FOR IMMEDIATE RELEASE:
MONDAY - August 8, 2011
FORMER VA EMPLOYEE SENTENCED IN IDENTITY THEFT CASE
WILMINGTON - United States Attorney Thomas G. Walker announced that in federal court on August 5, 2011, Senior United State District Judge James C. Fox, sentenced MICHAEL RAY WOODS, 48, of Fayetteville, North Carolina to 132 months’ imprisonment followed by three years’ supervised release. The Court also imposed restitution in the amount of $464,000.00.
On February 8, 2011, following a four-day trial, a jury convicted WOODS of 12 counts of preparing false tax returns, 10 counts of wire fraud, 9 counts of identity theft and 1 count of aggravated identity theft.
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.
Mr. Walker commented, “This sentence is an important deterrent to this type of crime. Here, a government employee, with responsibilities to our country’s veterans, was essentially preying upon them and victimizing them and the U.S. Government by preparing fraudulent tax returns. This sentence is an appropriate response to the crime.”
“Mr. Woods preyed upon individuals who have served our country. It is extremely disappointing that he used his position to line his pockets by preparing and filing false income tax returns at the expense of others. Mr. Woods abused his position with the Veteran’s Administration to steal from others,” stated Acting Special Agent in Charge Kay B. Jernigan, Internal Revenue Service, Criminal Investigations.
Investigation of the case was conducted by the Internal Revenue Service – Criminal Investigation and the Department of Veteran’s Affairs – Office of Inspector General. The Government was represented by Assistant United States Attorney Dennis M. Duffy and former Assistant United States Attorney Clay Wheeler.
News releases are available on the U. S. Attorney’s web page at www.usdoj.gov/usao/nce within 48 hours of release.
