Two Inmates Charged in Defrauding IRS to the Tune of Millions
Posted: Friday, April 30th, 2010 at 8:14 am
A routine check for contraband at a Monroe County, Florida jail has uncovered a nationwide scam in which prison inmates have been filing fraudulent tax returns, receiving a total of over $1 million in refunds.
According to investigators, the inmates used fake business names, other inmates’ social security numbers—which they sometimes obtained in trade for a pastry—and a master cheat sheet with salary and other figures, in order to fill out 4852 forms. These tax forms are used by employees who do not receive a W-2 form from their employer. The inmates kept their refund totals under $5,000 in an attempt to avoid scrutiny by the IRS.
Two men, accused of spearheading the scam at the Monroe County jail, as well as some of their family members who aided them in carrying it out, were charged last month. Shawn Clark and Danilo Suarez filled out the forms not only for themselves, but also for fellow inmates and relatives. They are charged with filing false income tax returns and conspiracy to defraud the IRS.
In many cases, family members of the inmates would help them to print out the forms and to cash the refund checks. Other times, however, the IRS sent the refund checks directly to the county jail.
The IRS has said that it’s difficult to crack down on the fraudulent filings, due to the fact that some inmates are legitimately entitled to refunds and the fact that the prison population fluctuates so widely.
Yet Monroe County isn’t alone; the same scheme has been perpetrated for decades, at jails and prisons across the country. Investigators say that complicated cheat sheets, with line-by-line instructions on how to fill out the income tax forms, were passed from inmate to inmate.
Some prison authorities are criticizing the IRS, saying that they knew of the scam for years but have not investigated. Even after the officials at the Monroe County jail in Key West handed their records and evidence to the IRS, that agency said it had to conduct its own investigation, rather than hand down indictments based on the information provided by the jail.
The charges filed against Clarke and Suarez come four years after the first evidence of fraud was uncovered in the cell of a Monroe County inmate, and despite the fact that inmates at that facility have been filing false returns, claiming to have held jobs that never existed, since 2004.
The IRS has declined to comment on why it has taken so long to follow up on this matter.
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