Inmates at a county prison just outside Key West, Fla., received up to $100,000 from the IRS after filing for over $1 million in fraudulent tax refunds.

Approximately 50 inmates were involved in the scheme at the Stock Island Detention Center, according to the Miami Herald. Local investigators began investigating the scam over three years ago, but evidence was only presented to a grand jury this month. Indictments could be forthcoming.

The inmates filed 1040EZ and 4852 forms, filling in the names of fake or defunct businesses, and bogus income and withholding numbers. At one point, they wrote to the IRS asking to be sent the 4852 forms, which they did not have access to in the jail. The refunds were typically for about $5,000. The money would usually be signed over to relatives or deposited in an inmate’s account, according to the Herald.

Prison officials learned of the scheme when they discovered a how-to note in one inmate’s cell, and a bank officer didn’t trust a power-of-attorney form from an outsider seeking to cash a check. They discovered two ringleaders, who sometimes received kickbacks from other inmates participating in the scheme.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access