Maryland Woman Sentenced to Prison for Her Role in Stolen Identity and Tax Refund Fraud Scheme
Scheme filed over 12,000 fraudulent tax returns and claimed more than $42 million in refunds
A Maryland woman was sentenced today to 28 months in prison for her involvement in a scheme to fraudulently obtain millions of dollars in income tax refunds, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division, U.S. Attorney Jessie K. Liu for the District of Columbia, Special Agent in Charge Kimberly Lappin of the Internal Revenue Service Criminal Investigation Washington D.C. Field Office, Inspector in Charge Robert B. Wemyss of the U.S. Postal Inspection Service, Washington Division and Assistant Inspector General for Investigations John L. Phillips of the U.S. Department of the Treasury.
According to court documents, Cheryle Murphy, 48, participated in a massive and sophisticated stolen identity refund fraud scheme involving a network of more than 130 people, many of whom were receiving public assistance. Conspirators fraudulently claimed refunds for tax years 2005 through 2012, often in the names of people whose identities had been stolen, including the elderly, people in assisted living facilities, drug addicts, and incarcerated prisoners. The overall case involved the filing of over 12,000 fraudulent federal income tax returns that sought at least $42 million in refunds.
Conspirators played various roles in the scheme to include: stealing identifying information, creating and mailing fraudulent federal tax returns, cashing fraudulent refund checks and forging endorsements of identity theft victims. The false returns typically reported inflated or fictitious income from a sole proprietorship and claimed phony dependents to generate an Earned Income Tax Credit, a refundable federal income tax credit for working families with low to moderate incomes. To date, approximately two dozen participants in this scheme have pleaded guilty.
From approximately August 2010 through November 2010, Murphy participated in claiming approximately $570,280 in fraudulent refunds from the IRS. Murphy agreed to allow her residence to be used for the delivery of tax refund checks and agreed with a co-conspirator to be paid for each check she received. Murphy also deposited into bank accounts under her name two cash deposits and four checks which Murphy received from a co-conspirator and that were obtained as part of the scheme. Ultimately, Murphy deposited a total of approximately $73,396 obtained as part of the scheme, of which she withdrew from ATMs approximately $17,500.
In addition to the term of imprisonment imposed, U.S. District Judge Rosemary M. Collyer ordered Murphy to serve three years of supervised release and to pay $127,180 in restitution to the IRS. She also ordered a forfeiture money judgment of $17,500.
Principal Deputy Assistant Attorney General Zuckerman, U.S. Attorney Liu, Special Agent in Charge Lappin, Inspector in Charge Wemyss and Assistant Inspector General Phillips commended the special agents, who conducted the investigation, and Assistant U.S. Attorneys Ellen Chubin Epstein and Michelle Bradford of the District of Columbia’s Fraud and Public Corruption Section and Trial Attorney Kimberly G. Ang of the Tax Division, who prosecuted the case, as well as Assistant U.S. Attorney Diane Lucas, who assisted with forfeiture issues.
They also expressed appreciation for the work of Tax Division Trial Attorneys Jeffrey B. Bender, Thomas F. Koelbl, and Jessica Moran and acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office for the District of Columbia, including former Assistant U.S. Attorney Sherri L. Schornstein, Assistant U.S. Attorney Chrisellen Kolb, Paralegal Specialists Aisha Keys and Donna Galindo, former Paralegal Specialists Jessica Mundi and Julie Dailey, Litigation Technology Specialist Ron Royal, Investigative Analysts William Hamann and Zachary McMenamin, and Victim/Witness Services Coordinator Tonya Jones.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.