An H&R Block manager in Southern California has been arrested for using the identities of his former tax preparation clients in an identity theft scheme.
Damon Charles Dubose, 38, of North Hills, Calif., was arrested Thursday by special agents with the IRS’s Criminal Investigation division after a criminal complaint was filed against him.
Dubose, working as a manager for an H&R Block office in Van Nuys, allegedly obtained personal identifying information of past customers. He prepared bogus tax returns in their names designed to obtain tax refunds and credits, according to prosecutors, and then used H&R Block Emerald Cards to withdraw the fraudulently obtained refunds from automated teller machines.
Dubose declined to comment when reached by phone. H&R Block said it is helping with the investigation.
"H&R Block takes this matter very seriously," said H&R Block spokesman Gene King. "This was an isolated incident and we are cooperating fully with authorities on the investigation of a former employee. The situation involves a small number of clients who have been contacted and informed of the steps the company is taking to help them and correct the situation."
Shortly before midnight on February 12, Dubose was seen by a patrolman loitering near the ATMs of three banks, wearing pantyhose over his face as well as beanies and a scarf.
Inside Dubose’s vehicle, the officer found six envelopes with a name and partial Social Security number handwritten on the outside, and an H&R Block Emerald Card on the inside. The Emerald Cards allow H&R Block customers to access their tax refunds electronically like a debit card.
Dubose’s vehicle also contained approximately $2,960 in cash and a printout of the dates of birth and Social Security numbers matching the handwritten information on the envelopes. Dubose claimed that the information was for his tax clients and he was authorized to make withdrawals on their behalf.
When law enforcement authorities searched the home of Dubose’s girlfriend, they found $6,900 in cash, along with six H&R Block Emerald Cards, and the personal identifying information of more individuals.
Three taxpayers whose identifying information Dubose possessed were contacted by law enforcement. All of them indicated that Dubose was not authorized to make withdrawals on their behalf or possess their personal identifying information.
According to the complaint, Dubose allegedly wired the electronically filed fraudulent tax returns from Van Nuys, Calif. to Tennessee and West Virginia.
Following Thursday’s appearance in court, Dubose was released on bond. His next court appearance is scheduled for April 30.
9 Comments
Gezz people. It does not matter a bad preparer is a bad preparer regardless of the title. In California we are required to have yearly education requirement and it still did not stop the crooks.
Until someone realize the E-File system has a hole big enough to drive a Mack truck trough then the problem will not go away.
Now the crooks are going directly to the IRS web site.. No PTIN number or EFIN needed.
You attorney's and CPA's crack me up with this, I am better than everbody attitude. The bottom line we are all being put out of business...
Yep, I'm a EA...
Posted by: JDAVIS | March 30, 2012 1:31 PM
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The above comments reflect the good & bad who are in every profession. There are good & bad Block employees... there are good & bad CPAs.
If I were a CPA, I would resent any implications that all CPAs are incompetent. And, as an employee of a H & R Block franchise, I resent that all Block employees are incompetent.
I have reviewed returns, done by CPAs, that were deplorable. Others have been perfect. I can say the same thing about Block returns.
I cannot imagine preparing income tax returns with only two-three weeks of training. I had 84 classroom hours before being permitted to even REVIEW case studies. Every year, I am required to to have at LEAST 24 continuing education hours before I am certified to be employed during the tax season.
I am thankful that most of the clients in our office come back year after year. They know us, they know we are sincere in our desire to do the best possible return for them. Our clients are not a cog in a money-making machine. They are are friends and neighbors - we care!
Posted by: GloR | March 27, 2012 6:34 PM
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As long as we have defenders and attackers, I'll add my two cents worth.
Recently, an attorney asked me to review an H&R prepared LLC return or two, and prepare the current year, all in connection with some litigation. Fortunately, the attorney had also been a CPA before returning to law school. He had looked through the returns and knew there were big problems. To describe the returns I reviewed as deficient would be a compliment. Was it negligently prepared? Probably not that good.
It required that I go back to the original formation and come forward. No reported amounts were even close. And we're talking more than $150,000 income understatement annually. Cost of preparation? $345. Cost of re-preparation of one year: $2,700, and I wrote off another $1,000 (because I'm a nice guy).
Of course, no balance sheet was present justifying any of their phantom losses, but taken none the less. Just pitiful.
I think that H&R serves a useful place in our society, simple straight-forward returns. Anything else? No way.
I wish this were my only H&R horror story. It is only the most recent.
Posted by: topbeancounter | March 27, 2012 1:36 PM
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I take offence at a general statement made about all H & R Block preparers. I have worked hard for 11 yrs at maintaining a high level of service to my clients.Our charges are based on the forms that we fill out,thus the amount of time we put in to the return. As for the Big accounting offices, I've made quite a bit of money over the years on thier screw ups. So lets not take any more potshots at each other,OK? MBG
Posted by: EMG | March 27, 2012 12:32 PM
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For ten years, I had my own tax practice in my small town. I could have made a full time job out of straightening out the messes made by the H&R Block and General Business Services franchisees. I'm sure I only saw a few of their clients - the ones who suspected something wasn't right (like being told to throw away 941's instead of filling them out each quarter). I encouraged all of them to write to H&R Block headquarters and report their experience, but none of them would.
D8122 - you must be working in a large office in a large city. In the case of our small town, both of those franchisees prepare taxes with very little training. The things they do to clients is hair raising.
Posted by: Aunt_Ida | March 27, 2012 10:50 AM
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Actually, people, I'm not bashing H&R Block, nor am I claiming this proves some larger point about the flaws of the big tax prep chains. But I can assure all concerned that my first season at Block I most certainly did prepare returns after only 2-3 weeks of training. What I didn't do was sign the returns or work without supervision.
However, what occurs to me is that Block routinely charges their clients two, three, four hundred dollars for pretty average returns, and then turns around and pays their junior associates $20-$30 for that work. I'm not surprised that occasionally someone who isn't handicapped by personal standards of honesty would look to make a little extra cash out of the deal. We had an incident like this in my office one year.
Ultimately, my way of closing that gap between what I charged and what I earned was to leave and start my own practice, a decision I only have gratitude for. I started from scratch--didn't take a single Block client with me--but I made more in my first week than I earned at Block in an entire season, and charged my clients half what they would have paid at Block the year before.
Posted by: Unknown | March 27, 2012 12:22 AM
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Tazman1963 - while I realize this may be a futile request, please refrain from shouting about things you know nothing about. H&R Block invests a significant amount of time and resources in training personnel - no one is allowed to prepare taxes with just 2-3 weeks of training. And every preparer is required to take advanced courses every year following the 84 hours of basic classroom instruction they receive prior to their first year and pass exams for every class they take. As to due diligence rules, they are there for ALL of us to follow and we at H&R Block take them very seriously. The incident referred to in this article is very unfortunate and if the allegations are true, the perpetrator is one bad apple that needs to go away. Sad as it is, there are dishonest people in all professions and all walks of life. Please don't disparage the thousands of us who work hard to do an honest and thorough return for our clients because of the alleged actions of what appears to be a truly bad one.
Posted by: d8122 | March 26, 2012 11:57 PM
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THAT'S EXACTLY WHO YOU SHOULD NOT TRUST. SOMEONE THAT GETS 2-3 WEEKS OF TRAINING AND TURNED LOOSE WITH ALL OF THAT PERSONAL INFORMATION AT THEIR FINGER TIPS. WE HAVE MORE COMPLAINATES ABOUT THESE MEGA TAX PREP BRANCHES THAN ANYONE. KNOW YOUR TAX ACCOUNTANT. TRUST THE ACCOUNTANT THAT HAS TAX PREP SCHOOLING EVERY YEAR, TRUST THE ACCOUNTANT THAT INVESTS ALL THE MONEY FOR EDUCATION EACH AND EVERY YEAR. TRUST THE ACCOUNTANT THAT MAKES SURE THEY ARE UP ON THE LATEST TAX LAW CHANGES. YOU CAN'T LEARN ALL YOU NEED TO KNOW ABOUT TAX PREP IN 2-3 WEEKS IN THE FIRST YEAR, NO WAY NO HOW. WE HAVE TO FOLLOW ALL THE DUE DILLIGENCE RULES AND FOR SOME REASON THE MEGA TAX PREP FOLKS THINK THEY DO NOT. BEWARE OF FLY BY NIGHT TAX PREP PEOPLE.
Posted by: tazman1963 | March 26, 2012 3:06 PM
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I'm sure his defense will be he was just looking for all those legitimate deductions his clients were entitled to, just like they say on t.v. The only difference is, of course, he wanted them for himself....
Posted by: topbeancounter | March 26, 2012 10:39 AM
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