DOJ ANNOUNCES GUILTY PLEA IN $228 MILLION TAX REFUND FRAUD CASE

FROM:  U.S. JUSTICE DEPARTMENT
Friday, June 19, 2015
Operator of O.I.D. Process Pleads Guilty for Involvement in $228 Million Fraudulent Tax Refund Scheme

A California man pleaded guilty yesterday to one count of conspiracy to submit false claims, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Melinda Haag of the Northern District of California.

According to the plea agreement, Duffy R. Dashner, aka Kevin Dashner, 42, of Reseda, California, and his co-conspirators, including Mark R. Maness, operated a business called O.I.D. Process through which they helped others to prepare and file individual federal income tax returns that claimed false Original Issue Discount (OID) interest income and federal tax withholdings, resulting in fraudulent claims for tax refunds (OID returns).  Dashner and Maness charged clients of O.I.D. Process a non-refundable registration fee to join the organization, and a 20 percent “refund acquisition fee” for any refund check issued by the Internal Revenue Service (IRS).  Dashner and Maness also operated a website and conducted weekly conference calls with clients to promote their business and to assist clients in preparing and filing OID returns.

Dashner and Maness required clients of O.I.D. Process to change their mailing address with the IRS to the address of another co-conspirator who was an attorney in San Francisco.  As a result, all correspondence from the IRS to the clients and the clients’ OID refund checks were sent to the attorney’s address rather than the clients’ home address.  By receiving the refund checks, Dashner and Maness were able to ensure that they received their 20 percent refund acquisition fee.  O.I.D. Process clients filed approximately 200 fraudulent OID returns claiming refunds that totaled approximately $228 million.

Dashner’s sentencing hearing is scheduled for Oct. 2 in San Francisco before U.S. District Judge Susan Illston of the Northern District of California.  The statutory maximum sentence for conspiracy to submit false claims is 10 years in prison and a $250,000 fine.  Maness previously pleaded guilty to conspiracy to submit false claims against the United States and was sentenced in February 2015 to serve 41 months in prison, and ordered to pay $1,176,668 in restitution to the IRS.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Haag commended the special agents of IRS–Criminal Investigation, who investigated the case, and Trial Attorney Matthew J. Kluge of the Tax Division and Assistant U.S. Attorney Michael G. Pitman of the Northern District of California, who are prosecuting this case.

TWO TAX PREPARERS INDICTED FOR ROLES IN STOLEN IDENTITY REFUND SCHEME

FROM:  U.S. JUSTICE DEPARTMENT 

Tuesday, October 28, 2014

Alabama Tax Preparers Indicted for Stolen Identity Refund Fraud

Two women from Phenix City, Alabama, were indicted yesterday for their involvement in a stolen identity refund fraud scheme (SIRF), Acting Deputy Assistant Attorney General Larry J. Wszalek for the Justice Department's Tax Division and U.S. Attorney George L. Beck Jr. for the Middle District of Alabama announced today following the unsealing of the indictment.

Teresa Floyd and her daughter, Lasondra Davis Miles, were charged with conspiracy to submit false claims, wire fraud and aggravated identity theft.  Floyd was also charged with theft of public money.

According to the superseding indictment, Floyd and Davis operated several tax preparation businesses in the Phenix City area, including T & L Tax Service and T & C Used Cars & Tax Service.  Floyd and Davis obtained stolen identities and used those identities to file more than 900 federal income tax returns that claimed more than $2.5 million in tax refunds.  To obtain the money from the scheme, the defendants applied for bank products from various financial institutions, which provided to the defendants blank check stock.  The bank products allow a tax preparer to deduct their fees directly from a tax refund and then print out the remainder of the refund as a check.  Floyd and Davis created fictitious identification documents and bills to provide to the financial institutions in an attempt to verify that the returns were filed in the names of legitimate customers.  The defendants caused the fraudulent checks to be cashed at several businesses in Alabama and Georgia.  Floyd also deposited fraudulent income tax refund checks into her bank account.

If convicted, the defendants face a statutory maximum sentence of 10 years in prison for the conspiracy to file false claims count, a statutory maximum sentence of 20 years in prison for each wire fraud count, a statutory maximum sentence of 10 years in prison for each theft of public money count and a mandatory sentence of two years in prison for the aggravated identity theft counts.  The defendants are also subject to fines, forfeiture and mandatory restitution if convicted.

The case was investigated by special agents of the Internal Revenue Service - Criminal Investigation.  Trial Attorney Michael Boteler of the Tax Division and Assistant U.S. Attorney Todd Brown for the Middle District of Alabama are prosecuting the case.

An indictment merely alleges that crimes have been committed and the defendants are presumed innocent until proven guilty beyond a reasonable doubt.

FORMER STATE OF ALABAMA EMPLOYEE PLEADS GUILTY TO STEALING IDENTITIES FROM STATE DATA BASES

FROM:  U.S. JUSTICE DEPARTMENT 

Thursday, October 2, 2014

Former Alabama State Employee Pleads Guilty to Stealing Identities from State Databases Used to Request over $7 Million in Tax Refunds

Today, Tamika Floyd pleaded guilty to one count of conspiracy to defraud the United States and one count of aggravated identity theft for her involvement in a Stolen Identity Refund Fraud Scheme (SIRF), announced Deputy Assistant Attorney General Ronald A. Cimino for the Justice Department's Tax Division and U.S. Attorney George L. Beck Jr. for the Middle District of Alabama.

According to the court documents, between 2006 and 2014, Floyd worked at the State of Alabama Department of Public Health and the Alabama Department of Human Resources, both located in Opelika, Alabama.  At both jobs, she had access to the identification information of individuals.   Beginning in 2012, Floyd was approached to obtain names from her employer that would be used to file false tax returns.  Floyd agreed to steal the names and in turn provided them to her co-conspirator.  Most of the names stolen belonged to teenagers.  Floyd’s co-conspirators used the names she provided to file more than 3,000 fraudulent federal income tax returns that claimed more than $7.5 million in refunds.

A sentencing date has not been scheduled.

The case was investigated by special agents of the Internal Revenue Service - Criminal Investigation.  Trial Attorney Michael Boteler of the Tax Division and Assistant U.S. Attorney Todd Brown for the Middle District of Alabama are prosecuting the case.

6 PLEAD GUILTY TO STEALING THE IDENTITIES OF DEAD PEOPLE

The following excerpt is from the Department of Justice website:
Tuesday, March 13, 2012
Six Plead Guilty in Ohio to Tax and Mail Fraud Conspiracies Involving I.D. Theft of Deceased
Muaad Salem, Hanan Widdi, Najeh Widdi, Hazem Woodi, Daxesj Patel and Fahim Suleiman each entered guilty pleas before the Honorable James S. Gwin today to charges arising from a scheme to obtain false and fraudulent U.S. Treasury tax refund checks, the Justice Department, the U.S. Attorney’s Office for the Northern District of Ohio and the Internal Revenue Service (IRS) announced.   Specifically, Salem, Najeh Widdi and Woodi entered guilty pleas to conspiracy to defraud the United States, conspiracy to commit mail fraud and mail fraud; Hanan Widdi entered a guilty plea to conspiracy to defraud the United States and conspiracy to commit mail fraud; Patel entered a guilty plea to two counts of submitting false claims and one count of false statements; and Suleiman entered a guilty plea to conspiracy to defraud the United States, conspiracy to commit mail fraud; mail fraud and aggravated identity theft.

According to the indictment, between April 15, 2009 to at least August 2011, Salem, Suleiman, Najeh Widdi, Hanan Widdi, Woodi, Patel and other unknown co-conspirators defrauded the United States by filing false and fraudulent tax returns, many in the names of recently deceased taxpayers, and directing refunds to controlled locations in the state of Florida.   The U.S. Treasury checks generated by the false and fraudulent returns were then sent by the U.S. mail to co-conspirators in Ohio who sold and distributed the checks for negotiation at various businesses and banking institutions.   As part of their plea agreements, the defendants admitted that the fraud loss caused by their conduct was between $1 and 2.5 million and that the offenses involved more than ten victims.

Sentencing is scheduled on May 29, 2012, for Najeh Widdi and Patel; on May 30, 2012, for Hanan Widdi and Woodi; and on June 1, 2012, for Salem and Suleiman.   Mail fraud is punishable by a maximum potential sentence of 20 years in prison; conspiracy to defraud the United States is punishable by a maximum potential sentence of 10 years; conspiracy to commit mail fraud, making a false claim against the United States and making a false statement are each punishable by a maximum potential sentence of five years in prison; aggravated identity theft is punishable by a mandatory minimum prison sentence of two years to follow conviction on any other offense.   All of the above sentences are also punishable by a fine of $250,000 for each count of conviction.

The case was prosecuted by Assistant U.S. Attorney Gary D. Arbeznik of the Northern District of Ohio and Trial Attorney Jessica W. Knight of the Justice Department’s Tax Division following investigation by the Cleveland Division of the Federal Bureau of Investigation, the IRS-Criminal Investigation, and the United States Postal Service.