ID theft fuels ‘tsunami’ of tax fraud in South Florida

South Florida crooks lead the nation in stealing identities, which they then use to file bogus tax returns.

10/20/2012 7:32 PM

10/20/2012 7:33 PM

Stealing IDs off the Internet has become easier than swiping candy from a convenience store.

Consider the case of Rodney St. Fleur, who was recently charged with taking the names of 26,000 people from public databases, including prison inmates. He obtained their Social Security numbers through online LexisNexis research services at his employer’s law office in North Miami Beach, according to a search warrant.

Authorities say some of St. Fleur’s information ended up in the hands of Frantz Pierre, a one-time North Miami gang member who was arrested at his seven-bedroom Parkland home last week. Pierre is accused of heading a ring that collected nearly $2 million in fraudulent federal tax refunds on more than 300 pre-paid debit cards in 2010.

The alleged St. Fleur-Pierre connection highlights the relative ease of misappropriating the identities of everyone from prison inmates posted on open databases to the deceased listed on the Social Security Administration’s master file of dead people, authorities say. The trend fuels the Miami area’s ranking as the country’s ID theft capital.

The two defendants’ lawyers declined to comment or could not be reached. A LexisNexis spokeswoman said the company, which has cooperated with investigators, “limits access to sensitive, personally identifiable information” to “legitimate” business customers.

The vulnerable

Perpetrators in South Florida, Tampa and other regions of the country exploit the identities of people who don’t file income tax returns, to avoid having the Internal Revenue Service detect duplicate filings. That strategic scam, coupled with the outright theft of everyday people’s IDs, which are then used to file phony tax returns, has robbed the U.S. government of billions of dollars yearly since the crime began spreading in 2008, according to a Treasury Department report.

“The victims generally tend to be either the most vulnerable members of our society or those who are not expected to file returns at all,” U.S. Attorney Wifredo Ferrer said earlier this month, when his office announced the ID theft-tax fraud charges against St. Fleur, Pierre and 38 others in 20 different cases involving a total of 54,000 stolen identities.

South Florida victims of these and similar crimes run the gamut: police officers, Holocaust survivors, U.S. Marines stationed in Afghanistan, schoolchildren, hospital patients and senior citizens.

What’s fueling the fraud? Florida has the highest rate of identity theft in the country, with 178 complaints per 100,000 residents last year, followed by Georgia, with 120 complaints per 100,000 residents, according to the Federal Trade Commission.

“While identity theft in Florida ranks highest in the United States, the identity theft rate in Miami has reached near epidemic proportions,” Ferrer said, noting ID theft is the force behind the “tsunami” of tax-refund fraud. He added that Florida’s rate is “dwarfed” by that in the Miami area, with 324 complaints per 100,000 residents.

Much of the ID theft is carried out by gang members, drug traffickers and violent criminals who have aggressively shifted to tax-refund fraud once associated with white-collar criminals. An ex-NFL lineman who once played for the University of Miami, William Joseph, was caught earlier this year trying to cash a fraudulent refund check at an undercover check-cashing store run by the FBI in North Miami Beach. He recently pleaded guilty.

Ferrer said common criminals have joined the refund rackets because “it’s easy, it’s lucrative and it’s less dangerous.”

Today, thieves sell stolen personal information consisting of names, dates of birth and Social Security numbers to tax-fraud offenders for as much as $100 to $150 per ID, according to federal investigators. They also sell batches of 50 IDs or more for $500 to $1,000. The sellers can also receive a small commission of 5 to 10 percent from the fraudsters for each successful tax return, which can range from $1,000 to $10,000.

To stay under the radar, offenders fill out official 1040 income tax returns with stolen Social Security numbers, fabricated incomes on W-2 forms and other doctored employment information, tricking the IRS into issuing refunds before officials discover there is no matching paperwork filed by the purported employers.

“If the victims of ID theft are not filing their tax returns, there’s no duplication,” Jose “Tony” Gonzalez, special agent in charge of the IRS’ criminal investigations unit, told The Miami Herald. “By the time a red flag goes up, the tax refunds issued are long gone.”

Earlier this month, one group of defendants — Serge St. Vil, of Miami, Muller Pierre, of North Miami, and Finshley Fanor, of Lauderhill — were charged with filing phony 2010 tax returns in the names of 5,000 people, nearly all of whom were dead. Investigators suspect they obtained the information from online databases, such as Ancestry.com, which now have placed restrictions on access to Social Security numbers.

$6 million score

The three defendants submitted tax returns seeking $14 million, and the IRS issued refunds totaling more than $6 million. St. Vil “directed payment of the fraudulent tax-refund proceeds to bank accounts controlled” by him, Pierre and other co-conspirators, according to an indictment.

Among others arrested this month in the federal roundup: Lineten “Link” Belizaire, who had been charged in August with the Lauderdale Lakes killings of two women and a baby. He had been out on bond — home confinement with an ankle monitor — awaiting trial in Broward County.

Belizaire, 21, of Miami Gardens, pleaded not guilty to the January shooting deaths of Octavia Barnett, 21; Barnett’s roommate Natasha Plummer, 25; and Plummer’s 6-month-old boy, Carlton Stringer Jr.

Belizaire’s lawyer, Alex Michaels, accused U.S. authorities of “collusion” with state prosecutors to keep the murder defendant behind bars in the tax-fraud case. But Ferrer said the murder prosecution was unrelated to Belizaire’s federal indictment, which accused him, his uncle, Ernest Baldwin, and two other men of submitting hundreds of bogus tax refund claims totaling $1 million and requesting that payments be made on pre-paid debit cards.

The probe began earlier this year when police pulled over Belizaire’s uncle during a traffic stop in Hialeah and found five notebooks containing the names, birthdates and Social Security numbers of 1,300 people, including Miami-Dade high school students and disabled residents, federal prosecutor Michael Berger said during Belizaire’s bail hearing last week.

Berger said the notebook included evidence of Belizaire’s debit-card account with Walmart, and that investigators discovered he received 17 tax refunds on one pre-paid card totaling $28,000. Berger added police found a laptop computer in the uncle’s car that contained a picture of Belizaire holding cash in his hand.

“He committed the crime while he was out on bond on the state charges,” Berger told a magistrate judge.

Federal Magistrate Chris McAliley detained Belizaire without bail before trial, concluding he was a flight risk.

“I don’t know if you’re guilty of murder or not,” McAliley said. “That is not of my concern.”

After her decision, Belizaire’s mother shouted out in court: “My son will be proven innocent.”

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