Danielle Denson said she didn’t even know she was supposed to report her income from exotic dancing to the IRS.
Yet she filed hundreds of fraudulent tax returns claiming more than $1 million in federal refunds.
On Thursday, U.S. District Judge Susan Bucklew sentenced Denson, 27, to six years and four months in federal prison, followed by three years of probation. The judge also ordered Denson to pay $1.6 million in restitution to the IRS.
“We have got to be really dumb, and I’m saying that to the IRS, that we don’t catch on for what – 1, 2, 3, 4 years?” Bucklew said.
Her attorney painted Denson as the victim of a hard life who was caught up in a widespread fraud that seemed a way out of poverty. The prosecution, though, said she was known as a “pioneer,” one of those who early on figured out how to steal from federal taxpayers.
Assistant U.S. Attorney Mandy Riedel said Denson organized “drop” parties where people exchanged stolen identifying information and filed fake tax returns to con the government out of fraudulent tax refunds.
One of the people whose identities was stolen, Megan Schoenherr, is a 27-year-old with severe autism who lives in an assisted living facility, according to her mother, Jackie. She told the judge she wanted Denson to receive the maximum sentence possible.
Finding out about the fraud, Schoenherr said, “has affected me and my family just as bad as when (Megan) was diagnosed with autism.”
Denson’s lawyer, public defender Jenny Devine, said Denson was abused by her father after her mother died of AIDS.
Schoenherr said this was “an excuse.” Schoenherr said she was severely abused as a child, also, and has held the same job for 29 years. She called Denson “the lowest of the low to prey on a disabled person or any person for that matter. She knew exactly what she was doing.”
Denson apologized and said she didn’t know the victims whose names she used. “Ninety percent of what I did, I didn’t know those people,” she said. “And it’s something I’ll never do again. “
Denson said she didn’t pay taxes on the money she earned legitimately as a dancer, “but I didn’t feel I had to.” She said she learned only a year ago that she was supposed to file a tax return on her earnings.
“What did you think the IRS did?” the judge asked incredulously. “Just give money back? Yet you were filing hundreds of tax returns? I have a hard time believing that.”
“I know it sounds crazy,” Denson responded.
Devine said Denson successfully completed 323 fraudulent tax returns, receiving about $300,000 from the IRS, less than the government said. Devine said the fraud was “very unsophisticated (and) very prevalent… It was not something they felt deterred from doing. It was, unfortunately, very empowering for them because it put them into a lifestyle they’d never been in before. She did use the money to go shopping. She did a lot of that.”
Denson, however, said reports that Denson purchased an expensive Gucci thong weren’t totally accurate. The purchase was actually thong footwear, not underwear, the lawyer said.
“I’m not sure why it’s better to spend $350 on Gucci flip flops than underwear,” Riedel said.
The prosecutor said Denson didn’t just steal money to survive but financed a lavish lifestyle, with a brand new Mercedes and other perks. She had frequent-user cards for the Hard Rock Casino, where she spent over $300,000 in 2007, and at Gucci, where she spent $14,000.