Lexington Man Sentenced To 175 Months For Identity Theft And Tax Fraud Conspiracy

LEXINGTON, KY - A Lexington, Ky., man, who previously admitted to leading a conspiracy to use stolen identities to file false federal income tax returns, has been sentenced to 175 months in prison.

On Wednesday, U.S. District Judge Danny C. Reeves sentenced 52-year-old David C. Pierce for wire fraud, aggravated identity theft, and conspiring to defraud the United States. Judge Reeves ordered $636,379 to be paid in restitution; of that amount, Pierce and another co-defendant are jointly and severally liable for $107,500. Under federal law, Pierce will have to serve at least 85 percent of his prison sentence.

Pierce previously pleaded guilty and admitted that he devised a scheme to obtain federal income tax refunds by fraud. Pierce accomplished this by creating false tax returns in the names of other members of his conspiracy and other individuals whose identities were stolen and supplied to him by his co-conspirators.

Pierce invented details about the lives of these taxpayers, including where they lived and worked, their incomes, and their expenses. He then filed these returns with the Internal Revenue Service (IRS), requesting that the tax refunds be directed to addresses and bank accounts belonging to him and other members of the conspiracy. During a two-year span, Pierce fraudulently claimed over $3.7 million in tax refunds and received over $600,000 in payments from the Internal Revenue Service.

Three of Pierce’s co-conspirators have also been sentenced for their roles in the conspiracy. Timothy Richard Smith, 51, was sentenced on Wednesday to 70 months imprisonment. Joyce Ann Estes, 44, received 51 months in prison on January 22, 2015. Stephen Lane Woodrum, 24, was sentenced to 48 months imprisonment on January 21, 2015. The final co-conspirator, Dwayne Ray Smith, has pleaded guilty to wire fraud, and aggravated identity theft, and conspiracy to defraud the United States. He is scheduled to be sentenced on February 11, 2015.

Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky, and Christopher Henry, Special Agent in Charge, Internal Revenue Service, jointly announced the sentences.

The investigation was conducted by the Internal Revenue Service Office of Criminal Investigation. Assistant U.S. Attorneys Andrew T. Boone and Kate K. Smith prosecuted this case on behalf of the federal government.