4 people charged in IRS ID scams

Prosecutors say the group collected $37,000 in fraudulent tax refunds

Three Arizona felons turned prison into a cottage industry for tax fraud, according to indictments filed in federal court last week.

A grand jury accused two ex-convicts and a current stateprison inmate of filing false tax returns in the names of 22 prisoners and collecting about $37,000 in refunds from 2009 to 2012.

Federal prosecutors say Michael Egger, Joseph Murray and Samuel Hamilton supplied names, Social Security numbers and birth dates of inmates to a Gilbert woman who filed nearly all of the false returns.

Kristi Marie Ramsey is charged with multiple counts CALL 12 FOR ACTION of conspiracy and filing false returns. Prosecutors say she filed the tax returns electronically and directed refunds to be wired to pre-paid debit cards created in the names of inmates.

The indictments allege the tax returns were for relatively small amounts, most often claiming income of $7,000 from work as household help. Each of the returns requested earned-income tax credits under federal stimulus programs, authorities said.

The returns each claimed $400 under the Making Work Pay tax credit and $1,000 under the American Opportunity credit, according to the indictment. The biggest refund was for $1,857 and the smallest was for $1,350.

The returns did not include W2 forms or any federal withholding, authorities said.

The indictments are the latest accusations of tax fraud involving identity theft. Officials with the Internal Revenue Services say that identity theft involving tax returns is one of their top concerns.

More than 3,000 IRS employees are assigned to working on identity-theft cases, more than twice the number that worked such cases in 2012, the IRS says on its website.

“Nearly 500 people have been indicted across the country. From October 2012 through March 2013, there have been more than 670 criminal identity theft investigations opened,” the IRS website states. “The criminals being sentenced are spending an average of four years in custody with sentences as long as 20 years.”

It warns the public about potential indications of identity theft, including: multiple tax returns filed in the same name; a balance due, refund offset or collection actions taken in a year no tax return was filed; did not file a tax return; IRS records indicate more wages than actually earned; and reductions or cancellations in state or federal benefits.

“Stopping refund fraud is a top priority for the IRS. Our agency is more proactive with these cases and is benefiting from the cooperation provided by prison officials,” said Brian Watson, spokesman for the Internal Revenue Service Criminal Investigation division in Phoenix.

Taxpayer ID thefts typically involve refund requests using another person’s Social Security number. Many times, the fraudster files taxes before the actual taxpayer and diverts refunds to his or her own address.

That sometimes can leave legitimate taxpayers waiting for six months or more while the IRS investigates.

It is unclear if the 22 prisoners involved in the cases against Ramsey and the other defendants participated or if they were victims themselves.

All four defendants have criminal histories. Hamilton is the only one currently incarcerated at the Arizona State Prison Complex in Florence, on drug and assault charges. He Call 12 for Action’s consumer-savings total so far in 2013. could be confined until 2018 on his current charges.

Arizona Department of Corrections records show Egger was sentenced on forgery and theft in 2006 and was released in 2011. Murray was sentenced on drug charges in 2010 and released in 2012.

Court records show Ramsey has been arrested and convicted on drug, forgery and badcheck charges.