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IRS Employee Stole Data To Forge $8M In Fraudulent Returns 151

Posted by timothy
from the but-they-love-you-at-heart dept.
coondoggie writes "A former Internal Revenue Service employee this week got 105 months in prison for pleading guilty to theft of government property and aggravated identity theft in a case where the guy tried to get away with nearly $8 million in fraudulent tax returns. The U.S. Department of Justice said Thomas Richardson used his inside knowledge of IRS operations to commit his crime, which was pretty audacious. According to the DOJ, Richardson admitted that within a two-day period, April 15 to April 17, 2006, he filed or caused to be filed 29 fraudulent 2005 individual income tax returns totaling $7,922,657."
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IRS Employee Stole Data To Forge $8M In Fraudulent Returns

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  • by mark-t (151149) <markt@ l y n x.bc.ca> on Friday February 10, 2012 @07:50PM (#39002039) Journal

    ...that the people who do this kind of crap somehow genuinely figure that they won't ever be found out.

    Why is it that you so rarely hear about crimes where the feds haven't been able to actually figure out who actually did it?

  • by subreality (157447) on Saturday February 11, 2012 @01:46AM (#39003271)

    ...isn't that implicit approval that what you did was legal?

    No, that's implicit approval that you didn't also commit tax evasion.

    The rulings are pretty self-consistent. You can even deduct the expenses for your illegal business:

    "While embezzlers, thieves, and the like are forced to report their ill-gotten gains as income for tax purposes, they may also take deductions for costs relating to criminal activity. For example, in Commissioner v. Tellier, a taxpayer was found guilty of engaging in business activities that violated the Securities Act of 1933.[7] The taxpayer subsequently tried to deduct from his gross income the legal fees he spent while defending himself.[8] The Supreme Court held that the taxpayer was allowed to deduct the legal fees from his gross income because they meet the requirements of 162(a).[9], which allows the taxpayer to deduct all the “ordinary and necessary expenses paid or incurred during the taxable year in carrying on a trade or business.”[10] The Court reasoned (and the Internal Revenue Service did not contest the point) that it was ordinary and necessary for a person engaged in a business to expect to have legal fees associated with that business, even though such things may only happen once in a lifetime.[11] Therefore, the taxpayer in Tellier was allowed to deduct his legal fees from his gross income, even though he incurred the fees because of his crime. The Tellier court reiterated that the purpose of the tax code was to tax net income, not punish unlawful behavior.[12] The Court suggested that if this was not the case, Congress would change the tax code to include special tax rules for illegal conduct.[13]" -- https://en.wikipedia.org/wiki/Taxation_of_illegal_income_in_the_United_States [wikipedia.org]

  • by epine (68316) on Saturday February 11, 2012 @02:30AM (#39003397)

    This is the perfect crime for an early season of the Sopranos, which featured several episodes where "degenerate" businessmen engaged in acts of crime they couldn't refuse. One involved an executive at an HMO, another involved a sporting gear franchise. Difference is that the screenwriters probably weren't bold enough to make this one up.

    And, for those wanting his head, it wasn't a horrible crime. It's stealing, since it's not his money, but the victim is hard to identify ...

    David Rose on the Moral Foundations of Economic Behavior [econtalk.org] in which he discusses his new book by that title.

    From the very loose transcript (my emph.):

    [W]hat is required to live that way, doesn't require twenty hours of schooling. It requires many years of continuous reinforcement in order to build the character to produce the moral conviction behind a belief, but the beliefs themselves are pretty simple. Don't do stuff, don't do negative moral actions. Just don't do them; and just because nobody gets hurt, that doesn't mean you can do it, either. Because it's not about the person who is getting hurt or not hurt; it's about you. If you steal, even though nobody gets hurt, you are still a thief. So don't do it. Period. Don't even consider it. Don't even run it up the flagpole. That's not that complicated. And then secondly, if somebody says to you that you should do something that you know is wrong but it's okay to do it because there's this other good thing over here that you can make happen if you do otherwise, you need to realize that that is the language of a charlatan, that that is inappropriate, that you are being sucked in.

    By the time you start rationalizing about the diffuse nature of the victim, moral laxity is already half-way up the flag pole.

    David Rose knows your type:

    The amount of cheating has never been zero, of course, but it has gone up dramatically in the last 25 years. Moreover, in the past when you asked students why they cheated and they explained why they cheated, they almost never excused the cheating; they never downplayed the moral import of it. They would say it was wrong but they had to do it. Today, though, increasingly--I don't remember the proportion but it's a shockingly high proportion--most of them report cheating at least once; and a shockingly high proportion of those who report cheating at least once say: What's the big deal? In other words, they make an argument that is very consistent with the absence of principled moral restraint. Because their argument is: I cheated; so what? Nobody got hurt. I didn't take anything from anybody. Nobody's worse off. Teacher's not worse off; I'm certainly not worse off; nobody in the class is worse off; what difference did it make? And the answer of course is, at that margin it makes no difference at all. But my point is that it's indicative of a shift in moral beliefs themselves, the way we organize our thoughts, and it's very frightening.

  • Re:Cheaters (Score:4, Interesting)

    by ScentCone (795499) on Saturday February 11, 2012 @09:36AM (#39004489)

    i didn't know there were that many people living on capital gains.

    OK, so you hate people who've risked money making investments. We get that. But do you really think everyone else is so stupid to think you're saying anything of substance? Roughly 50% of the population earns money below the rate that the Congress has set as meaning they owe incomes taxes, and many of them receive "refunds" on money they don't even pay. They don't pay income taxes, they pay negative income taxes. A small number of rich people pay the vast majority of the country's income taxes, and middle class people pay the bits that are left over. The other half of people pay none. Of course you know that, and you're a troll.

  • Re:Cheaters (Score:4, Interesting)

    by ScentCone (795499) on Saturday February 11, 2012 @09:45AM (#39004525)

    A wealthy person only spends a tiny fraction of their income.

    And when they do, it's on stuff that is taxed much more aggressively than things like rent, food, and utilities. The rich guy is also paying, usually, mammoth amounts of property tax, and will usually have a very large chunk of his assets gobbled up as a death tax.

    If you're worried about percentages, why aren't you proposing that all of the other things in life - not just the cost of having a government - are also "regressive" in the way you've chosed to describe things? A bag of chips at the store is also regressively priced, relative to income, isn't it? Outrageous! Unfair!

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