Miami U.S. attorney issues warning and crackdown on ID theft, tax-refund fraud
U.S. Attorney Wifredo Ferrer issued a warning about ID theft and tax-refund fraud amid a crackdown on the multibillion-dollar crime spreading across South Florida.
02/06/2013 12:51 PM
02/06/2013 6:52 PM
Guard your identity with your life, warns South Florida’s top law enforcement official.
U.S. Attorney Wifredo Ferrer says the double whammy of ID theft and tax-refund scams are the “new Medicare fraud,” picking the pockets of hard-working people and the federal government every year for billions of dollars.
“We need to protect our personal identities as best we can,” Ferrer told The Miami Herald. “One of the best ways to protect yourself is to file your tax returns as early as possible to beat the criminals to the punch.”
The Miami area, infamous for its smorgasbord of fraud schemes, is among the worst spots for what he described as an “epidemic” ID-theft crime wave. To drive home his point at the height of the tax season, Ferrer’s office unveiled the latest prosecutions of 14 defendants in a variety of tax-refund rackets.
Among them: Yet another case of a South Florida hospital employee swiping patients’ Social Security numbers and dates of birth to defraud the Internal Revenue Service.
According to an indictment filed in January, Boca Raton Regional Hospital scheduler Shalamar Major, 32, of Deerfield Beach, stole the personal information of patients and supplied the data to Tanisha Wright in exchange for a split fee for every successful false return submitted to the IRS.
Wright, 27, of Fort Lauderdale, is accused of filing the returns electronically and getting the IRS to direct-deposit the refunds on pre-paid reloadable debit cards, so she could make withdrawals at ATMs or retail purchases. In total, she filed 57 returns seeking $306,720, according to the indictment.
Other prosecutions include:• In an IRS undercover sting last month, Nael Dawud Sammour, 52, was charged with theft of public money after he tried to cash 75 fraudulently obtained tax-refund checks totaling $750,369, according to an indictment. Sammour was arrested after he allegedly used counterfeit driver’s licenses and Social Security cards to cash the refunds through IRS agents posing as check cashers. Agents seized $30,128 from him.
• Two other defendants, Fednol Pierre, 34, of Miami, and Jeanson Pata, 31, of West Palm Beach, were charged in January with stealing government funds and aggravated ID theft involving six fraudulent refunds totaling $52,535.
• Last week, five defendants — Jeffrey Andre Young Jr., 31, of Miami, Joseph Bshara, 27, of Miami Shores, Siham Benabdallah, 23, of Miami Shores, along with Douglas Michael Young, 41, and Nicole Young, 42, owners of two Miami tax preparation companies — pleaded guilty to a fraud conspiracy involving $37,749 in cashed refund checks.
Perpetrators in South Florida, Tampa and other regions of the country steal the identities of people including prisoners, the poor and even children who don’t file income tax returns in order to avoid having the IRS detect duplicate filings, authorities say. They also swipe people’s IDs to file phony tax returns. Combined, the schemes have robbed the U.S. government of billions of dollars yearly since the crime began spreading in 2008, according to a Treasury Department report.
South Florida victims of these and similar crimes run the gamut: police officers, Holocaust survivors, U.S. Marines stationed in Afghanistan, 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.
Ferrer noted that 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.
“While identity theft in Florida ranks highest in the United States, the identity theft rate in Miami has reached near-epidemic proportions,” Ferrer said last fall, after forming a strike force with federal agencies and local police to target the pernicious problem. So far, his office reports charging 113 defendants accused of about $92 million in tax fraud.
“This is the fastest-growing and most insidious crime in South Florida,” he said in an interview last week. “This is the new Medicare-fraud type of scheme.”
Much of the ID theft is carried out by gang members, drug traffickers and violent criminals who have aggressively shifted to tax-refund fraud, formerly associated with white-collar criminals. But an ex-NFL lineman who once played for the University of Miami, William Joseph, was also caught last year trying to cash a fraudulent refund check at an undercover check-cashing store run by the FBI in North Miami Beach. He pleaded guilty and was sentenced to two years in prison.
Common criminals have joined the refund rackets because it’s easy, lucrative and less dangerous than other crimes.
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 for each successful tax return.
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.
The root of the problem is the time lag: Employers issue legitimate W-2s to employees in late January or early February, but the IRS doesn’t review the employers’ actual forms until months later.
IRS officials, under pressure by Congress to expedite tax refunds for millions of Americans, are still trying to figure out how to be fast and vigilant at the same time by developing computer software to flag phony paperwork and match up legitimate forms.
The double-barreled threats of identity theft and tax-refund fraud have become so pervasive in the Internet age that the Treasury Department’s inspector general for tax administration spotlighted the crisis.
The IG’s report found that the IRS detected 938,664 tax returns involving ID theft and stopped the issuance of $6.5 billion in fraudulent refunds in 2011.
But the report also found that the IRS paid out more than $5.2 billion in tax refunds to fraudsters who filed about 1.5 million returns using stolen identities. The report predicted that scammers are likely to swindle $21 billion more from the IRS over the next five years.
The report, released in July, came with a disclaimer: “The amount of undetected tax refund fraud we identified is conservative.”
IRS criminal investigators, along with the FBI and other federal agencies, have become acutely sensitive to the spreading scourge — and the pain for taxpayers.
Said Richard Weber, the IRS’s top criminal chief: “Identity theft is a serious crime that victimizes honest taxpayers and causes immense hardship.”
Join the Discussion
Miami Herald is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere on the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.