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Friday, August 7, 2015

Eight Defendants Sentenced in $24 Million Stolen Identity Tax Refund Fraud Ring

9,000 Identities Stolen from the U.S. Army, Alabama State Agencies, a Georgia Call Center and a Georgia Company

Eight residents of Alabama and Georgia were sentenced today to serve more than 31 years in  prison, collectively, for their roles in a $24 million stolen identity refund fraud (SIRF) conspiracy, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney George L. Beck Jr. of the Middle District of Alabama.

U.S. District Court Judge Kristi K. DuBose of the Southern District of Alabama imposed the following sentences:

  • Tracy Mitchell, of Phenix City, Alabama, was sentenced to serve 159 months in prison, three years of supervised release and ordered to pay a forfeiture judgment in the amount of $329,242, which was seized in cash from her residence;
  • Talarius Paige, of Phenix City, was sentenced to serve 60 months in prison, three years of supervised release and ordered to pay $762,512 in restitution to the Internal Revenue Service (IRS);
  • Mequetta Snell-Quick, of Columbus, Georgia, was sentenced to serve 24 months and one day in prison, two years of supervised release and ordered to pay $199,471 in restitution to the IRS ;
  • Latasha Mitchell, of Phenix City, was sentenced to serve 36 months in prison, two years of supervised release and ordered to pay $513,821 in restitution to the IRS ;
  • Dameisha Mitchell, of Phenix City, was sentenced to serve 65 months in prison, three years of supervised release and ordered to pay $440,176 in restitution to the IRS;
  • Sharonda Johnson, of Phenix City, was sentenced to serve 24 months in prison, two years of supervised release and ordered to pay $440,176 in restitution to the IRS;
  • Patrice Taylor, of Midland, Georgia, was sentenced to serve 12 months and one day in prison, two years of supervised release and ordered to pay $28,783 in restitution to the IRS; and
  • Cynthia Johnson, of Phenix City, was sentenced to two years of probation and ordered to pay $5,047 in restitution to the IRS.

The sentencing of Keisha Lanier, of Seale, Alabama, is scheduled on Aug. 24.  Tamaica Hoskins, a co-defendant who was charged in the same indictment, was sentenced on June 25 to serve 145 months in prison.  Tamika Floyd, a defendant in a related case, was sentenced on May 19 to serve 87 months in prison.

“These conspirators abused their access to government and private databases to steal thousands of identities, including those of soldiers deployed in Afghanistan, and filed false tax returns seeking over $20 million in fraudulent refund claims,” said Acting Assistant Attorney General Ciraolo.  “The significant prison sentences and financial penalties imposed today reflect the seriousness of this criminal conduct and send a clear message that those who victimize U.S. citizens and steal from the U.S. Treasury will be prosecuted to the fullest extent of the law.”

According to information in court documents and at the sentencing hearings, between January 2011 and December 2013, Lanier and Tracy Mitchell led a large-scale identity theft ring in which Lanier, Tracy Mitchell and their co-defendants filed more than 9,000 false individual federal income tax returns that claimed more than $24 million in fraudulent claims for tax refunds.  The IRS paid out close to $10 million in refunds on these fraudulent claims.  The defendants obtained the stolen identities from various sources, including from the U.S. Army, several Alabama state agencies, a Georgia call center and employee records from a Georgia company.  Mitchell worked at the hospital located at Fort Benning, Georgia, where she had access to the identification data of military personnel, including soldiers who were deployed to Afghanistan.  She stole the personal information of soldiers and used that information to file false tax returns.

“Today’s sentencing of eight criminals, who used the identities of American service members and hospital patients to enrich themselves by stealing tax refunds, demonstrates the depths of how far criminals will stoop and the extent to which IRS-CI will go to fight identity theft,” said Chief Richard Weber of IRS-Criminal Investigation (IRS-CI).  “We will use every available resource in collaboration with our law enforcement partners to combat these serious crimes.”

“Today's sentences show our unwavering commitment to aggressively pursue cases of cybercrime and protect the men and women serving our nation,” said Director Daniel Andrews of the U.S. Army Criminal Investigation Command's (CID) Computer Crime Investigative Unit.  “These defendants stole personal identities for monetary gain, and their sentences should resonate with would-be criminals that we can, and we will, hold them accountable for their crimes.”Floyd stole personal information from two Alabama state agencies and provided those names to Lanier.  Lanier provided those names to Tracy Mitchell, Latasha Mitchell, Paige and others to file false tax returns.  Lanier also obtained stolen identities from the Alabama Department of Corrections.  Paige and Taylor worked in a call center for a payment-processing company in Columbus and stole identities.  Paige, in turn, used those identities to file false tax returns, some of which he filed from Tracy Mitchell’s residence.  Tracy and Latasha Mitchell also obtained employee files from a Columbus company and used those identities to file false tax returns.

In order to file the false tax returns, the defendants obtained several IRS Electronic Filing Numbers in the names of sham tax businesses.  On behalf of those sham tax businesses, the defendants applied for bank products from various financial institutions.  Under the guise of a legitimate business account, the institutions mailed blank check stock to the defendants’ homes.  The defendants directed the IRS to pay anticipated tax refunds to prepaid debit cards, in U.S. Treasury checks and to financial institutions, which in turn issued the tax refunds via prepaid debit cards or checks.  When the refunds were sent through the financial institutions, the defendants simply printed out the refund checks from the check stock that had been sent to their homes.

After a period of time, the financial institutions stopped permitting the defendants to print out the tax refund checks.  To continue the scheme, Tracy Mitchell and members of her family recruited U.S. Postal Service employees.  The corrupt postal employees specified addresses along their postal routes to have the U.S. Treasury checks mailed, then obtained those checks and turned them over to the defendants for a fee.

The scheme also involved a complex money laundering operation.  Almost $10 million in fraudulent tax refund checks were cashed at several businesses located in Alabama, Georgia and Kentucky.  To coordinate this massive check cashing scheme, the defendants communicated using text messages and maintained detailed records.  For instance, Sharondra Johnson worked at the Walmart money center in Columbus, where she cashed checks for customers as part of her job.  Dameisha Mitchell recruited Sharondra Johnson to cash tax refund checks that were fraudulently issued in the names of other individuals.  Sharondra Johnson agreed to cash the checks and communicated with Dameisha and Tracy Mitchell via text messages.  In an attempt to conceal the crime from Walmart, the defendants had multiple individuals deliver the tax refund checks to Johnson for her to cash them.

At sentencing, the government offered victim impact statements from several individuals whose identities were stolen, and from companies and governmental agencies where the identity theft breaches occurred.  As one agency representative noted, the identity theft was not only devastating financially, but it also had a chilling effect on their ability to serve the residents of this state.  A mother of a young U.S. Army soldier who was an identity theft victim described the consequences of the fraud on her and her family, stating:

While [my son] was fighting for our country and all back home[,] I received a very disturbing phone call from [an] Agent [] from the IRS that my son[,] while at Ft. Benning training to defend our country[,] the land of the free[,] had his identity stolen and fraudulent tax returns were filed with his social security number.  This news was devastating to think that my [] 19-year-old son[,] who was defending the very freedom this country stands [for] [,] was wronged by one of those people [he] was willing to die for.  My whole family could not believe what was happening.  We now had to worry about this terrible act by one of our own.  As I tried my best to keep composed and handle all of the gruesome mounds of paperwork to get this straightened out with the IRS, [my son] was then denied his tax refund.  This created a financial hardship on [him].  We were too afraid to tell [him] while he was deployed because we did not want to worry him and we wanted him to focus only on getting home alive and not have to worry about such an atrocious act by someone who did not even know [him].

“No sentence is too strong for those who prey on our fighting men and women,” said U.S. Attorney Beck Jr.  “War is hell on the home front, too, and the family left behind holding things together must be strongly protected.”

Acting Assistant Attorney General Ciraolo and U.S. Attorney Beck Jr. commended special agents of the IRS-Criminal Investigation and the U.S. Army-CID, who investigated the case, and Trial Attorneys Michael C. Boteler and Gregory P. Bailey of the Tax Division and Assistant U.S. Attorneys Todd A. Brown, Jonathan S. Ross and Kevin P. Davidson of the Middle District of Alabama, who prosecuted the case.  Ciraolo and Beck Jr. also thanked the U.S. Attorney’s Office of the Middle District of Georgia for their assistance in the case.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.

Press Release Number: 
Updated August 7, 2015