Tennessee State Inmate Sentenced to Serve 46 Months in Federal Prison for Conspiracy to Defraud the Internal Revenue Service
KNOXVILLE, Tenn. – On April 2, 2018, Larry Steven Covington, Jr., 39, of Knoxville, Tennessee, was sentenced by the Honorable Thomas A. Varlan, Chief U.S. District Judge, to serve 46 months in federal prison for his role in a conspiracy to defraud the U.S. Government.
Covington pleaded guilty to a one-count information in May 2017. According to the plea agreement on file with U.S. District Court, Covington learned how to prepare and file fraudulent income tax returns from another inmate while he was serving time in a Tennessee state correctional facility in 2008. Covington illegally obtained Personal Identification Information (PII), including social security numbers, from mostly other inmates, and used this information to either create false tax returns, which he mailed to his mother, or provided the information to his mother over the phone so she could prepare the forms and mail them to the IRS from her Knoxville residence.
Some of the refunds were deposited directly by the IRS into two bank accounts created by Covington for which he provided routing information along with the fraudulent tax forms. He instructed his mother to withdraw the money from these accounts, retain some for herself and purchase Green Dot cards for Covington with the remainder. In some cases, treasury checks were mailed directly to Covington’s mother, which she cashed and put the funds on a Green Dot Card for Covington.
Between the tax processing years of 2009 and 2015, over 550 fraudulent returns were filed using multiple addresses in the Eastern District of Tennessee. The attempted refunds totaled $905,213.74. The actual amount of loss was roughly $163,777.89. In addition to his federal prison sentenced, Covington was ordered to pay $163,777.89 in restitution to the Internal Revenue Service (IRS).
“The U.S. Attorney’s Office will prosecute all individuals who illegally obtain information and use it to commit fraud against the United States and unsuspecting victims by filing fraudulent federal income tax returns,” said U.S. Attorney J. Douglas Overbey. “Additionally, our prosecutors will continue to work with our federal and state law enforcement partners to investigate and stop federal crimes being committed by inmates while they are serving time in our state prison system,” added U.S. Attorney Overbey.
“Today’s sentence serves as a well-timed reminder this tax season; theft from American taxpayers by way of fraudulent tax returns will not be tolerated,” said Christopher Altemus, IRS Criminal Investigation Acting Special Agent in Charge of the Nashville Field Office.
Agencies involved in the investigation of this case included IRS Criminal Investigation and the U.S Postal Inspection Service. Assistant U.S. Attorney Jennifer Kolman represented the United States in court proceedings.