Maryland Woman Pleads Guilty In Scheme That Used Stolen Identifying Information To Seek More Than $20 Million In Fraudulent Tax Refunds-She Allowed Her Bank Account To Be Used For Deposits Of Fraudulent Refunds-
WASHINGTON – April Arnold, 31, of Waldorf, Md. pled guilty today to a federal conspiracy charge stemming from her role in an identity theft and tax fraud scheme involving the filing of returns seeking more than $20 million in fraudulent refunds.
The plea, in the U.S. District Court for the District of Columbia, was announced by U.S. Attorney Ronald C. Machen Jr.; Thomas J. Kelly, Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI); Gary R. Barksdale, Inspector in Charge of the Washington Division of the U.S. Postal Inspection Service; Eric M. Thorson, Inspector General, U.S. Department of Treasury; and David Beach, Special Agent in Charge, Washington Field Office, U.S. Secret Service.
Arnold pled guilty before the Honorable Magistrate Judge Alan Kay to a charge of conspiracy to defraud the United States with respect to claims. She will be sentenced at a later date by the Honorable Ellen S. Huvelle. The charge carries a statutory maximum of 10 years in prison, a fine of up to $250,000, restitution, and other penalties. Under federal sentencing guidelines, Arnold likely faces 18 to 24 months in prison and a fine of up to $40,000.
The case represents one of the largest prosecutions to date involving the use of stolen identifying information. Eight other defendants have pled guilty to charges in the case. They include Kevin Brown, 42, of Capitol Heights, Md., a key organizer and leader of the scheme.
According to evidence presented to the Court by Assistant U.S. Attorney Sherri L. Schornstein, Arnold was among participants in a massive identity theft and false tax refund scheme involving an extensive network of more than 100 people, many of whom were receiving public assistance. It also involves bank tellers and postal carriers. From 2006 to date, they allegedly caused the filing of at least 7,000 fraudulent federal income tax returns seeking more than $20 million in refunds. The case remains under investigation.
According to the government’s evidence in this case, the refunds were sought in the names of people whose identities had been stolen, including the elderly, people in assisted living facilities, drug addicts and incarcerated prisoners. At one nursing home alone, at least 14 identities were stolen, including five from people who were deceased at the time tax returns were filed in their names. Some people sold their identifying information. Some victims unwittingly turned over their identifying information after being told that they were due an income tax refund or were entitled to some “Obama Stimulus Money.”
The government’s evidence showed that participants in the schemes had various roles: some stole the identifying information; some permitted their personal identifying information to be used; some created and mailed the fraudulent federal tax returns; some permitted their addresses to be used for receipt of the refund checks; some helped cash the checks; some provided bank accounts for negotiation of checks, and some forged endorsements of identity theft victims on the refund checks.
The false returns typically claimed that the “taxpayer” operated a sole proprietorship, as a barber or day care provider, claimed phony dependents, and then reported income that was sufficient to generate tax refunds based on the Earned Income Tax Credit, a refundable federal income tax credit for working families with low to moderate incomes.
From January 2009 through November 2009, Arnold allowed her bank accounts to be used for the deposit and negotiation of 66 fraudulent U.S. Treasury tax refund checks, totaling about $145,351. All but one of these checks had been mailed to various residential addresses in the District of Columbia. Arnold did not know the individuals whose names were listed on the checks that were deposited into her bank accounts.
In announcing the guilty plea, U.S. Attorney Machen, Special Agent in Charge Kelly, Inspector in Charge Barksdale, Inspector General Thorson, and Special Agent in Charge Beach commended those who investigated the case. They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialist Donna Galindo, Assistant U.S. Attorney Diane Lucas, who assisted with forfeiture issues, and Assistant U.S. Attorney Sherri L. Schornstein, who is prosecuting the case.