Rampant identity theft, tax fraud frustrates Tampa police - WFLA News Channel 8

Rampant identity theft, tax fraud frustrates Tampa police

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By Elaine Silvestrini

TAMPA Wesley and Deidra Clark bundled up their 7-month-old son to be first in line on a recent morning, arriving at the IRS on Columbus Avenue by 6 a.m., waiting for the agency to open at 8:30.

"If you don't get here at 6," Wesley Clark said, "there's so many people, they don't let you in." The Clarks needed help because when they went to a tax preparer, they learned that both their Social Security numbers had been used to file fraudulent tax returns, and they were unable to file. The couple is counting on their refund. "Lots of bills when you have a newborn," he said.

Tax filing season is just weeks old, and a number of Tampa area taxpayers already are unable to file because someone has stolen their identities and beaten them to the IRS.

Even as the Internal Revenue Service announced a "massive national sweep cracking down on identity theft perpetrators," Tampa police say the fraud continues to grow beyond their ability to stop it.

Alvera Ashe was at the IRS the day before the Clarks. She was hoping to use her refund to pay for a headstone for her daughter, whom she said was killed in Miami. This was Ashe's third visit to the IRS, she said. Each time, the agency told her to do something else, fill out more paperwork.

"I work for this money the whole year," she said. "This money was stolen from me."

One local tax preparer, Jean Germain, co-owner of J & G Tax Services, said he had clients whose returns were rejected Jan. 17, the first day the IRS allowed filing, because someone had already filed in their names.

"There's been a lot of that this year," said Germain, who has had about 60 clients whose identities have been stolen this tax season.

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Tampa police say their hands are virtually tied as some crooks continue to rake in millions.

"Make-it-rain" parties where money is thrown in the air and showered down on hundreds of people continue almost daily.

Tampa police officers advise filing early.

"All the police officers are filing as soon as we possibly can," said Chief Jane Castor, who also was nervous about becoming a victim. "Everybody, anybody can become a victim. … Filing taxes in somebody else's name is relatively simple."

Detective Sal Augeri said the fraud is becoming more sophisticated.

"Before, a lot of people were doing it, but they were doing it independently of each other," he said. "They'd party together, they'd kind of all partake in the spoils, but the actual work they were doing individually.

"Now they're more networked," he added.

Some people will file the returns, others will find addresses to use for receiving the cards, and others will spend or launder the money. Police have evidence that some of the fraudulent returns filed in Tampa are resulting in refunds being sent to out-of-state addresses.

On Jan. 31, the IRS announced what it described as a nationwide crackdown on refund fraud and identity theft.

"This unprecedented effort against identity theft sends a strong, unmistakable message to anyone considering participating in a refund fraud scheme this tax season," said IRS Commissioner Doug Shulman in a statement. "We are aggressively pursuing cases across the nation with the Justice Department, and people will be going to jail."

Castor questioned whether a crackdown occurred.

"I guess it depends on how you define crackdown," she said. "From my vantage point, the Tampa Police Department, when we crack down, it's an immediate action that tries to solve a problem." Castor said the IRS announcement referred to old cases.

A review of cases included with the IRS announcement show that more than half of them cover criminal activity alleged to have occurred in 2010 or earlier. Some of the cases date to 2005.

This, Castor said, shows "the problems with the system itself. Even the IRS can't investigate these cases quickly."

She and Augeri noted that the sweep didn't include any Tampa area fraud.

The IRS said it sent investigators to Tampa check-cashing establishments to make sure they were complying with the law.

The IRS issued a statement defending the announcement, saying the crackdown "represented an unprecedented and continuing effort taken against refund fraud and identity theft.

"This nationwide effort has targeted 105 people in 23 states, totaling 939 criminal charges. The IRS is also using civil enforcement personnel to visit more than 150 money services businesses in areas we believe fraudulent refund checks are being cashed and has more than 250 ongoing audits focused on check-cashing businesses. These actions were the culmination of much hard work, and we will continue to improve and harden our systems to block fraudulent refunds from being paid out."

* * * * *

Police investigations are limited by the law's restrictions on access to tax information. Suspects are frequently found with debit cards in other people's names and ledgers containing names, dates of birth and Social Security numbers, according to a review of investigation reports.

Some suspects have been found carrying step-by-step instructions on how to commit tax fraud, while many more have been found with wads of cash they can't explain. And some have patient records chock-full of private information that can be used to file fraudulent returns.

Detectives recently watched as a suspect drove a van around the city, picking up homeless people and taking them to a tax preparation business. The van would then take the homeless people back and fill up again.

Augeri said there are about a dozen people in Tampa who have been "making big money" for years through tax fraud, to the tune of $500,000 to several million dollars a year.

Augeri said IRS criminal investigators are more aggressive and are communicating better with local police, but the agency doesn't have the manpower to deal with the number of cases. And local police don't have the legal authority to investigate and bring charges.

The department has referred scores of cases to the IRS for criminal prosecution – including one suspect Castor says was responsible for about $9 million worth of tax fraud. But the suspects walk free.

Most of the tax fraud cases investigated by Tampa police have languished without federal charges. In some instances, police say they have strong cases for state-level identity theft charges, but the state attorney's office declines to bring charges because the detectives can't get video evidence showing the suspects swiping the cards at bank machines.

But officials in the state attorney's office say they have to follow the law. "Merely possessing the ledgers or having a card on you isn't enough in state court for felony identity theft charges," said Assistant State Attorney Sheri Maxim, who said her office has brought 25 to 30 tax-fraud related cases.

In addition, she said, there are hundreds of cases being investigated. Maxim said she is prosecuting a case with no video evidence, but with law enforcement and other witnesses who saw the suspect try to use a card.

Police say the solution is to stop the fraudulent refunds.

The IRS says it has enhanced filters intended to flag fraudulent returns before checks are sent.

But Castor was skeptical the enhancements would work.

"The new filters that are being put in place by IRS, we don't hold out a whole lot of hope that those will be effective because the filters that they have in place now aren't really effective at all," she said.

Postal Inspector Doug Smith said he's seen evidence that the IRS is blocking some fraudulent refunds.

His agents have seized more than 11,000 fraudulent refund checks and debit cards mailed to Tampa area addresses this year. But some of those debit cards had no money in the accounts. Agents checked about 20 cards in three investigations, and it appears that at least 15 of those cards were blank, apparently because the IRS stopped the money from being credited to those cards.

But Augeri and Tampa Police Officer Kim O'Connor said they continue to find loaded cards. O'Connor said she checked 15 fraudulent debit cards, and they each were loaded with refunds of about $9,000.

"The frustration is overwhelming" for police, Castor said. But police continue to try to build cases.

Does Augeri think he's making a difference?

"No," he said. "Not at all."

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