An Inside Fraud Job

Millions of taxpayers trust that the Internal Revenue Service (IRS) will process their annual tax returns and pay refunds where due. They don’t expect to have their identities or their refund checks stolen by government employees working on the inside. An article published in the Atlanta Business Chronicle details the story of one IRS employee, who used her position to victimize 60 taxpayers and bilk the government of more than $500,000.

The story states that the woman reviewed suspicious tax returns for the purpose of preventing the government from being abused by fraud. (Instead of preventing it, she was causing it.) She worked with co-conspirators to use stolen Social Security numbers from tax returns that crossed their desks to file other fraudulent tax returns. If any of these tax returns were flagged as being fraudulent, the woman would make sure that the fraudulent payment was released by the IRS.

The article also mentions that the woman would look for large tax returns that were not considered to be fraudulent. She then provided her co-conspirators with the necessary information to change the address of the taxpayer within the IRS database. This would cause refund checks to be mailed to another address designated by the co-conspirators, not the actual taxpayer’s address. The co-conspirators paid the fraud-detector a share of the refund checks for “passing” the tax return through the system.

The 47-year-old former IRS employee was arrested at her desk. (I bet that was embarrassing.) She was found guilty of mail fraud and aggravated identity theft and was sentenced to four years and nine months in prison followed by five years of supervised release. She was also ordered to pay restitution of $501,048.40.

This woman abused her position of power to gain taxpayer money for private use. (That is a definite no-no.) It is important to note that this fraudster is the exception, not the rule at the IRS. However, this inside job is evidence that the crime of identity theft is growing. (There’s always a bad egg in the carton somewhere.) Congratulations to the U.S. Treasury Inspector General for Tax Administration for investigating and prosecuting this case, preventing further corruption and making sure those responsible are held accountable for their actions.

The post An Inside Fraud Job appeared first on Fraud of the Day.