The Fight Against Tax Refund Fraud and Identity Theft Refund Fraud

According to a recent press release, the Internal Revenue Service has made stopping identity theft and refund fraud a top priority, claiming its work on identity theft and refund fraud continues to grow, touching nearly every part of the organization.  The IRS assigned more than 3,000 IRS employees to work on identity theft-related issues. IRS employees are working to prevent refund fraud, investigate identity theft-related crimes and help taxpayers who have been victimized by identity thieves. In addition, the IRS provides training to more than 35,000 employees who work with taxpayers to recognize identity theft indicators and help people victimized by identity theft.

“IRS-CI,” short for IRS-Criminal Investigation, is the part of the IRS that is responsible for investigating tax crimes.

According to the press release, the IRS initiated 1,492 identity theft related criminal investigations in FY (Fiscal Year) 2013, an increase of 66% over investigations initiated in FY 2012.  Indictments and sentencing doubled in FY 2013 and the average prison term was more than three years (38 months).

In January 2013, the IRS conducted a coordinated and highly successful identity theft enforcement sweep.  The coast-to-coast effort against identity theft suspects led to 734 enforcement actions, including 298 indictments, informations, complaints and arrests.

The Law Enforcement Assistance Program, formerly known as the Identity Theft Pilot Disclosure Program, was expanded nationwide.  This program provides for the disclosure of federal tax return information associated with the accounts of known and suspected victims of identity theft with the express written consent of those victims. There are currently more than 300 state/local law enforcement agencies from 35 states participating.  For FY 2013, more than 2,400 requests were received from state and local law enforcement agencies.

The Identity Theft Clearinghouse (ITC) continues to develop and refer identity theft refund fraud schemes to IRS-CI field offices for investigation.  For FY 2013, the ITC received over 1,400 identity theft related leads.  Those leads related to more than 391,000 tax returns claiming in excess of $1.3 billion dollars in potentially fraudulent federal income tax refunds. 

IRS-CI continues to be the lead agency or actively involved in more than 30 multi-regional task forces or working groups including state/local and federal law enforcement agencies solely focusing on identity theft.

Here is a sampling of tax refund theft cases and identity theft refund fraud cases that were investigated and prosecuted in the New York City-metropolitan area, according to court records:

·         Grace Bautista was sentenced to 11 months in prison on November 19, 2013 for theft of government funds and was ordered to make restitution of $1,894,081 to the U.S. Treasury Department.

·         James Troy Brown was sentenced to 2 years of probation on November 1, 2013 for conspiracy to steal government funds and theft of mail by a postal employee.

·         Ramon Elia Cespedes was sentenced to 4 months in prison on October 15, 2013 for conspiracy to steal government funds.  He agreed to forfeit $9,000.

·         Natalie Charles was sentenced to 6 months in prison on November 14, 2013 for making false statements and theft of government funds.  She was ordered to make restitution of $16,254.

·         Humberto Garcia was sentenced to 24 months in prison on February 13, 2014 for theft of government funds.  He was ordered to make restitution of $330,302.59.

·         Andrius Gonzalez was sentenced to one year in prison on February 5, 2014 for conspiracy to steal government funds and theft of government funds.  Jilfredo Gonzalez  was sentenced to one year in prison on February 5, 2014 for conspiracy to steal government funds and theft of government funds.  (Raymundo Hernandez, Dawin Brito, Isabel Garcia and Cristino Anotonio Rodriguez, part of the same conspiracy to steal government funds, pleaded guilty and are awaiting sentencing.)

·         Alexander Kwapong was sentenced on December 12, 2013 to two years and one month in prison for conspiracy to commit bank fraud and aggravated identity theft.  He was ordered to make restitution of $30,000.

·         Oadi Mendez-Santos was sentenced to 16 months in prison on December 20, 2013 for embezzlement and theft of government funds and ordered to make restitution of $300,000.

·         Mymy Ortiz was sentenced to 3 months in prison on February 28, 2014 for conspiracy to commit theft of government funds and ordered to make restitution of $50,325.16.

·         Genesis Parada was sentenced to one year and a one day in prison for months in prison on October 25, 2013 for theft of government funds.  She was ordered to make restitution of $1,894,081 to the U.S. Treasury Department.

·         Lariza Ramirez was sentenced to two years of probation on October 31, 2013 for stealing and converting government property and ordered to make restitution of $2,752.

·         Wilson Rivas was sentenced to 8 months in prison on October 4, 2013 for conspiracy to steal government funds.  He agreed to forfeit $18,040.

·         Mohamed Sangare was sentenced to 56 months in prison on February 2, 2014 for conspiracy to steal government funds, theft of government funds, false claims conspiracy, conspiracy to commit wire fraud and aggravated identity theft.  He was ordered to make restitution of $1,646,986.

·         Nilda Tellez was sentenced to one year and one day in prison on March 7, 2014 for theft of government funds and was ordered to make restitution of $330,302.59.

·         Susan Williams (a/k/a Susan Pemberton) was sentenced to 57 months in prison on October 11, 2013 for making false claims and was ordered to make restitution of $2,345.

More information on identify theft is available on IRS.gov, including “The Taxpayer Guide to Identity Theft.”