she is out of work and needs her refund to pay bills.
Another identity theft victim in line, Raquel Chavez, of Tamarac, also was anxious to get her refund after a thief claimed her Social Security number first to file a false claim. “I was promised I would get my refund in 12 to 16 weeks,” she said.
But no money so far, prompting Chavez to take time off from work Tuesday to find out the status of her refund.
Alan Feller, of Hollywood, has been trying to get his refund, too. He said his tax returns was held up after a thief beat him to filing in February, using his identity. He said the IRS staff first told him they were “backlogged and he would have to wait “a couple of weeks before filing the identity theft forms.” Then it would take another 90 days “for the investigation to be done,” Feller said.
“All they will say is my case is still under investigation and they have no other information,” he added.
That is prompting South Floridians to ask their elected officials for help.
“We are continuing to hear from constituents about this issue and we’re doing what we can to help them,” said Alex Conant, a spokesman for U.S. Sen. Marco Rubio, R-Fla.
IRS’ Dobzinski said his agency will keep working to improve conditions, promising to “do everything we can to help taxpayers.
“We are working with our facilities people to determine ways that we can get people inside the building more quickly and reduce or eliminate the lines outside the building,” Dobzinski added.
Posted on August 30th, 2012 No comments
The Internal Revenue Service may have delivered more than $5 billion in refund checks to identity thieves who filed fraudulent tax returns for 2011, Treasury Department investigators said on August 2, 2012. They estimate another $21 billion could make its way to ID thieves’ pockets over the next five years.
The IRS is detecting far fewer fraudulent tax refund claims than actually occur, according to a government audit that warned the widespread problem could undermine public trust in the U.S. tax system. Although the IRS detected about 940,000 fraudulent returns for last year claiming $6.5 billion in refunds, there were potentially another 1.5 million undetected cases of thieves seeking refunds after assuming the identity of a dead person, child or someone else who normally wouldn’t file a tax return.
In one example, investigators found a single address in Lansing, Mich., that was used to file 2,137 separate tax returns. The IRS issued more than $3.3 million in refunds to that address. Three addresses in Florida, the epicenter of the identity theft crisis, filed more than 500 returns totaling more than $1 million in refunds for each address.
In another troubling scenario, hundreds of refunds were deposited into the same bank account – a red flag for investigators searching for ID thieves who may be filing for refunds for multiple people. In one instance, the IRS deposited 590 refunds totaling more than $900,000 into one account.
“We found multiple reasons for the IRS’s inability to detect billions of dollars in fraud,” J. Russell George, the Treasury Department’s inspector general for tax administration, in a statement. “At a time when every dollar counts, these results are extremely troubling.”
Topping the list of concerns is the IRS’s lack of timely access to third-party information it needs to verify returns and root out fraud.
Many Americans are struggling to pay their bills and the IRS takes pride in processing returns and issuing refunds promptly. But taxpayers can start filing their returns in mid-January, while employers and financial institutions don’t have to submit withholding and income documents for taxpayers to the IRS until the end of March. That means the IRS often issues refunds long before it can confirm the veracity of what’s listed on taxpayer returns.
Thieves are also exploiting vulnerabilities in the way the IRS delivers refunds, investigators found. Of the 1.5 million undetected cases of potential fraud, 1.2 million used direct deposits, including pre-loaded debit cards. Thieves often prefer those methods to a paper check, which require a physical address to receive the check and photo ID matching the taxpayer’s name to cash it.
IRS officials said the growth of identity theft-related fraud is one of its biggest challenges. Already this year, the agency has stopped almost $12 billion in confirmed fraud, it says. And it says its criminal investigators are actively pursuing those who perpetrate fraud – including the previously undetected cases identified by the audit.
“If the IRS determines a refund has been issued improperly, we will attempt to recoup the funds,” said IRS spokeswoman Michelle Eldridge.
The IRS agreed with the inspector general that Congress should expand the agency’s access to resources that could help it fight theft, including the National Directory of New Hires, a database created to help states enforce child support orders. The IRS specifically asked Congress for that authority in its 2013 budget request.
But IRS officials disputed the notion that $21 billion in fraudulent returns could be issued over the next five years, arguing that the estimate didn’t take into account the IRS’s stepped-up compliance and prevention efforts.
“We’re going to continue to monitor the IRS in this area until we see some improvement,” Michael McKenney, the acting deputy inspector general for audit, told The Associated Press.
Investigators went back through a sample of the 1.5 billion undetected cases to see why the IRS never flagged them as fraudulent. In 49 of 60 returns, investigators said, the return didn’t score high enough on the IRS’s fraud filter to merit a closer review. In eight of the 11 cases where the IRS did perform an additional review, it never verified the income and withholding on the return.
The audit was prompted by a request from Florida Sen. Bill Nelson, whose home state contains the top two cities where fraudulent tax returns originate: Tampa and Miami. Last week Nelson, a Democrat, joined with Republican Sen. Tom Coburn of Oklahoma to introduce legislation designed to curb identity theft in the tax system.
“It’s an ongoing problem,” Nelson said in a statement. “We’ve got to find a fix.”
Nelson’s bill would improve protections for Social Security numbers that thieves need to file returns, and would expand an existing program that gives previous victims of ID theft a personal identification number to deter repeat offenses against the same taxpayer. Another bipartisan bill passed by the House on Wednesday would bolster prosecutions and strengthen criminal penalties on ID thieves.
The IRS said it is already putting a number of new measures in place, including new ID theft screening filters that will hold on to refunds until the IRS can verify a taxpayer’s identity. That filter had thwarted about $1.3 billion in potentially fraudulent refunds through April, the audit said. Another system flags returns filed with Social Security numbers of those who have died.
For those who fall victim to identity thieves, the recovery process can be less than smooth. A separate report by the inspector general in May found that the IRS wasn’t providing good customer service and proper assistance to victims of ID theft, increasing the burden for those whose identities are stolen. The Federal Trade Commission has listed identity theft as the No. 1 consumer complaint for the past 12 years.
Posted on July 16th, 2012 No comments
Identity theft is sweeping the nation, ripping off citizens and even the federal government. If you haven’t been a victim yet, you could be next.
I was recently informed by the IRS that I had been the victim of identity theft. Some yahoo down in Florida had submitted a fraudulent return using my name and Social Security number. Upon further review, the IRS discovered that already 60 checks had gone to the same address in Florida. Duh.
My accountant was very helpful and gave me a checklist of items that have to be done quickly to avoid further damage. One of the items on the checklist was to immediately file a police report with my local precinct. I called the Greenwich, Connecticut, police non-emergency number and they dispatched a squad car to my home. I soon realized the scope of the problem after talking with the officer.
He told me the case eventually would move on to the FBI as identity theft has become an epidemic in this country and is believed to be international in scope. I was given a case identification number. You will see later why this step is so important in the identity theft checklist below:
- Call the IRS and inform them you believe you are a victim of identity theft. (Often the way you will find out that something is amiss is when you don’t receive your refund check. It may have been issued to the thief who has assumed your identity).
- Fill out IRS Form 14039 and fax or mail back to IRS.
- Contact the Social Security Administration. (here is a link to the Identity Theft webpage). If you contact them by phone they will tell you to contact the Federal Trade Commission.
- Contact the Federal Trade Commission (877-438-4338). After you contact them by phone, you will be sent an Identity Theft Complaint Affidavit.
- Contact your local police department and tell them you have been a victim of identity theft. Make sure you get a case number and follow up in a few days to get the full police report.
- Contact one of the three credit bureaus: Equifax at 800-525-6285, Trans Union at 800-680-7289, or Experian at 888-397-3742.
This will be the most difficult part of the process. Don’t let them give you the runaround. Most of the people you talk to will be hellbent on selling you a service. Tell them you are entitled to make a victim-of-fraud statement that will be put into your credit history. I found Equifax the most helpful; they worked diligently to make sure I was taken care of. The service representative reviewed my credit to see if any fraudulent accounts had been opened. Fortunately I was OK.
It is probably a good idea to review your credit reports once every couple of months and look for any errors or fraud. All three companies offer a service at varying degrees of cost. Remember you are entitled by law to a free copy of your credit report at least once a year.
Don’t forget to send them a full copy of the police report. They will need this to keep your fraud alert on file for more than 90 days. All three companies are required to pass on your victim statement to the other two bureaus, however it is probably a good idea to call all three after a few days to follow up.
I hope none of you will have to use this information, but given the scope and size of the epidemic, chances are you will.
Posted on October 13th, 2009 No comments
The IRS recorded more than 51,000 cases of taxpayer identity theft in 2008 and paid out $15 million in fraudulent refunds, and a GAO report finds that internal information security weaknesses constitute some of the most significant challenges faced by the agency.
View original post here:
IRS wins some, loses a few in fight against identity theft and data loss
Posted on October 7th, 2009 No comments
Last year’s investigation of identity theft, which involved stealing online tax returns, highlighted the vulnerability of many home computers.
Originally posted here:
So Many Local Crimes, So Few Cybercops to Help
Posted on October 7th, 2009 No comments
The Internal Revenue Service has issued a warning about scam e-mail billed as official IRS correspondence that requests personal information and may cause people to download malicious software.
The rest is here:
IRS issues warning about bogus e-mail
Posted on September 15th, 2009 No comments
The IRS has installed effective security controls on its laptop computers, but still has problems with reporting breaches and in backup data storage, a new report says.
IRS fails to plug all security gaps, IG says