FOR IMMEDIATE RELEASE:
WEDNESDAY - February 9, 2011
JURY CONVICTS FORMER DEPARTMENT OF VETERANS AFFAIRS EMPLOYEE
OF IDENTITY FRAUD; NORTH CAROLINA MAN STOLE IDENTITIES OF
DISABLED VETERANS AND USED THEM TO PREPARE FALSE TAX RETURNS
RALEIGH - United States Attorney George E.B. Holding announced today that a jury in Wilmington, North Carolina, convicted MICHAEL RAY WOODS, 47, of Fayetteville, North Carolina, of 12 counts of preparing false tax returns; 10 counts of wire fraud; 10 counts of identity theft; and 2 counts of aggravated identity theft. The jury returned its verdict on February 8, 2011, following a trial in federal court before Senior United States District Judge James C. Fox.
WOODS was employed by the U.S. Department of Veterans Affairs as a Data Warehouse Manager. In this position, WOODS was responsible for transferring large amounts of electronic patient data held by VA hospitals in North Carolina and Virginia to a “data warehouse” computer in Richmond, Virginia. WOODS worked for the VA from home in Fayetteville under a “tele-commuting” arrangement.
Simultaneously, WOODS was operating an extensive tax return preparation business out of his house. The evidence at trial showed that WOODS repeatedly prepared and submitted false personal income tax returns to the IRS on behalf of customers. These false returns typically included claims for fake education credits and claims for fake business expenses.
These returns also included fake dependents, in order to increase deductions and generate Earned Income Credits. The evidence at trial showed that WOODS stole personal identification information, including names, social security numbers, and dates of birth, of disabled veterans and used them, as well as others, as fake dependents. In choosing disabled veterans as his victims, WOODS increased the odds that his misuse of their identities would be successful, since disabled veterans were less likely to have taxable income and use their own identities to file tax returns.
WOODS profited from his scheme by automatically taking fees out of the resulting fraudulent customer refunds, but also by demanding $500 cash payments for the use of fake dependents. WOODS’ tax return scheme grew dramatically by generating the fraudulent refunds, which in turn generated “word-of-mouth” publicity by customers. By 2007, WOODS was filing over 800 returns a year and taking automatic fees of over $150,000.
“By stealing and using veterans’ personal information to defraud the IRS, the defendant – an employee of the Department of Veterans Affairs at the time – committed a shocking abuse of trust,” said United States Attorney George E.B. Holding. “We will aggressively prosecute these types of crimes.”
WOODS was taken into custody following the jury’s verdict. At sentencing set for May, 2011, WOODS faces up to 3 years’ imprisonment for each count of preparing false income tax returns, up to 20 years’ imprisonment for each count of mail fraud, up to 15 years’ imprisonment for each count of identity theft and up to two-year consecutive terms of imprisonment for each count of aggravated identity theft.
Investigation of the case was conducted by the Internal Revenue Service – Criminal Investigation and the Department of Vererans Affairs – Office of Inspector General. The Government was represented by Assistant United States Attorneys Clay C. Wheeler and Dennis M. Duffy.
News releases are available on the U. S. Attorney’s web page at www.usdoj.gov/usao/nce within 48 hours of release.