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The Resource Center Credit Fraud & Credit Monitoring The Resource Center | article

16 Criminals Indicted In $10 Million Tax Fraud Scheme

The identity thieves involved in the tax fraud ring face 20 years of jail time for their crimes.

The identity thieves involved in the tax fraud ring face 20 years of jail time for their crimes.

A federal grand jury in Pennsylvania recently indicted 16 people on counts of wire fraud and identity theft.

ABC News reported that the individuals are mostly from the New York City area, with some ties to Nigeria. Prosecutors said the id theft ring stole more than $10 million from the Internal Revenue Service (IRS) in fraudulent tax refunds.

The group operated in several states from December 2005 through November of last year, and used the identifying information of 11,000 people to open almost 3,500 fraudulent bank accounts at more than 440 different banks. They also allegedly used the stolen identities to submit tax returns claiming $38 million in refunds, and were successful in receiving almost $10 million.

Widget Financial, formerly the Erie General Electric Federal Credit Union, was the first to detect the suspicious behavior and report it to the FBI. The indictment states that the people involved used “clean” identities to file online tax returns, an identity being considered clean by the group when the person is unlikely to file his or her own tax return for reasons such as poor health. They also allegedly used people’s personal data to obtain fraudulent drivers’ licenses, Social Security cards, phone numbers and email addresses, all of which they used to file the fraudulent tax returns. The tax refunds were apparently deposited into fake bank accounts or sent to Nigeria.

Most of the ring members face up to 20 years in prison if convicted. Two of the key members of the criminal group, however, are charged with conspiracy to commit fraud and 12 counts each of aggravated identity theft, and may receive up to 38 years of prison time.

So how can you have protection from identity theft this tax season? Here are some tips:

  • Don’t file in public: Filling out your tax forms online is easy and efficient, but just make sure that you’re doing it on a private and secure WiFi network. Using a public network to enter private personal data is putting yourself at the mercy of hackers and cyber-criminals.
  • File early: Criminals look for “clean” identities for a reason: The IRS flags accounts that have multiple tax returns filed, sparking an investigation. If your authentic return is the first to be filed, you reduce the risk of not receiving your refund. If your return is filed after a fraudulent one, then your refund could be significantly delayed as the IRS conducts an investigation to find out which return was fake. The best thing you can do to protect yourself from tax fraud is to file early.
  • File electronically: Identity thieves file fraudulent tax refunds electronically for a reason, and so should you. Filling out the forms online is a faster way to get your refund in, and as a bonus, it decreases the chance that criminals will successfully intercept your sensitive mail.
  • Register for a credit monitoring service: It’s true that no one can stop identity theft completely, but you can minimize your risk and spot certain suspicious activities that may occur as early as possible. To do this, consider signing up for a credit monitoring service that can notify you of signs that may indicate fraud.
  • Shield your Social: The most important piece of information that thieves can get their hands on is your Social Security number, so take extra precautions to make sure it’s never unnecessarily exposed. For instance, put any documents listing your number in a locked safe, so you’re sure it’s inaccessible to thieves.

Tax fraud is a very real crime that is posing significant problems for the IRS as well as taxpaying individuals. Put your mind at ease by doing everything you can to make your information secure.

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