Feds charge 25 suspects with ID theft, tax fraud in South Florida take-down

04/03/2014 9:30 AM

04/04/2014 11:25 AM

At the height of tax season, federal authorities announced Thursday they have charged 25 South Florida suspects — including a Miami-Dade public school employee —with stealing personal information from unwitting victims such as students to file fraudulent income-tax returns in their names.

All but one of the suspects were arrested Thursday or in recent weeks in a variety of cases involving nearly 14,000 stolen identities and $36 million in false refund claims. As a result, the Internal Revenue Service paid $9.5 million to the accused criminals, authorities said.

South Florida’s take-down aimed to combat the ever-spreading crimes of ID theft and tax-refund fraud that is costing the U.S. government billions of dollars a year.

U.S. Attorney Wifredo Ferrer, who has launched the only task force in the nation to crack down on the dual crimes, held a news conference to spotlight the latest arrests before the April 15 tax-filing deadline and South Florida’s dubious reputation as the capital of these twin crimes. He also warned the public to guard their Social Security numbers and other personal information against cyber thieves to prevent themselves from becoming tax-fraud victims.

“It has been spreading like a virus in South Florida,” Ferrer said at the news conference. “Not only is it America’s fastest-growing crime, it is a consumer’s worst nightmare.”

That is because legitimate tax filers who expect to receive refunds get victimized on the front end by criminals who steal their names and submit fraudulent returns before them. Then, they get victimized on the back end when they have to confront the bureaucracy of the Internal Revenue Service to clear up the mess and obtain their actual refunds.

At the news conference, Ferrer cited a few of the 19 cases unveiled Thursday:

•  Pamela Rhim-Grant, 40, of Miami, a food services manager at Horace Mann Middle School, was arrested along with two others on charges of stealing about 400 student identities from Coral Reef, Palmetto, Killian and several other Miami-Dade high schools for filing more than 200 fraudulent tax returns.
•  Marlon Maikel Palacios, 38, of North Miami, a former U.S. Postal Service Mail carrier, was charged with providing addresses on his route to co-conspirators who used them for filing false refund claims and receiving IRS payments.
•  Four defendants, Anthony A. Pace Jr., 29, Brandon A. Terry, 29, Derel L. Henry, 39, and Rosa Johnson, 26, all of Miami, were charged with using the stolen identities of current and former Miami-Dade Corrections inmates to file fake returns electronically.

Since 2012, the U.S. attorney’s office has prosecuted upward of 300 defendants who have stolen about 90,000 identities and filed $485 million in false refund claims, resulting in $106 million in payments by the IRS.

“Criminals all over South Florida are turning to computers to make an easy buck at the public’s expense,” said George L. Piro, special agent in charge of the FBI’s Miami office.

Jose A. Gonzalez, special agent in charge of the IRS’ criminal investigations in South Florida, said law enforcement has focused on illegitimate tax preparers who apply for or steal electronic identification numbers that allow them to file multiple fraudulent refund claims and to receive payments on debit cards.

Gonzalez said IRS investigators have suspended a total of 70 electronic filing ID numbers that allowed perpetrators to file 53,900 fraudulent tax-refund claims over the past two years. These numbers are normally used to file legitimate returns by accountants and other tax preparers.

Gonzalez called the tax-fraud crisis an “ongoing battle” for his agency, the FBI, Secret Service, U.S. Postal Inspection Service and Homeland Security Investigations — with no end in sight.

Critics say the root of the problem is that the IRS rarely checks tax documents such as W-2 income forms in real time to see if employees’ returns match information provided by their employers before the April 15 filing deadline. That has given tax-fraud offenders ample time early in the tax season to use stolen identities — swiped from hospitals, police stations and other places — to beat legitimate tax filers to the punch.

The problem has spiraled so out of control that some South Florida perpetrators haven’t even bothered with stealing people’s identities to commit tax fraud. They have simply filed phony refund claims for tens of thousands or hundreds of thousands of dollars in their own names and the IRS has issued massive refunds to them in the form of checks or debit cards.

Ferrer called the problem “alarming,” noting that it “remains South Florida’s fastest-growing fraud scheme.”

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