Maryland Man Pleads Guilty In Scheme That Used Stolen Identifying Information To Seek More Than $20 Million In Fraudulent Tax Refunds-Identities Stolen From Nursing Home Patients, Others-
WASHINGTON – Kevin Brown, 42, of Capitol Heights, Md., pled guilty today to federal charges stemming from his role as a key organizer and leader of an identity theft and tax fraud scheme involving the filing of returns seeking more than $20 million in fraudulent refunds.
The guilty plea was announced by U.S. Attorney Ronald C. Machen Jr.; Thomas J. Kelly, Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI); Gary R. Barksdale, Inspector in Charge of the Washington Division of the U.S. Postal Inspection Service; Eric M. Thorson, Inspector General, U.S. Department of Treasury; and David Beach, Special Agent in Charge, Washington Field Office, U.S. Secret Service.
The case represents one of the largest prosecutions to date involving the use of stolen identifying information.
According to evidence presented to the Court by Assistant U.S. Attorney Sherri L. Schornstein, the defendant was among participants in a massive identity theft and false tax refund scheme involving an extensive network of more than 100 people, many of whom were receiving public assistance. It also involves bank tellers and postal carriers. From 2006 to date, they caused the filing of at least 7,000 fraudulent federal income tax returns seeking more than $20 million in refunds. The case remains under investigation.
Brown pled guilty in the U.S. District Court for the District of Columbia to one count each of conspiracy to defraud the government with respect to claims; making false, fictitious or fraudulent claims for a tax refund, and fraud and related activity in connection with identification information (identity theft). The guilty plea was entered before the Honorable Magistrate Judge Alan Kay. The defendant will be sentenced at a later date by the Honorable Ellen S. Huvelle.
The conspiracy charge carries a statutory maximum of 10 years in prison. The false claims charge carries a statutory maximum of five years in prison, and the identity fraud charge carries up to 15 years. The charges also carry potential fines. Under federal sentencing guidelines, the parties have agreed that the likely range is a prison sentence of up to 14 years and a fine of up to $175,000.
The government has seized and administratively forfeited from Kevin Brown a 2007 Range Rover and more than $100,000 in cash and bank accounts.
“The scope of the identity theft conspiracy revealed by today’s guilty plea is staggering: more than one hundred participants schemed to file more than 7,000 bogus tax returns seeking to rip off $20 million from U.S. taxpayers,” said U.S. Attorney Machen. “These conspirators filed fake tax returns in the names of dead people, grandparents in assisted living facilities, drug addicts, and prisoners. Today one of the masterminds behind this criminal plot took responsibility for his role, but this investigation is not over.”
“IRS Criminal Investigation takes particular interest in cases where individuals, for their own personal benefit, use deceit and fraud to line their pockets,” said Special Agent in Charge Kelly. “The illegal activity detailed in the indictment has had a negative and long-lasting impact on the community. Honest and law-abiding citizens are fed up with the likes of those motivated merely by greed. Identify theft is a loathsome, despicable crime that victimizes honest Americans and causes immense hardship to those individuals whose identities were stolen. This plea should serve as a warning to those who are considering similar conduct.”
According to the government’s evidence in this case, the refunds were sought in the names of people whose identities had been stolen, including the elderly, people in assisted living facilities, drug addicts and incarcerated prisoners. At one nursing home alone, at least 14 identities were stolen, including five from people who were deceased at the time tax returns were filed in their names. Some people sold their identifying information. Some victims unwittingly turned over their identifying information after being told that they were due an income tax refund or were entitled to some “Obama Stimulus Money.”
The government’s evidence showed that participants in the schemes had various roles: some stole the identifying information; some permitted their personal identifying information to be used; some created and mailed the fraudulent federal tax returns; some permitted their addresses to be used for receipt of the refund checks. Some helped cash the checks; some provided bank accounts for negotiation of checks, and some forged endorsements of identity theft victims on the refund checks.
The false returns typically claimed that the “taxpayer” operated a sole proprietorship, such as a barber, claimed phony dependents, and then reported income that was sufficient to generate tax refunds based on the Earned Income Tax Credit, a refundable federal income tax credit for working families with low to moderate incomes.
According to the government’s evidence, Brown was a key organizer and leader of the scheme and recruited others to join in the illegal activities. Brown, who owned Classic Kutz, a barbershop in the 3200 block of 22nd Street SE, Washington, D.C., sometimes listed that establishment as the business name on the fraudulent returns. Among other things, he prepared fraudulent returns, mailed them, endorsed refund checks, and deposited funds.
In announcing the guilty plea, U.S. Attorney Machen, Special Agent in Charge Kelly, Inspector in Charge Barksdale, Inspector General Thorson, and Special Agent in Charge Beach commended those who investigated the case. They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Paralegal Specialist Donna Galindo, Assistant U.S. Attorney Diane Lucas, who assisted with forfeiture issues, and Assistant U.S. Attorney Sherri L. Schornstein, who is prosecuting the case.13-058