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Wednesday, Nov 26, 2014
Crime & Courts

Tampa area turning corner on ID theft tax fraud plague

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Published:   |   Updated: February 16, 2014 at 08:08 AM

TAMPA — In recent years, tax filing season in the Tampa area has also been “make it rain” season for thieves.

This year, however, there's something different in the air.

It wasn't that long ago that Tampa police would come across evidence of identity theft tax refund fraud on a daily basis: ledgers with people's names, birth dates and Social Security numbers; expensive souped-up cars in low-income neighborhoods; homes full of pricey furniture, clothes and designer purses with the price tags still on them.

Cpl. Lisa Parashis says she encountered evidence of tax fraud at least once a week, and sometimes more, when she patrolled East Tampa. “It was very frustrating” because police were mostly unable to do anything other than seize ledgers and debit cards and send the thieves on their way.

“The attitude from the criminals was that they were getting away with this,” Parashis said. “It was almost as if they knew they were committing a crime, but they were laughing.”

That's changed, she said. These days, she said, she rarely encounters evidence of tax fraud. On Friday, Parashis drove around looking for one of the tricked-out cars that had become a symbol of the millions of illicit dollars that poured into city streets from faked tax returns. She couldn't find any.

“I definitely feel like law enforcement is winning in this area,” Parashis said. “We still have further to go.”

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Gone, by and large, are the days of crooks brazenly committing income tax fraud, carrying backpacks stuffed with ledgers of stolen personal information and teaching classes on how to get away with stealing vast sums of money from the IRS using nothing more than a laptop computer and an online tax filing program.

The fraud was so open and pervasive in the Tampa area that the city was named No. 1 in the country on a national watchdog report, which said in August 2012 that Tampa had more of the refund fraud than the next three cities on the list combined. A follow-up report released in September didn't even mention Tampa, which is no longer among the top five cities for stolen identity refund fraud, according to the Treasury's inspector general for tax administration.

Though stolen identity tax refund fraud is still lucrative for determined and sophisticated thieves, law enforcement officials say small-time street-level crooks largely have abandoned what they once saw as easy money, no longer confident they can get away with it.

Authorities say they no longer are overwhelmed and frustrated by their inability to fight the fraud; they say they know how to deal with it and that criminals no longer are confident they can get away with stealing millions of dollars from federal taxpayers by simply stealing personal identification information and filing tax returns with phony income and deduction amounts.

“The effort we undertook,” said Acting U.S. Attorney Lee Bentley, “has reaped dividends. Tampa is no longer the source of more fraudulent tax returns than any other city in the United States.”

Also vanished are the battles between law enforcement agencies, pitting police against IRS criminal investigators and the IRS at large, that were seen as obstacles to fixing the problem that washed like a tsunami over Tampa area streets.

Now officials talk in glowing terms of the “alliance” assembled by Jim Robnett, who was sent to Tampa in the summer of 2012 to take over the local IRS criminal investigation office and clean up the mess.

“Jim Robnett and his group just turned this around,” said Tampa Police Department Sgt. Pat Kennedy.

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Authorities say other changes helped rein in the fraud, including a 2012 Justice Department directive that sped up federal tax fraud investigations, which used to take months to get approval and now can proceed within a few days. The department recently eliminated a “sunset” provision in the directive that would have ended the expedited review process in October. The end of the sunset provision means the new process will continue indefinitely.

Bentley says the directive enabled his office to amp up prosecutions, going from about a dozen in 2012 to about 100 last year.

The steady stream of prosecutions, including some high-profile cases that resulted in long prison sentences — 21 years in one well-known instance — also has sent a message to criminals, officials say, that they no longer can count on getting away with the fraud.

And although the IRS will not discuss specifics, the agency says it has increased the filters it has on incoming tax returns in an effort to screen out fraudulent filings and prevent bogus refunds from being sent to criminals in the first place. Local law enforcement officials say they are seeing the results.

Last year, Tampa area U.S. Postal Service inspectors intercepted 34,000 suspicious pieces of mail associated with fraudulent refunds, according to Postal Inspector Doug Smith. In 2012, that number was 126,000.

“From 2011 through November 2013, the IRS has stopped 14.6 million suspicious returns and protected over $50 billion in fraudulent refunds,” said IRS spokeswoman Julianne Fisher Breitbeil. “For 2014, the IRS will continue to increase both the number and efficiency of the identity theft filters.”

One change expected to make a big difference this year is a new state law that makes it easier to arrest people found with other people's personal information for identity theft. The law was changed partly in response to a joint investigation by The Tampa Tribune and News Channel 8, which reported police were routinely forced to release suspects they found with ledgers, as well as medical and financial business records filled with other people's names, dates of birth and Social Security numbers. Now, someone found in possession of identity information of at least five other people without permission can be charged with a felony.

Robnett called the new law “a big deal.”

The enhanced ability to arrest suspects as soon as they are found in possession of other people's information, he said, gives law enforcement a better chance to build a bigger case. The defendants could be handed over to the federal courts for prosecution or could just be prosecuted on the state identity theft charge. The end result, he said, should be more prosecutions, meaning more deterrence and better morale for police and deputies who no longer have to let bad guys go.

“We don't know yet, but it's our hope that that's a game changer,” Robnett said. “It will bring a person in so that we can talk to them about where they got the information, and it can help spread the prosecution burden from what you've seen primarily federal to both federal and state, so we really can do more cases this way that relate to ID theft.”

Robnett said he also thinks an initiative to reach victims and witnesses through Crime Stoppers will reap dividends by helping victims reach law enforcement and encouraging more investigative leads from the public.

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There are abundant signs the criminals are no longer as flagrant and active as they once were, but no one is ready to declare the war won, and authorities acknowledge much works needs to be done.

Among the areas for improvement:

♦Continuing fraud. As the inspector general report said in September, “Detection has improved; however, identity theft continues to result in billions of dollars in potentially fraudulent tax refunds” nationwide. Indeed, in addition to the billions of dollars still being stolen from federal taxpayers by U.S.-based thieves, the report found evidence of hundreds of thousands of dollars in potentially fraudulent refunds sent to addresses overseas, including to Bulgaria, Lithuania, China and Ireland.

♦Debit cards: The IRS inspector general has warned the agency since at least 2008 that the way it allows tax refunds to be electronically deposited onto debit cards makes it easier for thieves to steal from the government. Using the cards, thieves can open what look like bank accounts, without the usual identification requirements or monitoring, for multiple refunds that can then be cashed, also without identification. The IRS is unable to distinguish between debit cards and other types of bank accounts.

Law enforcement officials in the Tampa area say the vast majority of fraudulent refunds they come across are deposited via debit cards. The September inspector general report hammered the IRS for failing to heed repeated calls to address the issue. Bentley said fixing that issue “would make our job much easier.”

♦Verifying financial information on tax returns. One problem for the IRS is that employers aren't required to send W-2 information to the government until March 31, after most people due refunds already have filed their tax returns. This makes it impossible for the agency to match up the information with tax returns before sending out most refunds. The inspector general, and to some extent the IRS, repeatedly has called on Congress to change the law to allow real-time income verification, which the inspector general says would make the biggest dent in refund fraud.

♦Authenticating taxpayers' identities when they file returns. “It remains a challenge for the IRS to authenticate taxpayers,” the inspector general wrote in his September report. The watchdog has urged the IRS to model verification on approaches by credit monitoring agencies and banks where consumers are asked questions such as the names of their first pets or the institution where they got their first car loans.

The IRS has implemented pilot projects, including a pilot program in Florida, Georgia and the District of Columbia, where people can get personal identification numbers for filing their taxes. The pilot program requires consumers to answer a series of questions in order to obtain the PINs.

♦IRS budget. As the agency struggles to help identity theft victims and investigate fraudulent returns, along with its other responsibilities, Congress has cut the IRS' budget by nearly $1 billion. IRS Commissioner John Koskinen recently told a House subcommittee that the budget issues are serious. “We are understaffed,” he said. “And it means that people are working harder, trying to do their best, but it means ultimately that we're not performing as well. ... To some extent, you get what you pay for.”

In spite of the challenges, however, local officials are optimistic about their ability to meet the challenges. “I think we finally reached a place where our office, the state attorney's office and state, local and federal law enforcement know how to fight the problem,” said Bentley, “and we're doing it with a measure of success. But we can't let up, because these crimes are still being committed, and everyone needs to be vigilant with their personal identification information.”

 

esilvestrini@tampatrib.com

813-259-7837

Twitter: @ElaineTBO

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