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January 13, 2014

IRS Employee Orchestrated Identity Theft Refund Scheme Using Taxpayer Records

On December 10, 2013, in the Northern District of Georgia, IRS Tax Examining Technician Missy Sledge was indicted for aggravated identity theft and mail fraud. [1]

According to court documents, as part of her official IRS duties, Sledge had access to taxpayers’ personal identifiers, including names, Social Security Numbers (SSN), dates of birth, and addresses, and information about tax professionals. Sledge used this access in furtherance of an identity theft scheme which included the filing of fraudulent tax returns and the subsequent theft of refunds. [2] With information from IRS computer systems, Sledge provided taxpayers’ personal information to her coconspirators. [3]

It was part of the scheme that others would file fraudulent tax returns with the IRS using the stolen identities of various taxpayers. Sledge used her IRS computer to review the fraudulent returns submitted to determine if she could release fraudulent tax refunds from those returns. When identified, Sledge would release the fraudulent refund for payment. Sledge further assisted those involved in the scheme in impersonating either the taxpayers or their authorized representatives so the taxpayers’ addresses of record could be changed to a fictitious address accessible to Sledge or others involved in the scheme. Sledge then caused the IRS to mail refunds in the taxpayers’ names to the fictitious address to be intercepted or stolen. [4]

On May 21, 2013, an individual was arrested in Texas and was found to be in possession of an IRS refund check in the amount of $595,901.97, along with three pages of internal IRS documents containing tax information for one of the identity theft victims. A review of IRS systems revealed Sledge made accesses to this taxpayer’s account, as well as to the taxpayer’s accountant’s information, on seven dates between February 2013 and May 2013. The victim was due a large refund because she had overpaid her estimated taxes. One of the perpetrators used the accountant’s information and Government-issued representative number to impersonate the tax practitioner in telephone communication with the IRS on March 5, 2013, to change the address on record from a North Carolina address to an address in Atlanta, Georgia. Sledge then released the $595,901.97 refund to the fictitious address. [5]

On May 23, 2013, an e-mail was sent from Sledge’s IRS e-mail account containing the personal information for two other taxpayers, a married couple. The e-mail included the taxpayers’ names, SSNs, dates of birth, address, and tax preparer’s information. A subsequent telephonic address change was made, changing the address of record from the taxpayers’ Massachusetts address to a Georgia address, and a refund in the amount of $961,779.33 was paid on or about May 31, 2013. Review of the IRS systems identified accesses to the taxpayers’ accounts by Sledge on May 23, 2013 and again in June 2013. [6]

Multiple communications were identified to and from Sledge’s IRS e-mail account on dates between May 2013 and September 2013, relaying taxpayer information and/or internal IRS documents for up to as many as 56 taxpayers to Sledge’s coconspirators. Text messages containing taxpayer information and discussing the theft of Government funds were also identified. In one message she sent to an individual she was trying to recruit as a coconspirator, Sledge told the recipient she had a business proposition for him and indicated she had a plan to change the addresses so checks would come to him. Sledge offered to split the scheme proceeds three or four ways, depending on the number of people involved. Sledge said she would give him all the information needed to get the address changed without any problems or questions and said, “All of this money is just sitting here for the taking.” [7]

TIGTA special agents arrested Sledge in Chamblee, Georgia on November 26, 2013. [8] She entered a not guilty plea at her arraignment, held on December 19, 2013. [8]

  • [1] N.D. Ga. Indictment filed Dec. 10, 2013; N.D. Ga. Criminal Complaint filed Nov. 25, 2013.
  • [2] N.D. Ga. Indictment filed Dec. 10, 2013.
  • [3] N.D. Ga. Criminal Complaint filed Nov. 25, 2013.
  • [4] N.D. Ga. Indictment filed Dec. 10, 2013.
  • [5] N.D. Ga. Criminal Complaint filed Nov. 25, 2013.
  • [6] N.D. Ga. Criminal Complaint filed Nov. 25, 2013.
  • [7] Id.
  • [8] N.D. Ga. Arrest Warrant Return filed Dec. 5, 2013.
  • [9] N.D. Ga. Docket filed Dec. 10, 2013.
  • Nevada Defendant Found Guilty of Corrupt Interference, False Claims and Conspiracy, and Co-Defendant Found Guilty of Conspiracy

    On December 4, 2013, in the District of Nevada, Bret Ogilvie was found guilty of corrupt interference with tax administration and false claims against the Government. [1] Ogilvie and his co-defendant, Linwood Tracy, Jr., were each found guilty of conspiracy to defraud the United States. [2] Both were indicted for the violations in November 2012. [3]

    According to court documents, Ogilvie and Tracy knowingly and intentionally conspired with each other and others to obstruct the lawful functions of the IRS with threats of lawsuits against the IRS, its employees, and private businesses complying with IRS enforcement. Specifically, Tracy threatened to sue the IRS for $10 million if a tax lien on Ogilvie’s residence was not removed. Ogilvie called an IRS Revenue Officer on more than one occasion and threatened to file a lawsuit if funds levied from Ogilvie’s bank account were not returned. Tracy sued the Revenue Officer and other IRS officials for refusing his Power of Attorney, and requested $50 million in damages. Tracy and Ogilvie also threatened private businesses with lawsuits if they complied with IRS summonses. [4]

    Additionally, Ogilvie made claims for the payment of tax refunds which he knew to be false, fictitious, and fraudulent. Ogilvie filed refund claims for five tax years totaling $3,985,143, when, in fact, Ogilvie had paid no taxes in those five years and was not entitled to a refund in any amount. [5]

    Sentencing for Tracy is scheduled for March 3, 2014, and Ogilvie’s sentencing is scheduled for March 24, 2014. [6]

  • [1] D. Nev. Verdict Form Bret Ogilvie filed Dec. 4, 2013.
  • [2] D. Nev. Verdict Form Bret Ogilvie filed Dec. 4, 2013; D. Nev. Verdict Form Linwood Tracy, Jr. filed Dec. 4, 2013.
  • [3] D. Nev. Indictment filed Nov. 28, 2012.
  • [4] D. Nev. Indictment filed Nov. 28, 2012.
  • [5] Id.
  • [6] D. Nev. Criminal Docket filed Nov. 28, 2012.

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