A massive case of organized tax and bank fraud culminated today with the unsealing of four federal grand jury indictments accusing 55 people of participating in one or more illicit schemes, including the theft of more than 2,000 identities that were used to claim more than 420 million in bogus IRS tax refunds. As a result the IRS paid out more than $7 million, even issuing payments in the names of dead people.
The charges are the result of a two-year-long investigation by federal and local authorities in San Diego and Los Angeles. Twenty-two defendants were arrested this morning during sweeps in Los Angeles, San Diego, Las Vegas and Maryland. Hundreds of federal, state, and local law enforcement officers participated in the takedown. Thirty-three defendants remain at large, including 21 who are believed to be out of the country.
"This case is staggering in terms of the number of victims, its level of sophistication, its audacious methods and the callous disregard for victims," said U.S. Attorney Laura Duffy. "These arrests are the first strike back on behalf of taxpayers and more than 2,000 victims who now have to reclaim their good names -- a frustrating task that can take years. We will continue to make these cases a priority."
The various schemes are described in four separate indictments. The largest indictment charges 29 people and involved the alleged filing of about 2,000 fraudulent tax returns. The scheme involved the participation of scores of San Diego-based foreign nationals from former Soviet bloc countries, including Russia, Kazakhstan, and Turkmenistan, who were visiting San Diego using J-1 and F-1 visas. All of the defendants arrested in Thursday's operation are expected to make their initial appearances in federal court either today or tomorrow in the district where they were arrested.
Tax refund fraud involving the use of stolen identities has emerged as such a fast-growing crime category that it has earned an acronym, SIRF, for Stolen Identity Refund Fraud. The Department of Justice has issued a new directive to coordinate, expedite and streamline the prosecutorial efforts of the Tax Division and U.S. Attorneys' Offices nationwide.
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