Tax refund fraud like ‘crack cocaine’ for criminals, U.S. attorney says

Tax refund fraud like ‘crack cocaine’ for criminals, U.S. attorney says

The filing of fraudulent tax returns by money-hungry identity thieves is spreading through South Florida “like a virus” and six recent cases involving 14 defendants highlight that grim reality, federal prosecutors say.

Announced on Tuesday evening, the cases reflect Florida’s dubious distinction as the identity theft capital of the United States, according to federal data, and the Miami-Fort Lauderdale area’s status as the worst urban center for identity theft in the country.

The cases include a scheduler at a Boca Raton hospital, Shalamar Major, who is accused of stealing patient data and giving it to a friend, Tanisha Wright.

Wright then filed 57 fraudulent tax returns worth $306,720 and the pair split the proceeds, which were loaded on to pre-paid debit card, according to an indictment filed in federal court in Fort Lauderdale.

The other cases include a Miami man, Fednol Pierre, 34, who allegedly collected more than $52,000 in fraudulent tax returns. Jeanson Pata, 31, of West Palm Beach, is also accused in that case. Jahed Movlayazdanpahi, 29, of Miramar, is also a defendant in one of the cases.
Wifredo Ferrer, the U.S. Attorney for the Southern District of Florida, likened the crime to a drug addiction for some phony filers, some of whom engage in “dumpster diving” to scrounge for discarded personal documents.

“This type of fraud, it’s like crack cocaine on a card,” Ferrer said. “Because the IRS sometimes pays the refund on a (debit) card, it becomes so addictive and lucrative. We have people going through the trash and breaking into cars, trying to find personal information.”

Ferrer urged consumers to protect themselves by never carrying their Social Security number and by filing their tax returns as soon as possible — before the criminals get a chance. He also said taxpayers would be wise to invest in a document shredder.

Asked why South Florida has become such a hotbed for tax refund scammers, Ferrer said there is a “culture of fraud” that has seen criminal opportunists moving from Medicare fraud to Internal Revenue Service fraud.

Plus, he said everybody seems to be in on the action. Defendants have run the gamut from hospital workers to former military personnel to tax preparers and business owners, he noted. As well, violent criminals who formerly robbed people and sold drugs are now taking to their laptops to file online, some of them hosting “filing parties” to submit fraudulent tax returns en masse.

Since the formation of the South Florida Identity Theft Tax Fraud Strike Force in October 2012, federal prosecutors have charged 113 defendants accused of reaping $92 million in phony tax refunds, Ferrer said. The strike force is comprised of a seven or eight full-time federal prosecutors and dozens of federal and local law enforcement officers and agents, he said.

According to Federal Trade Commission data, the Miami-Fort Lauderdale area had the highest rate of identity theft complaints in the country in both 2010 and 2011. Florida also had the highest rate of identity theft among states in 2011, 2010, and 2009.

Tampa and Miami were the top two cities for stolen identity refund fraud, according to the U.S. Treasury Inspector General for Tax Administration, the independent agency that provides oversight of the IRS. For the 2010 tax year, 163,220 potentially bogus tax returns were filed from those cities.

An IRS spokesperson in South Florida said IRS officials would be commenting on the issue of identity theft on Thursday.

Denise Richardson, a consumer advocate based in Hollywood, echoed what Ferrer said, that South Florida’s criminals are migrating from the high-risk world of violent crime to the lower-risk and more lucrative realm of identity theft.

“Now it’s not the drugs that makes them money, it’s data,” Richardson said. “Because you can sell it over and over again.”
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