Examples of Questionable Refund Investigations - Fiscal Year 2017
The following examples of Questionable Refund Investigations are written from public record documents on file in the courts within the judicial district where the cases were prosecuted.
Tampa Man Sentenced In Stolen Identity Refund Fraud Scheme
On Nov. 18, 2016, in Tampa, Fla., Cedric Clark was sentenced to 102 months in prison and ordered to pay restitution of $1,933,862 to the IRS. Between October 2010 and June 2013, Clark engaged in a fraud scheme involving the filing of false and fraudulent income tax returns in the names of living and deceased individuals. Clark and his co-conspirators received approximately $1.9 million in tax refund checks from the IRS. They had filed returns requesting refunds of almost $6 million.
Minnesota Couple Sentenced For Multi-Million-Dollar Income Tax Refund Fraud Scheme
On Nov. 17, 2016, in St. Paul, Minn., Mark Arlin Hammerschmidt, and his wife, Ornella Angelina Hammerschmidt, of Prior Lake, Minn. were sentenced to 135 months and 48 months in prison, respectively. In addition Mark Hammerschmidt was ordered to pay $1,832,986 in restitution and Ornella Hammerschmidt was ordered to pay $45,365 in restitution, for their roles in orchestrating a multi-million-dollar tax fraud scheme. From January 2011 through February 2013, Mark and Ornella Hammerschmidt operated an immigration and tax preparation business, called American Group, located in Shakopee, Minn. and Winter Garden, Fla., which they utilized to prepare and file more than 1,000 fraudulent federal income tax returns. The defendants attracted customers to American Group by misrepresenting their professional credentials and certifications. Most notably, Ornella Hammerschmidt falsely represented herself as a licensed immigration attorney. As part of the scheme, the defendants attempted to conceal their involvement as fraudulent return preparers by intentionally not signing the tax returns on the part of the form meant to be signed by paid preparers. The defendants also falsely reported their business addresses and bank accounts controlled by them as the addresses and bank accounts of their taxpayer clients. In connection with this part of the scheme, the defendants sought approximately $200,000 in fraudulent tax refund payments. Many of the defendants’ clients were non-or-limited English speakers, who relied on the defendants to properly and legally prepare their taxes. The false returns filed on behalf of the taxpayer clients caused substantial harm to them, both in terms of problems with the IRS and problems with immigration status. In addition, tax returns were filed by Mark Hammerschmidt who obtained the personal identification information (PII) of hundreds of Guatemalan citizens. Mark Hammerschmidt then prepared and filed with the IRS applications for Individual Taxpayer Identification Numbers (“ITINs”) in the names of the Guatemalan citizens. Once he obtained the ITINs, Mark Hammerschmidt filed multiple years’ worth of false tax returns in the Guatemalan citizens’ names, seeking refunds based on false information. Mark Hammerschmidt also used the PII to file false Minnesota state income tax returns. In connection with this part of the scheme, the defendant sought approximately $1.8 million in tax refunds based on the fraudulent tax returns he filed.
South Carolina Woman Sentenced for Tax Fraud Scheme
On Nov. 10, 2016, in Montgomery, Ala., Willie May Ford, of Lamar, SC, was sentenced to 51 months in prison, three years of supervised release and ordered to pay restitution of $1,672,971 for access device fraud. Ford and another individual used counterfeit travelers’ checks to purchase items at two separate stores, which led to their arrest. Numerous traveler’s checks, credit and debit cards, and pieces of personal identifying information were seized from the vehicle that Ford had traveled in to Alabama. A subsequent investigation revealed that the personal information of over 400 individuals was used to file fraudulent federal income tax returns.
Supermarket Owner, Accomplice Sentenced in Identity Theft, Tax Fraud Scheme
On Nov. 4, 2016, in Providence, Rhode Island, Juan Vasquez was sentenced to 72 months in prison, three years of supervised release and ordered to pay $2,682,042 in restitution to the IRS. Vasquez was the mastermind behind a long-running scheme to use the stolen identities of more than 400 individuals on fraudulent tax returns resulting in the receipt of more than $2.6 million in fraudulent tax refunds. Vasquez ran the scheme out of his business, the former Dominican Supermarket in Pawtucket. Vasquez’ sister, Belkis Vasquez, of Central Falls, was sentenced to three years of probation and ordered to pay restitution to the IRS of $325,490 for her participation in the conspiracy. Doris Morel, a full-time cashier at the Dominican Supermarket, and Erika Tomasino, a secretary for Juan Vasquez, were also convicted for their participation in the conspiracy. Morel and Tomasino are scheduled to be sentenced at a later date.
Michigan Man Sentenced for Filing False Claims
On Nov. 2, 2016, in Detroit, Mich., Deandre Elliott, of Detroit, was sentenced to 24 months in prison and ordered to pay $183,099 in restitution to the IRS. Elliott was in possession of victims’ personal identifying information and he filed false tax returns using this information. Several victims testified they never authorized Elliott to file returns on their behalf and most were unaware tax returns were filed in their names. The fraudulent tax returns contained wages from employers for which the victims were never employed and other tax credits. Elliott sought to have the fraudulent refunds deposited into accounts under his control.
Two Florida Residents Sentenced for Stolen Identity Refund Fraud Scheme
On Oct. 27, 2016, in Miami, Fla., Maurice Exavier, of Lauderhill, was sentenced to 145 months in prison and three years of supervised release. Carline Maurice was sentenced to 132 months in prison and three years of supervised release. The defendants were ordered to pay, joint and several, restitution of $1,265,611. Exavier and Maurice acquired and used the personal identifying information of deceased individuals to file false tax returns with the IRS that contained fraudulent claims for refunds. Exavier and Maurice sought payment of the refunds as Refund Anticipation Checks (RACs), checks issued by a bank for the amount of a claimed refund, minus deductions for tax preparation and other service fees, if applicable. The RACs were then printed locally at a tax preparation company where a defendant had access or control. The refund checks were then deposited into a bank account controlled by Exavier and Maurice so the funds could be used by the conspirators for personal items.
Atlanta Man Sentenced for Theft of Public Money and Aggravated Identity Theft
On Oct. 27, 2016, Peter Isika, of Marietta, Ga., was sentenced to 45 months in prison, three years of supervised release and ordered to pay restitution of $419,810 to the IRS for using stolen identities to fraudulently obtain income tax refunds. During 2013 and 2014, Isika filed at least 50 false income tax returns with the Internal Revenue Service using stolen identities that he purchased over the Internet. Isika directed the fraudulently obtained tax refunds to prepaid debit cards and bank accounts that he controlled.
Tennessee Resident Sentenced for Tax Fraud and Money Laundering
On Oct. 12, 2016, in Knoxville Tenn., Mayra Edith Blair was sentenced to 37 months in prison and ordered to forfeit a money judgment in the amount of $2.5 million to the United States. Blair was part of a conspiracy that used phony identification documents to file fraudulent federal income tax returns in order to obtain refundable tax credits. The scheme resulted in the theft of more than $10.8 million from the U.S. taxpayers.
Florida Man Sentenced for Stolen Identity Refund Fraud Scheme
On Oct. 6, 2016, in Tampa, Fla., Ledale Johnson of Bradenton, Florida, was sentenced to 39 months in prison and ordered to pay restitution of $57,415 to the IRS. From October 2011 through March 2012 Johnson conspired with others to file false tax returns that generated tax refunds, which were then downloaded onto prepaid debit cards in other people’s names, including deceased individuals. Johnson used the debit and prepaid cards to purchase money orders or to spend on personal items. On two separate occasions, Johnson was stopped by local law enforcement and found to be in possession of numerous fraudulent cards. Fraudulent income tax returns seeking refunds of more than $250,000 were filed, with nearly $58,000 obtained in illegal tax refunds.
Florida Woman Sentenced for Filing False Tax Returns and Identity Theft
On Oct. 4, 2016, in Orlando, Fla., Virginia Miller was sentenced to 61 months in prison for conspiracy to steal federal tax refunds and aggravated identity theft. Miller conspired to file false federal income tax returns using stolen personal identifying information (PII), much of which belonged to individuals who were physically and mentally disabled, to obtain tax refunds from the Treasury Department. Miller prepared and filed the fraudulent returns using the stolen PII. She then directed the Internal Revenue Service to electronically deposit the fraudulent refunds into a bank account that her daughter controlled. The women withdrew the tax refunds in cash and made purchases for their own benefit and the benefit of others. During a two-year period, the Millers filed approximately 226 fraudulent tax returns and obtained $493,697 in fraudulent tax refunds from the Treasury Department.
Florida Man Sentenced in Stolen Identity Tax Refund Fraud Conspiracy
On Oct. 3, 2016, in Fort Lauderdale, Fla., Oniel Winston Scarlett, of Belle Glade, was sentenced to 48 months in prison, two years of supervised release and ordered to pay restitution of $188,570 for his participation in a stolen identity tax refund fraud conspiracy involving students and other individuals’ personal identifying information (PII). Scarlett and his co-conspirators fraudulently obtained and exchanged amongst themselves the PII of other individuals, filed fraudulent income tax returns with the IRS using the stolen PII, and directed fraudulent refunds to be deposited onto pre-paid debit cards in the names of other individuals using the stolen PII. Scarlett was in possession of stolen PII during a traffic stop on September 20, 2011. During the traffic stop, the FHP trooper conducted a consent search of Scarlett’s vehicle and found pre-paid debit cards; printouts of hundreds of peoples’ PII; laptop/notebook computers as well as bank account information, where it was later determined that nearly $77,000 in federal tax refunds were direct deposited from 52 separate fraudulent tax returns filed with the IRS. Scarlett admitted he had been recruited to help register pre-paid debit cards that were to be used to accept the fraudulent IRS refunds. He also admitted his role in agreeing to accept money for his role in helping complete the crime. Some of the PII was also used to file false tax returns with the IRS. On the computer, law enforcement found 228 separate login user identifications used to file false income tax returns claiming approximately $290,000.