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April 21, 2016

Former IRS Employee Sentenced for Involvement in a Stolen Identity Refund Scheme

On February 22, 2016, in the Western District of Missouri, Central Division, former Internal Revenue Service (IRS) employee Demetria Brown was sentenced for her role in a stolen identity tax refund scheme. [1] Brown pled guilty to charges of wire fraud and aggravated identity theft related to the scheme in June 2015. [2]

According to the court documents, Brown knowingly and willfully devised a scheme to defraud and obtain money from the IRS and the Missouri Department of Revenue (MDOR) by means of materially fraudulent representations. Brown worked for the IRS in St. Louis, Missouri, and lived in Fairview Heights, Illinois, at all times relevant to the charges. [3]

As part of her scheme, Brown obtained the personal identifiers (including names, Social Security Numbers, and dates of birth) of individuals without their consent or knowledge and completed fraudulent U.S. Individual Tax Returns and Missouri State Tax Returns using the identifiers. Brown added false information to the returns, such as addresses, place of employment, wages earned, and taxes withheld, and claimed refunds that were, in fact, not due. [4]

Using a false identity, Brown established an account with an Internet service provider and an e-mail address in order to submit these false returns to the IRS and MDOR. In furtherance of her scheme, Brown opened nominee bank accounts with at least six financial institutions in five different States, and used the bank information to direct the fraudulent refund payments to accounts which she controlled. [5] Over a four-year period, 29 fraudulent State income tax refunds were deposited into accounts opened by Brown in the names of her three children. Brown was listed as the custodian on each account. [6]

Brown admitted that she had been preparing and electronically filing fraudulent Federal and State returns using the e-mail address she had established and her home computer. The IRS determined that Brown filed in excess of 120 fraudulent Federal tax returns. [7] Through her scheme, Brown unlawfully acquired approximately $326,000. [8]

Brown was sentenced to 30 months in prison, followed by three years of supervised release. Additionally, she was ordered to pay a total of $326,000 in restitution; $211,000 to the IRS, and $115,000 to MDOR. Brown is scheduled to begin her sentence on June 1, 2016. [9]

  • [1] W.D. Mo. C.D. Judgment filed Feb. 24, 2016.
  • [2] W.D. Mo. C.D. Plea Agr. filed June 1, 2015.
  • [3] W.D. Mo. C.D. Indict. filed Oct. 2, 2013.
  • [4] Id.
  • [5] Id.
  • [6] W.D. Mo. C.D. Plea Agr. filed June 1, 2015.
  • [7] Id.
  • [8] W.D. Mo. C.D. Indict. filed Oct. 2, 2013.
  • [9] W.D. Mo. C.D. Judgment filed Feb 24, 2016.


  • Nigerian Man Arrested for Role in Large-Scale Scheme Using Stolen Identities to Interfere With and Defraud the IRS

    Michael Oluwasegun Kazeem was indicted in the District of Oregon for mail fraud, conspiracy to commit mail fraud, and aggravated identity theft on February 4, 2016, [1] and was subsequently arrested for those same offenses in Atlanta, Georgia on February 17, 2016. [2]

    According to the indictment, beginning as early as Tax Year 2012 and continuing until May 2015, Kazeem knowingly conspired with others to commit mail fraud, to defraud the Internal Revenue Service (IRS) and obtain money through false and fraudulent representations, and to use the means of identification of others without lawful authority. Kazeem resides in Nigeria and in the State of Georgia. His brother (and coconspirator) lives in Maryland, and a third coconspirator resides in Georgia. [3]

    It was the object of the conspiracy to obtain stolen personally identifying information (PII) and use that information, coupled with information illegally obtained from IRS data systems, for the purpose of preparing and electronically filing fraudulent tax returns with the IRS to claim fraudulent refunds. [4]

    Kazeem and his coconspirators obtained the names and other PII of over 250,000 U.S. taxpayers without their knowledge or consent. The stolen PII included information originating from a database owned by an Oregon company that conducts background checks for volunteers and job applicants. The coconspirators exchanged hundreds of communications containing the stolen Social Security Numbers (SSN) and other PII from the Oregon database. [5]

    In furtherance of the conspiracy, Kazeem and his coconspirators used the stolen PII for unauthorized access to the IRS transcript system, which was available online through the “Get Transcript” application, in order to obtain over 1,200 taxpayer transcripts for subsequent use in filing fraudulent returns in those taxpayers’ names. An IRS transcript shows the taxpayer’s tax return information, including line items from the return, income information from the Forms W-2, 1099, and 1098, and basic data such as marital status, adjusted gross income, and taxable income. The online “Get Transcript” application requires a multi-step authentication using the taxpayer’s PII and personal identity verification questions. The coconspirators used the stolen names and other PII, along with any IRS transcript information acquired, to create fraudulent income tax returns and false Forms W-2. [6]

    The coconspirators also used the stolen PII to obtain Electronic Filing PINs in the names of the victims. An Electronic Filing PIN is a five-digit personal identification number required for electronically filed tax returns when the filer does not have certain items of information from the previous year. A filer can request an Electronic Filing PIN using the website IRS.gov by authenticating his/her identity through a variety of prompts for personal information, including SSN, name, address, and date of birth. Kazeem sent communications to his brother containing over 4,000 fraudulently obtained Electronic Filing PINS and stolen taxpayer PII. The fraudulent Electronic Filing PINs sent to Kazeem’s brother, as well as disposable e-mail addresses, were used to file over 1,375 fraudulent Federal returns for Tax Year 2013, claiming refunds in excess of $11 million. The actual loss based on the returns accepted for payment exceeded $2.6 million. [7]

    The coconspirators acquired hundreds of Green Dot debit cards with the stolen PII and used them to receive fraudulent tax refunds. They retrieved the fraudulent refunds from the debit and/or stored value cards through various purchases, including the purchase of money orders or wire transfers payable to themselves, and converted cash and money orders for their personal use. [8]

    In total, Kazeem and his coconspirators used the stolen PII to file over 2,900 false Federal income tax returns seeking more than $25 million dollars in fraudulent refunds. The actual losses to the IRS exceeded $4.7 million. [9]

    Additional legal proceedings are anticipated.

    • [1] D. Or. Indictment filed Feb. 4, 2016.
    • [2] D. Or. Executed Arrest Warrant filed Feb. 18, 2016.
    • [3] D. Or. Indictment filed Feb. 4, 2016.
    • [4] Id.
    • [5] Id.
    • [6] Id.
    • [7] Id.
    • [8] Id.
    • [9] Id.


    • IRS Employee Pleads Guilty to Orchestrating Large-Scale Identity Theft Refund Scheme

      On February 8, 2016, in the Northern District of Alabama, Internal Revenue Service (IRS) employee Nakeisha Hall pled guilty to the theft of Government funds, aggravated identity theft, unauthorized access to a protected computer, and conspiracy to commit mail fraud affecting a financial institution and bank fraud. [1] Hall was initially charged in a sealed indictment in September 2015 with the theft of Government funds, identity theft, and unauthorized access violations. [2] In December 2015, the conspiracy charge was added against Hall, and two coconspirators, Jimmie Goodman and Abdulla Coleman, were charged as well. [3] A third coconspirator, Lashon Roberson, had been charged in the conspiracy in October 2015. [4] Hall and Goodman were arrested on December 22, 2015; Coleman was arrested on January 7, 2016. [5]

      According to the court documents, Hall began working at the IRS in 2000. She was employed in the IRS Taxpayer Advocate Service (TAS) office in Birmingham, Alabama from 2007 to 2011, and has worked in TAS offices in Omaha, Nebraska, New Orleans, Louisiana, and Salt Lake City, Utah since November 2011. The TAS function is responsible for assisting taxpayers who are having difficulties with the IRS, often because they are victims of identity theft needing assistance in removing fraudulent tax information from their accounts, and with filing corrected tax returns. [6]

      By virtue of her IRS employment, Hall had the ability to access taxpayers’ personal identifying information (PII), including names, dates of birth, and Social Security Numbers (SSN). Hall’s authority to access this information, however, was limited to official business purposes. Hall was fully aware of these limitations, had completed training regarding such, and knew accesses made for non-business reasons could be subject to criminal prosecution. As a result of her lengthy IRS employment, Hall was also familiar with the process of filing tax returns and how to maximize tax refund amounts. [7]

      As part of her scheme to defraud the IRS, and for the purpose of personal financial gain, [8] Hall intentionally exceeded her authorization at work and accessed thousands of names, dates of birth, and SSNs for non-business purposes, running various searches through the IRS’s system looking for individuals who met certain criteria. Between 2008 and 2011, Hall used fraudulently obtained PII to file hundreds of fraudulent individual income tax returns. Not only were these returns not authorized by the taxpayers whose identities were used, they also contained false and fraudulent Forms W-2 and other information in order to generate improper and artificially inflated refunds.

      Hall prepared the fraudulent returns on her own computer using online tax software programs and requested that the associated refunds be put on debit cards designed solely for the purpose of accepting tax refunds. [9]

      After Hall came up with the idea for the scheme, she approached the others (coconspirators) for assistance in retrieving and liquidating the refunds. Hall solicited and obtained “drop addresses” from Goodman, Coleman, Roberson, and at least one other unnamed individual. Hall then had the tax refund debit cards sent by mail to the various “drop addresses.” [10]

      Once the refund debit cards arrived via mail, Hall and her coconspirators retrieved and activated them using the taxpayers’ PII previously obtained by Hall. Hall and her coconspirators accessed the associated funds through ATMs or by purchasing goods and services with the cards and receiving cash back on any unspent balance. For returns that generated refunds in the form of paper Treasury checks instead of debit cards, fraudulent endorsements were used to cash the Treasury checks at financial institutions. Hall compensated her coconspirators by giving them a portion of the money obtained or by giving them refund cards. [11]

      The conspiracy involved fraudulent returns with an intended loss by way of fraudulent refunds of more than $550,000. The Government will recommend that Hall and her charged coconspirators be joint and severally liable for restitution in the amount of $438,187, but reserves the right to request additional restitution if additional amounts become known before Hall’s sentencing date. [12]

      Hall’s sentencing is set for June 29, 2016. [13] She could potentially face a maximum sentence of 32 years’ imprisonment for the conspiracy and aggravated identity theft charges. [14] Coconspirator Roberson entered a guilty plea on February 11, 2016 and is scheduled to be sentenced on May 10, 2016. [15] Additional legal proceedings are anticipated for Goodman and Coleman. [16]

      • [1] N.D. Ala. Plea Agreement Hall filed Feb. 8, 2016.
      • [2] N.D. Ala. Indictment Hall filed Sep. 24, 2015.
      • [3] N.D. Ala. Superseding Indictment Hall et al filed Dec. 15, 2015.
      • [4] N.D. Ala. Information Roberson filed Oct. 15, 2015.
      • [5] N.D. Ala. Criminal Docket Hall et al filed Sep. 24, 2015.
      • [6] N.D. Ala. Plea Agreement Hall filed Feb. 8, 2016.
      • [7] Id.
      • [8] N.D. Ala. Superseding Indictment Hall et al filed Dec. 15, 2015.
      • [9] N.D. Ala. Plea Agreement Hall filed Feb. 8, 2016.
      • [10] Id.
      • [11] Id.
      • [12] Id.
      • [13] N.D. Ala. Criminal Docket Hall et al filed Sep. 24, 2015.
      • [14] N.D. Ala. Plea Agreement Hall filed Feb. 8, 2016.
      • [15] N.D. Ala. Criminal Docket Roberson filed Oct. 15, 2015.
      • [16] N.D. Ala. Criminal Docket Hall et al filed Sep. 24, 2015.


      • IRS Employee Arrested in Fraud Scheme

        On January 20, 2016, Internal Revenue Service (IRS) employee Creshika Wise was arrested in Atlanta, Georgia. [1] Wise had been indicted in the Northern District of Georgia for mail fraud, wire fraud, and aggravated identity theft on January 14, 2016. [2]

        According to the court documents, at all times relevant to the charges, Wise was an IRS revenue agent in Atlanta, Georgia. Her official duties as a revenue agent included regularly auditing individual, business, and corporate tax returns, and calculating taxpayers’ correct tax liability based on her examination. [3]

        In approximately August 2013, Wise was assigned to audit an individual tax return jointly filed by two married taxpayers. The taxpayers had authorized a certified public accountant (CPA) to transact business with the IRS on their behalf. Due to erroneous information received from a third-party, the taxpayers had initially underreported and underpaid their Federal tax and, upon correction of the error, owed $758,846 in additional personal income tax, plus interest. The taxpayers, through their CPA, agreed with this assessment. [4]

        Wise subsequently devised a scheme to knowingly defraud the taxpayers and to obtain money by means of false and fraudulent representations. The object of Wise’s scheme was to take all or part of the additional Federal tax and interest owed to the IRS by these taxpayers and keep it for herself, personally. Wise created a fictitious IRS Form 4549, Income Tax Examination Changes, for the taxpayers and placed the fictitious form in the IRS’s files. The fictitious Form 4549 showed a balance due of only $282,363 rather than the $758,846 already agreed upon. Wise also forged the signature of the taxpayers’ CPA on the fictitious form. [5]

        Wise then opened a checking account in the name “Creshika C. Wise Sole Prop D/B/A U.S. Treasury and Accounting Service.” She later sent a deceptive e-mail to the taxpayer-husband instructing him to send a wire transfer to this account, which she described as being titled in the name “U.S. Treasury and Accounting Service,” failing to disclose that the bank account belonged to her personally rather than to the IRS. [6]

        Wise also attempted to open a bank account through the Internet at a different financial institution, this time in the names of the married taxpayers. As a follow-up, Wise sent a signature card via facsimile to the bank, and called the bank impersonating the taxpayer-wife in order to inquire about the status of the new account. In furtherance of her scheme, Wise changed, or caused to be changed, the taxpayers’ addresses in the IRS computer system, from their actual residence to a United Parcel Service mailbox opened and controlled by Wise. [7]

        Additional legal proceedings are anticipated.

        • [1] N.D. Ga. Executed Arrest Warrant filed Feb. 5, 2016.
        • [2] N.D. Ga. Indictment filed Jan 14, 2016.
        • [3] Id.
        • [4] Id.
        • [5] Id.
        • [6] Id.
        • [7] Id.


        • March 15, 2016

          Disbarred Attorney Sentenced in IRS Impersonation Fraud Scheme

          On February 2, 2016, in Maryland, Saundra Lucille White was sentenced for mail fraud, wire fraud, money laundering, and aggravated identity theft. [1] White had been found guilty of the offenses in a seven-day jury trial in July, 2015. [2]

          According to the court documents, White was an attorney licensed in the District of Columbia (D.C.) and in Maryland. Between March 2010 and May 2013, White knowingly and willfully devised a scheme to defraud individuals and obtain money and property by means of fraudulent pretenses and representations. [3]

          Specifically, White served as the attorney for an individual (the victim) residing in Washington, D.C. who was assisting an incapacitated relative. At White’s request, the victim provided her with an accounting of the relative’s assets. White then assisted the victim in obtaining permanent guardianship of the relative in late 2010. The relative died in January 2011. White was disbarred from practicing law in D.C. and Maryland in January 2011 and September 2011, respectively, but never informed the victim she was no longer a licensed attorney. [4]

          As part of her scheme to defraud the victim, White created numerous fraudulent notices that purported to be from the Internal Revenue Service (IRS) demanding payment of taxes purportedly owed by the deceased relative and another of the victim’s deceased relatives. White mailed and faxed these fraudulent notices to the victim. [5]

          White advised the victim that, as the legal guardian of the deceased relative, she (the victim) was required to remit payments for the taxes. The fraudulent notices stated that payments were to be sent to an entity called Intel Realty Financial Service (IRFS) at an address that was controlled by White. [6]

          In furtherance of her scheme, White attempted to obtain a Maryland driver’s license in the deceased relative’s name but bearing her own photograph. She opened bank accounts in the names of IRFS and the deceased relative, and obtained debit cards in the deceased’s name. [7]

          White then deposited the checks, totaling over $500,000, which had been sent from the victim in response to the purported IRS notices. White wrote checks from the bank accounts to herself or others for her own benefit using the forged signature of the deceased relative. One such check was made payable to Herb Gordon Volvo in the amount of $20,500, to pay for part of the down payment on a Volvo later titled to White. [8]

          White was sentenced to a total of 11 years in prison, followed by three years of supervised release. She was also ordered to pay restitution in the amount of $841,908.57. [9]

          • [1] D. Md. Judgment filed Feb. 4, 2016.
          • [2] D. Md. Verdict Form filed July 23, 2015; D. Md. Crim. Docket retrieved Feb. 22, 2016.
          • [3] D. Md. Superseding Indict. filed Sep. 22, 2014.
          • [4] Id.
          • [5] Id.
          • [6] Id.
          • [7] Id.
          • [8] Id.
          • [9] Md. Judgment filed Feb. 4, 2016.


          • Two Individuals Sentenced in Georgia for Impersonation Scheme

            On January 5, 2016, in the Northern District of Georgia, Kenneth Kaufman was sentenced for conspiracy to commit mail and wire fraud associated with an impersonation scheme. [1] Kaufman and coconspirator Kecia Place were initially indicted for the scheme in March 2015. [2] Place pled guilty to an Information charging her with money laundering in August 2015 [3] and was sentenced for that offense on November 18, 2015. [4] Kaufman entered a guilty plea for the conspiracy charge on September 10, 2015. [5]

            According to the court documents, from early 2014 until February 2015, Kaufman, Place, and others knowingly and willfully conspired to devise a scheme to defraud and obtain money through the use of materially false and fraudulent representations. In execution of the scheme, Kaufman rented a Post Office (PO) Box in Atlanta, Georgia and established a bank account in his name. The conspirators then established a Georgia business named Brand New Day Management, LLC (Brand New Day) and opened a second bank account in the name of the business. Place was listed on this bank account as a co-signer and as Secretary of Brand New Day. Kaufman later added the business name as a mail recipient at the PO Box in Atlanta. [6]

            In furtherance of the scheme to defraud, the conspirators contacted individuals and falsely advised them that they had to first pay a sum of money to cover taxes or fees in order to receive the lottery or prize money. Victims were instructed to send the taxes or fees through a variety of methods, such as a U.S. Postal Money Order or check mailed to Kaufman or Brand New Day at the established PO Box, a direct deposit of funds into one of the two bank accounts established for the scheme, or via Western Union or Moneygram funds sent to the conspirators. Some victims were contacted again after making their initial payment and falsely advised that the value of the lottery or prize had increased and additional taxes or fees were needed in order to receive their prize money. [7]

            Kaufman and Place received approximately $380,000 from at least 20 victims. None of the victims ever received the promised winnings. [8]

            Kaufman was sentenced to 33 months in prison, and Place was sentenced to one year and one day in prison. Each will be on supervised release for three years following his or her respective prison term. Kaufman was ordered to make restitution in the amount of $355,433.00. Place is jointly and severally liable for $78,864.50 of the restitution. [9]

            • [1] N.D. Ga. Amended Judgment Kenneth Kaufman filed Jan. 7, 2016.
            • [2] N.D. Ga. Indictment filed Mar. 18, 2015.
            • [3] N.D. Ga. Information filed Aug. 17, 2015.
            • [4] N.D. Ga. Judgment Kecia Place filed Nov. 19, 2015.
            • [5] N.D. Ga. Minute Sheet Change of Plea Kenneth Kaufman filed Sep. 10, 2015.
            • [6] N.D. Ga. Indictment filed Mar. 18, 2015.
            • [7] Id.
            • [8] Id.
            • [9] N.D. Ga. Amended Judgment Kenneth Kaufman filed Jan. 7, 2016; N.D. Ga. Judgment Kecia Place filed Nov. 19, 2015.


            • IRS Employee Pleads Guilty to Aiding and Assisting Fraud and False Statements

              On January 7, 2016, Internal Revenue Service (IRS) employee Yolanda Castro pled guilty to aiding and assisting fraud and false statements. [1] She was arrested on February 27, 2015, [2] and indicted in the Eastern District of California the previous day, February 26, 2015, on charges of making a fraudulent tax return by an employee of the United States, aiding and assisting fraud and false statements, and false statements to a Government agency. [3]

              According to court documents, Castro has been employed by the IRS in Fresno, California, for approximately 20 years as a tax examiner and, most recently, as a contact representative responsible for responding to taxpayers’ inquiries and making adjustments to taxpayers’ accounts. Between 2007 and 2013, Castro prepared and filed, or caused to be filed, numerous fraudulent Federal income tax returns for herself, her family members, and others, in which she knowingly placed false information for purported child care services, education expenses, business expenses, and casualty losses. As a result of her fraudulent conduct, Castro defrauded the United States of approximately $37,387. [4]

              Specifically, as part of her fraudulent return scheme, Castro claimed on her own Federal tax returns education expenses and child care expenses that she knew she did not incur. Further, in connection with an audit of one of these false returns, Castro knowingly provided the IRS auditor with fabricated receipts for college textbooks and child care services, and made false statements to the auditor about the textbook purchases. She did so to deceive the auditor and to conceal the fact that she had fraudulently claimed the education and child care credits. [5]

              Additionally, Castro willfully aided and assisted in the preparation of six Federal returns for others, in which she falsely identified purported child care providers and fraudulently claimed $17,800 in child care services. The fraudulent information Castro included in these tax returns yielded fraudulent tax deductions and credits for which Castro and the taxpayers whose returns she prepared were not eligible.” In some cases, Castro had access to the personal identifying information of the purported child care providers because she had prepared those taxpayers’ returns in the past. However, on at least one occasion, Castro illicitly accessed IRS databases to review the purported provider’s personal identifying information. [6]

              • [1] E.D. Cal. Plea Agreement filed Jan. 7, 2016.
              • [2] E.D. Cal. Executed Arrest Warrant filed Feb. 27, 2015.
              • [3] E.D. Cal. Indict. filed Feb. 26, 2015.
              • [4] Id.
              • [5] Id.
              • [6] Id.


              • Former IRS Employee and Another Individual Charged in California With Stolen Identity Theft Refund Fraud Scheme

                On January 14, 2016, in the Eastern District of California, former Internal Revenue Service (IRS) employee Lorita Marie Rocha and her associate and former roommate Nereida Rodriguez were indicted on charges of conspiracy to commit wire fraud and wire fraud. [1]

                According to court documents, Rocha was employed by the IRS at the Fresno Service Center as a seasonal tax examiner in the Error Resolution System (ERS) unit, where she had access to the names, Social Security Numbers, dates of birth, and other personally identifiable information of certain taxpayers and their claimed dependents. Her duties at the IRS included verifying the accuracy of dependents claimed on tax returns. [2]

                Between February 2008 and January 2012, Rocha and Rodriguez participated in a scheme to obtain and to help others obtain the payment of false and fraudulent claims for refunds from the IRS through the preparation and submission of false and fraudulent Federal income tax returns. Rocha fraudulently obtained the personal information of dependents through her employment at the IRS. Rocha, Rodriguez, and those they aided, used that fraudulent dependent information to falsely claim dependents on Federal income tax returns, most of which were filed electronically. The refunds were typically issued in the form of either a direct deposit into Rocha’s or Rodriguez’s bank account or a direct deposit to a lender as reimbursement for a previously-issued refund anticipation loan. [3]

                Rocha and Rodriguez misappropriated more than two dozen individuals’ names and means of identification from the ERS unit and subsequently caused them to be used in false and fraudulent tax returns. As a result of their conduct, Rocha and Rodriguez caused tax returns to be filed with the IRS that fraudulently claimed tax refunds in excess of $100,000. [4]

                Rocha was arraigned and entered a not guilty plea on January 22, 2016. [5] Her accomplice, Rodriguez, was arraigned and entered a not guilty plea on January 21, 2016. [6]

                The investigation was conducted jointly by agents of the Treasury Inspector General for Tax Administration and IRS Criminal Investigation. Additional legal actions are pending for both defendants.

                • [1] E.D. Cal. Indict. filed January 14, 2016.
                • [2] Id.
                • [3] Id.
                • [4] Id.
                • [5] E.D. Cal. Arraignment filed January 22, 2016
                • [6] E. D. Cal. Arraignment filed January 21, 2016


                • February 17, 2016

                  California Man Sentenced for Impersonating an IRS Employee With the Intent to Harass

                  On January 4, 2016, in the Northern District of California, Douglas York was sentenced for the impersonation of an employee of the United States. [1] York was indicted for the offense in April 2015, [2] and a jury found him guilty in August 2015. [3]

                  According to the court documents, York pretended to be an officer or employee of the United States, specifically an agent of the IRS engaged in the investigation of tax records. Without disclosing his true identity, and with intent to threaten and harass a specific person, York made a telephone call and left a voice mail for the victim indicating that he was from the IRS and was calling about a tax audit. [4]

                  In a trial memorandum, the Government alleged that York made an interstate communication for the purpose of harassment, i.e., a telephone call originating in California by means of an application called “Spoofcard,” whose servers were located in New Jersey. In the communication, York failed to truthfully identify himself and also used a voice alteration feature to further conceal his identity. [5] The voice mail left for the victim represented that Judy Smith from the IRS was calling and stated that a tax audit was going to be requested for years 2005, 2006, and 2007. The caller requested a return call to the number listed on the caller ID and further said that if the victim could not be reached, the IRS would be checking into his past and looking into his records. [6]

                  The Government alleged it was York’s purpose to annoy and harass the victim with the voice mail, as well as with other continued instances of harassment. Among other things, York incessantly called the victim over the course of several months, placed a phony advertisement for the sale of a car on Craigslist with the victim’s address listed, and posted a sign on the victim’s street claiming he was a child predator. [7]

                  York was sentenced to 12 months and one day in prison, followed by one year of supervised release. The special conditions of York’s supervision state that York is to have no contact with the victim during his supervision, is to abstain from the use of all alcoholic beverages, and shall participate in a mental health treatment program. [8] York appealed his conviction and sentence on January 7, 2016. [9] He was scheduled to begin his sentence on February 3, 2016; [10] however, on January 19, 2016, the court issued a no-bail warrant for York’s arrest because he had violated the conditions of his pretrial release, including removal of his monitoring device and excessive consumption of alcohol. As of the date of the warrant, attempts to locate York were unsuccessful and his whereabouts were unknown. [11]

                  • [1] N.D. Cal. Judgment filed Jan. 7, 2016.
                  • [2] N.D. Cal. Indict. filed Apr. 22, 2015.
                  • [3] N.D. Cal. Verdict Form filed Aug. 28, 2015.
                  • [4] N.D. Cal. Superseding Indict. filed July 9, 2015.
                  • [5] N.D. Cal. United States’ Trial Memorandum filed July 9, 2015.
                  • [6] N.D. Cal. Superseding Indict. filed July 9, 2015.
                  • [7] N.D. Cal. United States’ Trial Memorandum filed July 9, 2015.
                  • [8] N.D. Cal. Judgment filed Jan. 7, 2016.
                  • [9] N.D. Cal. Notice of Appeal filed Jan. 7, 2016.
                  • [10] N.D. Cal. Judgment filed Jan. 7, 2016.
                  • [11] N.D. Cal. Petition for Arrest Warrant for Defendant Under Pretrial Supervision filed Jan. 19, 2016.




                  • Three to Seven Years in Prison for IRS Employee and Coconspirators

                    An Internal Revenue Service (IRS) employee and two of her coconspirators were sentenced in the Eastern District of California [1] for their roles in a $1.4 million identity theft conspiracy. [2] IRS employee Viririana Hernandez was sentenced on November 2, 2015. [3] Coconspirators Daniel Miranda, Jr. and Roberto Martinez, Jr. were each sentenced on December 7, 2015. [4] A fourth conspirator, Lilliana Gonzales, is scheduled to be sentenced on February 8, 2016. [5] Hernandez and her three coconspirators were charged in a 23- count indictment in July 2014 with various Federal offenses, including conspiracy to commit wire fraud, bank fraud, and mail fraud, as well as aggravated identity theft. [6] All four pled guilty between August 2015 and September 2015. [7]

                    According to the court documents, Hernandez, Miranda, Martinez, and Gonzales knowingly engaged in an identity theft conspiracy using the personal information of victims obtained through various methods, including IRS personnel records. Hernandez had been employed by the IRS in Fresno, California since 2006. During her employment, she had worked in a variety of administrative positions, some allowing her access to human resources files on other IRS employees. [8]

                    From at least June 2012 through at least January 2014, the four conspired to defraud retail merchants, cardholders, and banks to obtain money, services, and property under fraudulent pretenses. As part of the conspiracy, Hernandez mined IRS databases for personal information, such as dates of birth and Social Security Numbers, belonging to current and former IRS workers, and made such information available for use by the other conspirators. By October 2012, Miranda possessed the personal information of approximately 288 current and former IRS employees. The conspirators also obtained personal information through a number of employment applications for a franchise restaurant. [9]

                    Once in possession of some initial personal information, the conspirators sought to obtain additional information, including details of credit cards and other financial accounts. They then used this personal information to fraudulently open new financial accounts in the victims’ names or to fraudulently gain access to the victims’ existing financial accounts, often by adding themselves as authorized users. The conspirators made a myriad of fraudulent purchases using this method of access to their victims’ bank and store credit accounts. They also used their wrongful access to get cash advances from ATMs and in-person bank transactions. On at least two occasions, the victim’s personal data, including name, date of birth, address, and specific store credit account information was sent via text to IRS employee Hernandez. On one such occasion, the same day that she received the victim’s account information by text, Hernandez subsequently used it to purchase three Gucci watches at Macy’s, totaling $3,348.89. [10]

                    To avoid detection and maximize the amount of money, goods, and services they could obtain, the conspirators often made numerous purchases on the accounts in a short amount of time before their fraud was discovered and the accounts were suspended. They also used the victims’ accounts to purchase gift cards or merchandise that was later returned for store credit. This allowed them to continue to use gift cards or store credit even if a victim had cancelled access to the credit card. [11]

                    In total, the conspirators used the means of identification of more than 250 people without lawful authority and sought to obtain at least $1.4 million in money, services, and property from merchants, cardholders, and financial institutions. [12]

                    Hernandez was sentenced to 54 months in prison. Miranda was sentenced to 94 months of imprisonment and Martinez to 36 months. Each will be on supervised release for three years following their imprisonment and are jointly and severally liable for restitution in the amount of $125,884. [13]

                    • [1] E.D. Cal. Criminal Docket USA v. Miranda et al filed July 17, 2014.
                    • [2] E.D. Cal. Plea Agr. Miranda filed June 5, 2015.
                    • [3] E.D. Cal. Judgment Hernandez filed Nov. 4, 2015.
                    • [4] E.D. Cal. Judgment Miranda filed Dec. 11, 2015; E.D. Cal. Judgment Martinez filed Dec. 11, 2015.
                    • [5] E.D. Cal. Criminal Docket Gonzales filed July 17, 2014.
                    • [6] E.D. Cal. Indict. filed July 17, 2014.
                    • [7] E.D. Cal. Criminal Docket USA v. Miranda et al filed July 17, 2014.
                    • [8] E.D. Cal. Indict. filed July 17, 2014.
                    • [9] Id.
                    • [10] Id.
                    • [11] Id.
                    • [12] E.D. Cal. Plea Agr. Miranda filed June 5, 2015.
                    • [13] E.D. Cal. Judgment Hernandez filed Nov. 4, 2015; E.D. Cal. Judgment Miranda filed Dec. 11, 2015; E.D. Cal. Judgment Martinez filed Dec. 11, 2015.


                    • Day Care Owner Sentenced for Submitting Fake IRS Document to Obstruct Collection of Funds

                      Deborah Cellucci was sentenced on December 1, 2015 in the Eastern District of Pennsylvania for obstructing the administration of the Internal Revenue laws and wire fraud. [1] Cellucci was indicted for the offenses in September 2014 [2] and pled guilty in June 2015. [3]

                      According to the court documents, Cellucci was the owner and operator of a day care center in Philadelphia, Pennsylvania called Our Little Rascals (OLR). OLR received monthly public subsidy payments from a designated agency in support of Pennsylvania’s subsidized child care program. [4]

                      Cellucci’s day care business became delinquent on various corporate tax payments, owing more than $50,000 to the Internal Revenue Service (IRS). The IRS made efforts to collect the debt, which Cellucci was aware of and had discussed with an accountant and the assigned IRS Revenue Officer. As part of its collection efforts, the IRS sent a Notice of Levy to the State’s designated payment agency in order to redirect the monthly day care subsidy payment to the IRS instead of to OLR, in order to pay part of the business’s delinquent tax bill. [5] The subsidy due to OLR the following month was $28,103.20. In light of the Notice of Levy, the payment agency prepared a check in that amount payable to “US Treasury.” [6]

                      Cellucci then corruptly endeavored to obstruct and impede the administration of the Internal Revenue laws, devising a scheme to defraud the IRS and obtain money by means of false pretenses and representations. As part of the scheme, Cellucci created or obtained a false Release of Levy and transmitted it via facsimile from her home in New Jersey to the agency in Philadelphia. Relying upon the false Release of Levy received, the agency set aside the check payable to the U. S. Treasury and instead issued a check in the amount of $28,103.20 to OLR, thus causing the levied funds to be paid to the day care business instead of the IRS. Cellucci received and cashed the check, depositing the proceeds in an OLR bank account. [7]

                      Cellucci was sentenced to 12 months and one day in prison, followed by three years of supervised release. She was further ordered to pay $28,103.20 in restitution to the IRS. Cellucci is scheduled to begin her sentence on January 22, 2016. [8]

                      • [1] E.D. Pa. Judgment filed Dec. 1, 2015.
                      • [2] E.D. Pa. Indict. filed Sep. 30, 2014.
                      • [3] E.D. Pa. Crim. Docket filed Sep. 20, 2014.
                      • [4] E.D. Pa. Indict. filed Sep. 30, 2014.
                      • [5] E.D. Pa. Govt. Change of Plea Memorandum filed June 23, 2015.
                      • [6] E.D. Pa. Indict. filed Sep. 30, 2014.
                      • [7] Id.
                      • [8] E.D. Pa. Judgment filed Dec. 1, 2015.


                      • Former IRS Special Agent Sentenced to More Than Five Years in Prison for Tax Refund Scheme

                        Former Internal Revenue Service (IRS) Special Agent Donald Centreal Smith was sentenced in the Northern District of Alabama on November 10, 2015 for his role in a tax refund scheme. [1] Smith entered a guilty plea to conspiracy, wire fraud, and aggravated identity theft in June 2015. [2] His coconspirator, Gary Gene Collins, pled guilty to conspiracy and wire fraud in June 2015 [3] and was sentenced on November 18, 2015. [4]

                        According to the court documents, Smith began his employment with IRS Criminal Investigation (IRS-CI) as a trainee in 2005 and became a special agent with IRS-CI in 2007. He was assigned to the Birmingham, Alabama field office. Collins, an Alabama resident, and Smith were friends. From about September 2011 through October 2013, Smith and Collins unlawfully conspired with each other and devised a scheme to make fictitious and fraudulent claims in the form of income tax returns filed with the IRS. [5]

                        Red Alliance, LLC—a business used by Smith and Collins to carry out their scheme—was registered with the Secretary of State in Delaware in April 2012. Smith and Collins then opened two bank accounts at Regions Bank, one in the name of Red Alliance and another in the name of Red Alliance dba True Tax Enterprise. [6]

                        Between June 2012 and October 2012, Smith and Collins electronically filed approximately 19 fraudulent personal income tax returns with the IRS, knowingly using the identification of others without lawful authority. Most of the personal identification information (i.e., names, dates of birth, and Social Security Numbers) contained in the false tax returns came into Smith’s possession by virtue of his employment as a special agent. Specifically, Smith had obtained the information several years earlier through investigations involving tax preparer fraud that he had conducted and prosecuted in his capacity as an IRS special agent. Smith retrieved the personal identifying information from the criminal case files, shared the information with Collins, and used the identifying information from the criminal files to prepare and file most of the false and fraudulent personal tax returns. [7] The false returns directed the refunds to be deposited into the two specific bank accounts earlier established by Smith and Collins at Regions Bank, which were opened with Collins’s Social Security Number, date of birth, and home address. [8]

                        Smith and Collins requested, through the filing of these 19 false claims, Federal tax refunds totaling $65,308.00. Before the scheme was detected, the IRS paid $12,908.94 in refunds. Smith and Collins converted these funds to their own use. [9]

                        One of the identity theft victims attempted to file her 2011 return and was informed that a return had already been submitted in her name using her personal information and that the false return generated a refund payment that had been deposited into an account at Regions Bank. The victim went to Regions Bank and reported the fraud to the bank security officer. The security officer investigated the account and discovered that two bank accounts were receiving refunds in the name of Red Alliance, and that the account holders were Smith and Collins. The security officer placed a “no post” on the accounts. [10]

                        Collins called Regions Bank after discovering the “no post” order on the accounts and spoke with the bank security officer. The security officer agreed to remove the “no post” if Collins provided a copy of the tax return filed on behalf of the reporting victim. The security officer never heard from Collins again . Collins also made several calls to Smith that same day. [11]

                        On two subsequent dates following Collins’s contact with Regions Bank, Smith searched a restricted and confidential Treasury database looking for Bank Secrecy Act information and records relating to himself, Red Alliance, the Employer Identification Number associated with Red Alliance, and the reporting identity theft victim. A search of Smith’s IRS workspace revealed handwritten notes associated with 18 of the fraudulent returns and a detailed spreadsheet containing the personal identifying information of individuals identified during the two prior criminal tax cases Smith had investigated. [12]

                        Smith was sentenced to a total of 61 months in prison, followed by three years of supervised release. He is scheduled to surrender to begin serving his sentence on February 3, 2016. [13] Collins was sentenced to three years of supervised probation, to include nine months of home detention. [14] Smith and Collins are jointly and severally responsible for restitution to the IRS in the amount of $12,908.94, and both are prohibited from preparing tax returns other than their own during the periods of their sentence and supervised release. [15]

                        • [1] N.D. Ala. Judgment Smith filed Nov. 16, 2015.
                        • [2] N.D. Ala. Plea Agr. Smith filed June 15, 2015.
                        • [3] N.D. Ala. Plea Agr. Collins filed June 25, 2015.
                        • [4] N.D. Ala. Judgment Collins filed Nov. 19, 2015.
                        • [5] N.D. Ala. Plea Agr. Smith filed June 15, 2015; N.D. Ala. Plea Agr. Collins filed June 25, 2015.
                        • [6] . N.D. Ala. Indict. filed Apr. 30, 2015.
                        • [7] . N.D. Ala. Plea Agr. Smith filed June 15, 2015; N.D. Ala. Plea Agr. Collins filed June 25, 2015.
                        • [8] N.D. Ala. Indict. filed Apr. 30, 2015.
                        • [9] N.D. Ala. Plea Agr. Smith filed June 15, 2015; N.D. Ala. Plea Agr. Collins filed June 25, 2015.
                        • [10] Id.
                        • [11] Id.
                        • [12] N.D. Ala. Plea Agr. Smith filed June 15, 2015.
                        • [13] N.D. Ala. Judgment Smith filed Nov. 16, 2015.
                        • [14] N.D. Ala. Judgment Collins filed Nov. 19, 2015.
                        • [15] N.D. Ala. Judgment Smith filed Nov. 16, 2015; N.D. Ala. Judgment Collins filed Nov. 19, 2015.


                        • Former IRS Employee Pleads Guilty in Scheme Designed to Defraud the IRS and the Commonwealth of Pennsylvania

                          On November 6, 2015, in the Eastern District of Pennsylvania, former Internal Revenue Service (IRS) employee Modestine Gillette, a/k/a “Cookie,” pled guilty to filing false claims, theft of Government property, aggravated identity theft, access device fraud, wire fraud, and filing a false Federal income tax return. [1] Gillette was indicted for the offenses in February 2015. Her daughter, Moniquetta Coats, was also charged with wire fraud in the February 2015 indictment. [2]

                          According to the court documents, Gillette was a seasonal contact representative working part-time at the IRS from October 2008 until March 2012. As a contact representative, Gillette was responsible for providing administrative and technical assistance to individuals and businesses who contacted the IRS with tax - related questions. In her capacity as an employee, Gillette had access to IRS computerized files containing confidential tax return information for taxpayers, including names, Social Security Numbers (SSNs), and income information. IRS employees are prohibited from accessing tax return information in the absence of an official business reason. Agency rules and regulations also prohibit employees from preparing tax returns for compensation. Gillette had received training and instruction in these legal obligations as a condition of her employment. [3]

                          In contradiction of agency rules and regulations, Gillette prepared Federal income tax returns for friends, relatives, and acquaintances in exchange for payment. Between February 2010 and February 2012, Gillette knowingly prepared and filed, or caused to be filed, nine Federal income tax returns which contained false, fictitious, or fraudulent information, and diverted Government funds from those returns for her own benefit. Most of the individuals listed on the fraudulent tax returns had provided Gillette with their true income and expense information and had authorized Gillette to prepare and submit their returns for them. Nevertheless, the tax returns Gillette prepared and submitted to the IRS reported false information, including income not earned by the taxpayers, business expenses not incurred, false dependent claims, and inflated refund requests. The total amount claimed was $34,466. One taxpayer did not authorize Gillette to prepare and submit a return on her behalf; however, Gillette used her identification to submit a fraudulent tax return, request an inflated refund, and directed the inflated refund into a bank account in the name of her (Gillette’s) spouse. [4]

                          Gillette then knowingly stole and converted to her own use about $12,869 of the inflated refunds. Gillette did so by directing the taxpayers’ refunds, or a portion thereof, into either her own bank account or, more often, into an account in the name of her spouse, generally without the taxpayers’ knowledge. [5]

                          Further, since at least June 2010, Gillette was an owner or operator, and was employed by, A Unique Learning Experience, LLC, (A Unique Experience) a child daycare business in Philadelphia, Pennsylvania. From about June 2010 through June 2013, Gillette devised a scheme to defraud the United States and the Commonwealth of Pennsylvania Department of Labor by obtaining money through false and fraudulent representations. Specifically, Gillette received benefits to which she was not entitled under the Federal Unemployment Program, the Emergency Unemployment Compensation Program, and the American Recovery and Reinvestment Act of 2009. Gillette used the Internet and telephone to submit applications and file claims falsely representing that she was not self-employed, was not working for any other employer, and had not worked for another employer in Pennsylvania since her separation from the Federal Government. Gillette failed to disclose that she had been receiving income from A Unique Experience. In 2011 alone, she received direct compensation from A Unique Experience in excess of $35,000. Gillette also failed to disclose that she was an owner and operator of A Unique Experience. As a result of these misrepresentations, Gillette received approximately 66 weeks of payments, totaling a bout $46,322, in unemployment benefits , to which she was not entitled and which had been fraudulently obtained. [6]

                          Gillette’s daughter, Coats, was also an owner, operator, and employee of A Unique Experience during the same time period. Coats similarly made fraudulent representations regarding her unemployment benefits by failing to disclose that she had been an owner and operator of A Unique Experience and by failing to disclose employment with, and income from, that business. As a result, Coats received about 16 weeks of unemployment payments to which she was not entitled, totaling approximately $10,578 in benefits. [7] Coats pled guilty to wire fraud related to the unemployment compensation fraud on November 6, 2015. [8]

                          Moreover, in January 2012, Gillette willfully filed her own 2011 joint Federal income tax return, under penalty of perjury, knowing that it was not true and correct. Gillette failed to report as income stolen funds of approximately $5,033, her income of about $35,138 from A Unique Experience, and her spouse’s income from A Unique Experience in the amount of $3,929. [9]

                          Both Gillette and Coats are scheduled for sentencing on February 8, 2016. [10]

                          • [1] E.D. Pa. Criminal Docket filed Feb. 18, 2015.
                          • [2] E.D. Pa. Indict. filed Feb 18, 2015.
                          • [3] Id.
                          • [4] Id.
                          • [5] Id.
                          • [6] Id.
                          • [7] Id.
                          • [8] E.D. Pa. Criminal Docket filed Feb. 18, 2015.
                          • [9] E.D. Pa. Indict. filed Feb 18, 2015.
                          • [10] E.D. Pa. Criminal Docket filed Feb. 18, 2015.


                          • Arkansas Man Sentenced for Retaliating Against the IRS

                            On October 28, 2015, in the Western District of Arkansas, Philip Roberts was sentenced for corrupt interference with the Internal Revenue laws. [1] Roberts was indicted for the offense in June 2014 [2] and pled guilty in June 2015. [3]

                            According to the court documents, Roberts, a resident of Fort Smith, Arkansas, was determined to have an outstanding Federal income tax liability of over $2 million. As the Internal Revenue Service (IRS) started its efforts to collect Roberts’ outstanding tax liability, he engaged in protracted and open defiance, corruptly endeavoring to obstruct and impede the Internal Revenue Code by submitting numerous frivolous documents to the IRS with the intention of obstructing its efforts to collect his unpaid tax liability. [4]

                            Included in Roberts’ fraudulent submissions were numerous documents falsely naming former Secretary of the Treasury Henry Paulson Jr. as his fiduciary; documents falsely claiming Secretary Paulson, former IRS Commissioner Douglas Schulman, and several named IRS employees were involved in cash transactions with Roberts, ranging in amounts from $2.5 million to $300 million; and IRS Forms 1099-OID (Original Issue Discount) claiming payments were made to three IRS employees engaged in the collection of Roberts’ tax liability, when in fact, Roberts made no such payments to the employees. [5]

                            According to the Government’s sentencing memorandum, this is the second time Roberts has been convicted of a Federal tax crime. In 2000, Roberts was convicted for failing to file Federal income tax returns and was sentenced to 16 months in prison. By 2008, Roberts’ tax liability had grown to over $2 million. Roberts then not only tried to pay his outstanding taxes using bogus financial instruments, he also engaged in a concerted effort to thwart the IRS’s attempts to collect his unpaid taxes, including singling out the IRS employees who were simply doing their jobs, for his revenge. Forms filed against the three IRS revenue officers assigned to collect Roberts’ taxes were in apparent retaliation because they did not accept his fraudulent documents as payment. Additionally, Roberts threatened that the revenue officers would be civilly liable for his taxes and threatened them with possible criminal prosecution. [6]

                            Roberts was sentenced to 17 months in prison, followed by one year of supervised release. He was further ordered to pay a $3,000 fine and cooperate with the IRS in the ascertainment of any taxes owed. Roberts is to self-surrender on December 7, 2015. [7]

                            • [1] W.D. Ark. Judgment filed Oct. 30, 2015.
                            • [2] W.D. Ark. Indict. filed June 25, 2014.
                            • [3] W.D. Ark. Plea Agr. filed June 22, 2015.
                            • [4] W.D. Ark. Indict. filed June 25, 2014.
                            • [5] Id.
                            • [6] W.D. Ark. United States Sentencing Memorandum filed Oct 14, 2015.
                            • [7] W.D. Ark. Judgment filed Oct. 30, 2015.



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