A Staten Island, N.Y., woman has admitted to playing a role in one of the largest and longest-running stolen identity tax refund fraud schemes ever identified.
Elian Matlovsky, 29, pleaded guilty Thursday before U.S. District Judge Claire C. Cecchi to one count of conspiracy to defraud the United States and one count of theft of government property.
A multi-agency task force, including agents from the Internal Revenue Service, found that from at least 2007, dozens of individuals in the New Jersey and New York area have been engaged in the scheme, in which more than 8,000 fraudulent income tax returns were filed seeking over $65 million in tax refunds, resulting in losses to the federal government of over $12 million.
According to prosecutors, Matlovsky and the others obtained personal identifiers, such as dates of birth and Social Security numbers, belonging to Puerto Rican citizens. They then used those identifiers to create fraudulent 1040 forms, falsely reporting wages purportedly earned by the “taxpayers” and taxes that had been purportedly withheld, to create the appearance that they were entitled to tax refunds. The returns were filed electronically.
By tracing the specific Internet Protocol addresses that submitted the electronically filed 1040s, law enforcement officers learned that only a handful of IP addresses created many of the fraudulent 1040 forms that led to the issuance of tax refund checks.
The conspirators also purchased mail route lists of addresses covered by various mail carriers. They then applied for tax refunds, inserted addresses along the mail route as the purported home addresses of the “taxpayers,” and obtained the refund checks sent to the addresses. They also applied for checks using addresses otherwise controlled by, or accessible by, some of conspirators and collected the checks after they were delivered to those addresses.
During the course of the scheme, hundreds of refund checks were mailed to only a few different addresses in a few different towns, including Nutley, Somerset and Newark, N.J., and Shirley, N.Y.
Matlovsky and the others then deposited and cashed the checks. The conspirators used several methods, but Matlovsky opened several bank accounts, into which she deposited nearly $1 million in tax refund checks. Once the checks were deposited into Matlovsky’s accounts, she and others caused the proceeds to be withdrawn and spent the funds.
During the course of the investigation, members of the task force identified certain “hot spots” of activity and intercepted more than $22 million in refund checks that had been applied for fraudulently before they were delivered to members of the conspiracy.
Matlovsky faces up to five years in prison and a $250,000 fine on the conspiracy count and up to 10 years in prison and a $250,000 fine for the theft of government property count. Another charge in the case, theft of mail by a postal employee, carries up to five years in prison and a $250,000 fine. Sentencing is scheduled for November.