Posts Tagged ‘EITC’

Tax Fraud on the Wholesale

Saturday, January 10th, 2015

Out of New York City comes allegations of wholesale tax fraud. Seven individuals were arrested on Thursday and charged with conspiracy to defraud the US, conspiracy to commit wire fraud, and aggravated identity theft. Some of the defendants were charged with subscribing to a false tax return. The allegations show a scheme that took inside information and allowed widespread tax fraud. Here’s how it supposedly worked.

One of the defendants worked for the New York City Human Resources Administration as a fraud investigator. He allegedly sold names, dates of birth, and social security numbers to the other members of the conspiracy. They allegedly used their tax practice in the Bronx to prepare thousands of returns with the Earned Income Tax Credit using the stolen identities. This gave individuals a higher refund…and allowed the conspirators to allegedly pocket some of the proceeds. The scheme supposedly ran from at least 2009 to 2014. The conspirators were quite brazen; they allegedly continued with their conspiracy even after search warrants were executed on their business. (Hint: That was not a good idea.)

The scheme intertwined two areas of tax fraud: The Earned Income Credit and identity theft. Both have been repeated topics on this blog.

If found guilty the defendants are looking at terms at ClubFed.