U.S. Attorney's Office Reminds Public to be Aware of Tax Identity Theft during Tax Season

SHREVEPORT/LAFAYETTE/ALEXANDRIA/LAKE CHARLES/MONROE, La. –United States Attorney Stephanie A. Finley joins the IRS and other federal agencies to raise awareness about a growing problem of identity theft as it relates to tax refund fraud.  As the federal tax filing deadline approaches, extensions are granted and the state tax season continues.  The Western District of Louisiana U.S. Attorney’s Office has also prosecuted individuals for related tax crimes.

Nationwide tax ID theft fraud is estimated to cost the U.S. Treasury more than $5 billion annually.  The IRS has made tax identity theft a top priority and has hired new staff to explore new technologies and adopted new procedures to fight it.  In fiscal year 2013, the IRS initiated 1,492 identity theft related criminal investigations, an increase of 66 percent over investigations initiated in fiscal year (FY) 2012. Indictments and sentencing doubled in FY 2013 and the average prison term was more than three years.

Stolen Identity Refund Fraud (SIRF) is reported to have affected more than 550,000 taxpayers from 2008 through May of 2012. In FY 2013, the Department of Justice filed more than 580 indictments or informations charging more than 880 defendants with SIRF-related crimes.  In its efforts to prosecute fraudulent tax return preparers and promoters nationwide, the Tax Division has obtained court orders to stop more than 60 preparers and promoters doing business all over the United States.

Tax identity theft normally occurs when someone files a tax return using other people’s personal information, like a Social Security number, to get an income tax refund from the IRS.  It also can happen when someone uses a Social Security number to get a job or claims someone else’s child as a dependent on a tax return.  Victims usually do not realize that their identity has been stolen until they do their taxes.  The IRS will contact the victim saying that more than one tax return was filed using their Social Security number, or that IRS records show they received wages from an employer they do not know.

In an effort to combat law breakers in the Western District of Louisiana, which represents 42 of Louisiana’s 64 parishes, criminal charges have been filed against those who have filed fraudulent tax documents and those who have stolen other people’s identities.

Tax related cases prosecuted in the Western District since April 15, 2013 are:

Roderick Caldwell, 33, of Shreveport, pleaded guilty on September 26, 2013, to theft of income tax refunds.  Caldwell deposited the fraudulently obtained refunds into accounts he held with Suntrust and Capital One Bank.  On January 8, 2014, he was ordered by U.S. District Judge Donald E. Walter to pay back the $51,000.

Lashanda E. Harris, 38, of Natchitoches, La., pleaded guilty on October 29, 2013. She was a tax preparer in Natchitoches and assisted customers in preparing false tax returns.  As part of the scheme, Harris received “kickbacks” from the customers.  She was sentenced on January 31, 2014, by U.S. District Judge Dee D. Drell, to 18 months in prison and was ordered to pay $101,795 in restitution.

Francis C. Broussard 54, of West Monroe, La., pleaded guilty April 19, 2013. He filed personal tax returns in 2009 for years 2005 to 2008 using documents containing false information in an attempt to receive a total of 9.7 million in refunds to which he was not entitled. Broussard, who is a lawyer, did not receive the requested refunds. He was sentenced February 3, 2014 by U.S. District Court Judge Robert G. James to 28 months in prison and three years of supervised release.

Leo Cortez Vinson, 40, of Shreveport, pleaded guilty September 1, 2011. In early 2009, Vinson prepared 22 Form 1040 tax returns for the 2008 tax year containing false information and claiming $91,141 in refunds. The IRS issued $79,396 of these refunds caused by the filing of the fraudulent tax returns.  On average Vinson received between $1,000 and $1,500 per tax return. Vinson recruited inmates from different prisons to supply Social Security numbers for the false returns and paid them $100 for their information. He was sentenced on November 14, 2013 by U.S. District Court Judge Tom Stagg to 36 months in prison and one year of supervised release.

William Loftin Jr., 71, of Bossier City, La., pleaded guilty July 2, 2013. Loftin filed taxes on April 14, 2008 for the 2007 calendar year U.S. Individual Income Taxes due. Under Section C of the form 1040, Lofton reported that for the gross receipts and sales that two of his businesses, Executive Consultants and EDGEAR LLC, made $2.4 million in 2007. Loftin admitted the numbers were false. The actual amount was $4.6 million, which is a difference of $2.2 million. He was sentenced on November 14, 2013 by U.S. District Judge Tom Stagg to one year of probation and to pay $50,000.

Larry Bruce, 61, Leesville, La., pleaded guilty January 29, 2013. Bruce admitted to being responsible for not paying payroll taxes owed to the Internal Revenue Service while working as the financial officer for EMI in Leesville from 2003 to 2007. Bruce was sentenced on May 13, 2013 by U.S. District Judge Richard T. Haik to five years in prison and three years of supervised release. He was also ordered to pay restitution in the amount of $294,070.98 to the IRS.

Gary Scott, 61, of Lafayette, pleaded guilty December 18, 2012. Scott earned more than $2.4 million in gross receipts between 2004 and 2009, and failed to file timely tax returns for those years.  In an attempt to avoid paying his tax liability and evade assessment of future income taxes, Scott intentionally hid assets and went to great lengths to remove those assets out of his name. He was sentenced on April 16, 2013 by U.S. District Judge Elizabeth E. Foote to two years in prison, three years of supervised release and ordered to pay $362,961.65 in restitution to the IRS in unpaid taxes.

There are a number of ways for tax identity thieves to get personal information, to include:

• going through trash or stealing mail from a home or car;
• sending phony emails that look like they’re from the IRS asking for personal information;
• misusing clients’ information or passing it along to identity thieves by employees of businesses.

Tax payers can take the following precautions to safeguard their identity:

• do not carry your Social Security number in your purse or wallet; and
• do not respond to threats received over the phone, through emails or by way of texts from those portraying to be IRS employees.

 “I want to thank all of the agencies who have worked on these cases,” Finley stated.  “Thanks also to private citizens for their efforts in reporting tax related crimes and guarding their tax information from criminals. Through the combined efforts of the public and agencies on a federal, state and local level, this type of fraud can be shut down and justice served upon those who abuse the tax laws and take advantage of law abiding citizens and their customers who place their trust in them.”

“Seeking out and prosecuting individuals who commit violations of the tax laws is the main focus of the work we do at IRS Criminal Investigation, “said Gabriel Grchan, Special Agent in Charge, IRS-CI, New Orleans Field Office. “We greatly appreciate the U.S. Attorney Stephanie Finley for her commitment to the prosecution of these cases. It is my hope that the legal actions undertaken in this district will further assure the taxpaying citizens of our country that IRS – CI is fully engaged in the war against those who attempt to steal from the U.S. Treasury.”

To protect yourself this tax season, it is important to know the ways that the IRS will and will not contact you if they have concerns.  If you receive a letter from the IRS, contact the IRS Identity Protection Specialized Unit at 1-800-908-4490.   The IRS does not initiate collection action by way of phone.  For additional tips on how to protect your identity, or if you think that you are a victim of fraud, go to www.irs.gov.

For those who have had their identity stolen and used for fraud, the IRS will issue a special PIN to use for filing taxes.  Information on the PIN program is available at www.irs.gov/uac/Newsroom/IRS-Combats-Identity-Theft-and-Refund-Fraud-on-Many-Fronts-2014.  Please visit the FTC at ftc.gov/idtheft and the IRS at irs.gov/identitytheft for more information about tax identity theft.