Tax fraud growing in Georgia

“Of course I was unhappy,” the Norcross man said. “I’ve never had a problem with my taxes before.”

Trejo learned that his Social Security number had been stolen, not only preventing him from completing his tax return and claiming a possible refund but putting him in debt.

“This happens all over the world,” Trejo, 34, said. “But I never thought it would happen to me.”

It is happening more and more often. The number of criminal investigations initiated by the IRS and the Georgia Department of Revenue has soared in the past year, increasing by nearly 200 federal cases and more than 20,000 state-wide.

“It’s becoming very prevalent,” said Staci Guest, director of the state revenue department’s Office of Special Investigations.

Revenue Department officials detected more than 52,000 fraudulent tax returns in Georgia in the 2010 tax season, halting roughly $41 million in refunds. In 2009, the department found nearly 29,000 cases worth $40 million.

“But we don’t know how much we’re not catching,” Guest said.

Like Trejo, many tax-payers don’t discover they've been a victim until it’s too late.

“One of the fastest ways you can find out about tax fraud is to file your taxes, the IRS says,” said Steve Schwartz, an executive with identity-theft prevention firm Intersections, Inc. “It’s almost impossible to prevent identity theft.”

When the deadline for filing federal taxes approaches each year, authorities see more and more schemes.

“We were getting about 10 a week in January,” said Sgt. Andrew Skelly, head of Gwinnett County Police Department’s white collar crime unit. “We'll get a spike of about 15 to 20 in March and April.”

Schwartz said tax scammers most often exploit stolen Social Security numbers and bank information. Sometimes, however, tax professionals hired to prepare returns run their own schemes.

Cynthia Annette Elliott, a former tax preparer from College Park, is currently serving 10 years in federal prison for stealing more than 100 refund checks and economic stimulus payments. She falsely filed the returns and deposited more than $350,000 into her own checking account.

David Sawyer, an accountant and member of the Georgia chapter of the Association of Certified Fraud Examiners, said finding a reputable tax preparer can help prevent this kind of fraud. He suggests conferring with the Better Business Bureau.

“It’s not necessarily privileged information like you would have with an attorney, but the key is to go to a reputable CPA firm, because there is a heightened level of professional integrity,” Sawyer said.

He also advised using a referral from someone you trust and to ask that preparer who some of his clients are.

The office of the U.S. Treasury Inspector General for Tax Administration has recently required all professional tax preparers to register with the Treasury Department. All preparers will require licensing by 2014.

But even with safeguards, Sawyer, the accountant, said the IRS is overwhelmed each year.

“The problem becomes the volume of tax returns that the IRS has to process,” he said. “They don’t have the time to review all of them. By the time IRS gets to it, a return and the information on it may have been compromised.”

Assistant U.S. Attorney Chris Bly said via e-mail that he didn't know how Michael Romeo St. Romain and Brian Dupree were able to file fraudulent tax returns that netted them more than $475,000 several years ago.

“They included false information, which resulted in refunds that the taxpayers were not entitled to receive,” Bly said.

Only when the duo went back for a second round of scams that would have brought them another $1 million in refunds were theycaught. Both Dupree, of Miami, and St. Romain, of Decatur, are serving four years and nine months in federal prison.

Guest said since the state revenue department beefed up its special investigation unit over the last five years, her 10 examiners have found scammers lifting Social Security numbers from dead people, children and non-Georgians.

“We see people who are first-time filers and they may be suspects,” she said. “We’ll call a [likely] victim and they’ll say, ‘I’ve never lived in Georgia.’”

Identity consultant Schwartz recommended online tax filers use encrypted preparation websites. For those paper filers, he suggested shipping documents with some form of delivery confirmation.

“Don’t just drop it in a mail box,” he said. “Make sure you see someone handle the sealed mail.”

Still, that might not have been enough to stop Jason Shepherd, who was indicted last month for stealing more than 50 money orders totaling about $25,000 in payments made out to the IRS.

The Lithonia man worked as a contractor at a Bank of America lockbox facility in Tucker and allegedly pilfered the money orders, altering them in an attempt to divert them into his account. Shepherd faces up to 30 years in jail.

“Theft of payments processed through lockboxes results in lost tax revenue and can impact a taxpayer's account,” said J. Russell George, the Treasury Inspector General for Tax Administration, whose office oversees the IRS.

Michael Stringer, one of Georgia’s top “takers” in the 2008 tax year when the state found only 15,885 bogus state returns, was indicted by federal judge in November for wire fraud and identity theft. Stringer was caught trying to take nearly $1.4 million in state tax returns from Georgia alone, Department of Revenue’s Guest said.

“But he stole over $560,000 before we caught him,” she said.

Stringer, who was involved in similar tax scams dozens other states, was caught and prosecuted in Hawaii and is in federal prison in Atlanta until 2016.

Schwartz said that foremost, people must remain vigilant.

"You have to protect your information and hope that the people who you give your information protect it," he said.

The advice comes too late for Jesus Trejo. Last week, Skelly’s white collar unit in Gwinnett County arrested 26-year-old Abigael Estrada-Trujill, an illegal immigrant, for using Trejo’s Social Security number for work in Dahlonega.

Trejo, who works two jobs and was expecting a tax refund, still feels vulnerable.

“There’s not really anything you can do,” he said.

20 Tips to keep your information safe during tax season

1. Be wary of calls or e-mails claiming to be from the IRS, no matter what the issue. The IRS will always write you first.

2. Never confirm your Social Security number or bank account information by e-mail or over the phone.

3. Mail is especially attractive during tax time. If you can, have your mail delivered to a post office box.

4. Mail tax returns and sensitive information directly from the post office or shipping store and pay extra for delivery confirmation.

5. If your bank or employer has recently changed or been taken over, be suspicious of calls or e-mails asking you to confirm employment status or tax information.

6. If filing online, stick with a reputable web-based tax preparation service with adequate security measures.

7. Be careful not to misspell the URS of an online service; an error could send you to a fraudulent site that mimics the real one.

8. To learn how to identify a secure website, visit the Federal Trade Commission at

9. Make sure your computer is free of malware or spyware that can copy your personal information.

10. If you keep a copy of your return after filing it electronically, change the file name on computer and save it to an external USB drive or flash drive.

11. Choose your professional tax preparer carefully, by taking referrals from acquaintances or comparing tax preparing companies against Better Business Bureau complaints.

12. Don’t be afraid to ask tax preparers security questions, like how your information is guarded at their offices during and after preparation, how long they will keep a copy of your tax return and whether they conduct background checks on their employees.

13. Closely review your tax return before signing it and giving it back to your preparer. Make sure you’re signing the actual file and not a copy.

14. If you owe money to the IRS, try to pay online through their system. If you have to pay by check or money order, spell out the name “Internal Revenue Service” because it’s harder to forge.

15. Consider using direct deposit as a safer way to receive refunds. Again, thieves more frequently go through mail during tax season.

16. Never e-mail tax information or returns to your accountant. E-mail isn't always secure.

17. If you make paper copies of your return, don’t use a public photocopying machine. Some machines keep copies of pages in short-term memory.

18. Shred any unnecessary documents or copies when tax season is over to prevent dumpster divers from accessing your Social Security numbers or bank account information.

19. Check your credit report immediately after tax time and again a few months later to make sure your personal information wasn’t stolen and isn’t being used without you knowing.

20. Should you suspect fraud, say receiving mail that purports to be from the IRS but seems suspicious, call Georgia’s IRS taxpayer advocate office at 404-338-8099.

Tips provided by the IRS, Intersections, Inc., the Georgia Department of Revenue, and the Better Business Bureau.

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