A 23-year-old Russian has been arrested for stealing about $105,000 in tax refunds after he set up a set of fraudulent Web sites that claimed to prepare taxes for free.
Maxim Maltsev of Novosibirsk, Russia, who resided in San Diego between May 26, 2006, and Sept. 27, 2006, was arrested last Wednesday upon his arrival in the U.S. at Los Angeles International Airport. Maltsev was charged in a sealed indictment handed up by a federal grand jury sitting in San Diego on April 16, 2009 with one count of conspiracy to defraud the United States regarding claims. Maltsev made an initial appearance Thursday in U.S. District Court in Los Angeles.
According to the indictment, Maltsev was part of a conspiracy to obtain federal income tax returns requesting refunds before they were electronically filed with the Internal Revenue Service. The conspirators then changed the bank account information on the returns to divert the refund payments from the taxpayers to accounts opened for that purpose by members of the conspiracy.
To that end, according to the indictment, Maltsev opened bank accounts at four banks in San Diego between June 29, 2006 and Aug. 30, 2006. Approximately 65 federal income tax refund payments, totaling around $105,000, were illegally diverted to the accounts opened by Maltsev. Those funds were withdrawn by debit and check cards and by ATM cash withdrawals in the U.S. and overseas.
The success of the scheme depended upon U.S. taxpayers being fooled into using free
electronic tax return filing services that are not affiliated with the IRS. The IRS sponsors a program called Free File that allows for the preparation and electronic filing of federal tax returns for free for eligible taxpayers. In 2006, for example, approximately 70 percent of all taxpayers were eligible to use the Free File program. There were 19 approved Free File affiliates in 2006 whose Web sites were linked to the official Web site of the IRS. The conspirators manufactured Web sites that appeared to be Free File affiliates and advertised them on the Internet and through e-mail.
Taxpayers who used these services may have thought that they were using approved affiliates but were not. Taxpayers filled out their income tax returns online with the bogus services. The bogus services then changed the banking information and submitted the income tax returns to the IRS through approved Free File affiliates. All of the modified tax returns were submitted to the various Free File affiliates from Internet Protocol addresses originating in Belarus.
This case was investigated by special agents of the Treasury Department, the Treasury Inspector General for Tax Administration, and the IRS's Criminal Investigations Division.
Maltsev has been ordered held without bail pending further hearings upon his transfer to San Diego. The investigation is continuing regarding other conspirators.
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