A South Florida federal judge sentenced a 29-year-old North Miami man last week to 38 months in prison, followed by three years of supervised release, for his role in a sophisticated tax fraud scheme. In addition, the defendant was ordered to pay $454,121.72 in restitution.
From 2012 to 2015, the defendant used stolen information of hundreds of victims to electronically file fraudulent tax returns in their names. In several instances, the same victims' names were used to filed fraudulent returns year after year. The defendant masked his own identity through sophisticated means, including using virtual private networks (VPNs) to hide his internet protocol (IP) address from IRS servers. During the course of the scheme, the defendant filed thousands of fraudulent tax returns and claimed approximately $1.5 million in tax refunds. The IRS was able to detect and stop roughly $1 million of the fraudulent payouts, but paid the defendant about $454,121.72 in fraudulent refunds.
The majority of the fraudulent refunds were deposited into bank accounts that the defendant admitted were opened in the names of victims of identity theft. The defendant also admitted to controlling these accounts and withdrawing funds for his own benefit.
The Cyber Crimes Unit of the IRS-Criminal Investigation (CI) investigated the case. IRS-CI created the Cyber Crimes Unit in 2014 to address the increase in tax crimes that contain cyber components—especially those related to internet fraud, identity theft, and related crimes. IRS-CI's Cyber Crimes Unit investigates internet-based technologies that enable criminals to engage in illegal activity.