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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 whoever57 (658626) on Friday February 10, 2012 @08:37PM (#39001961) Journal

    In America...
    you tax IRS!

  • Crucify him!

  • Cheaters (Score:3, Funny)

    by Nidi62 (1525137) on Friday February 10, 2012 @08:40PM (#39001971)
    They don't just try to cheat us, they try to cheat each other!
  • by Anonymous Coward

    I bet he won't be punished NEARLY as bad as the megaupload guy. Such bullshit.

    • Re: (Score:1, Troll)

      by tomhudson (43916)
      Steal a million, go to jail. Steal hundreds of billions ...
      • you're a conqueror. Steal it all . . .
      • Steal hundreds of billions ...

        I object to your terminology here. That's called "tax", not "steal". ~

        • by tomhudson (43916)

          Oops - I guess I should have made it clear that I was referring to that "other tax" - the wall street bailouts. My bad!

          Trickle-down doesn't work, you'd think the government would realize trickle-up doesn't either.

          • Don't worry, I'm not a libertarian; and I got the idea just fine. It was just too tempting to not poke fun at it that way.

    • by sco08y (615665)

      I bet he won't be punished NEARLY as bad as the megaupload guy. Such bullshit.

      How can you get so angry at something you speculate is going to happen?

      But there's no need to bet, it's in the fucking summary. 105 weeks in prison, after a guilty plea. The megaupload guy is fighting it, which means he might get off entirely, or they might slam him, so the two sentences won't be comparable.

      • Re: (Score:2, Informative)

        by Anonymous Coward

        105 MONTHS in prison, not weeks. Just a bit shy of 9 years.

      • by timeOday (582209)
        You know, as much as I would not like to waste 2 years of my life in prison, I think I'd be even more worried about the rest of my life, as a felony convict. In these days of less-than-full employment, it's not like you can just rider over the next horizon and start over. Convicted felons are truly screwed for life employment-wise. They can't even get food stamps.
  • by mark-t (151149) <markt@@@lynx...bc...ca> on Friday February 10, 2012 @08:50PM (#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?

    • Say they stopped at $6 million. That is enough to get a new false identity or move to a country without extradition. After watching Top Gear I'd settle on Vietnam. Looks beautiful and friendly and has no diplomatic or extradition treaties.

      • Re: (Score:3, Insightful)

        by Anonymous Coward

        After watching Top Gear I'd settle on Vietnam. Looks beautiful and friendly and has no diplomatic or extradition treaties.

        Everywhere looks "beautiful and friendly" when you've got a massive production team running around making sure everything goes smoothly (and an editing team for when things don't).

    • Re: (Score:3, Insightful)

      by izomiac (815208)
      The best criminals are smart enough to make it look like a crime never occurred, and there are probably a fair number of these (not an extraordinary number, there are lucrative "honest" lines of work for smart people). This guy probably though he could pull that off.

      The article isn't too explicit on the details, but it sounds like he used his position and expertise to identify 29 people who were [dumber: weren't] eligible but didn't file [dumber: yet] for substantial tax returns. Then, he used the data
      • by epine (68316) on Saturday February 11, 2012 @03:30AM (#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.

        • > Nobody got hurt.

          Hmm. I cheated once at school and it almost wrecked my future. I wasn't caught, and it sent me on a path that I wouldn't have gone down if I hadn't have cheated. I was taking a Chemistry exam aged 14 and due to overcrowding, the exam was in a regular classroom rather than the gym. The assistant music teacher was running the show and as he had really bad eyesight it was just too easy to look through books in my bag for answers. A month later, the results came out and I hit 90% - almost t

    • by decora (1710862) on Friday February 10, 2012 @10:31PM (#39002543) Journal

      1. a lot of financial institutions would rather not it be public knowledge that they have problems in their security systems, etc. they try to hush things up without getting the cops involved.

      2. the cops sometimes will collude with them to hush things up. see 'The Asylum' by Leah McGrath Goodman and NYMEX (yes, NYMEX from Trading Places)

      3. at the highest echelon, the notion of what is legal and illegal gets distorted and fooled with, by lobbyists, payed-for intellectuals, and the super rich. so that to date there has been little-to-no prosecution of the people in the CDO, mortgage securities, robo signing, foreclosure fraud, and housing bubble system. experts and authors like Roger Lowenstein spill buckets of ink trying to prove that no crime took place, even though 2 trillion dollars magically disappeared into hedge funds and investment banks offshore accounts in 2008, with the help of the taxpayer.

      4. take number 3 and just ... multiply it. well. did you know, for example, that the guy who ran Nymex was, directly before he ran Nymex, the head government regulator of Nymex? And that he let Nymex do stuff that it shouldn't have been doing, and then they hired him out of his government job and gave him a huge raise? there are thousands of cases like that that never receive media attention.

      in other words, people DO get away with that sort of thing, all the time.
      and the best way to get away with it is to have something like 'CEO' or 'Board Chairman' on your resume.

      • Re: (Score:2, Insightful)

        by Anonymous Coward

        FWIW, being a lowly anonymous coward: I worked for large multinational bank, and low-level petty thieves in the system (trying to cash checks under stolen identities, steal money orders, etc.) are *always* dismissed without police prosecution. Furthermore, this is widely known amongst employees, some of whom attempt to take advantage of the PR-shy policy. But there are massive amounts of checks and balances between multiple departments and heavy security to try to guard against loss as much as possible, ma

    • by Tharsman (1364603)

      It's naive to think that having most prosecutions convicted means most occurrences even get prosecuted.

      Most crimes of this type never get caught. Heck, no one even finds out they happened in the first place.

    • by rachit (163465) on Friday February 10, 2012 @11:15PM (#39002701)

      You know, there is never just one cockroach...

    • You kind of answered your own question, hoss. It's not like murder, where someone doesn't show up to work and so police KNOW a crime has been committed: financial crimes are successful when the "victim" institution simply doesn't know the difference. It's especially the case where the amount being stolen is large on the scale of the individual, but small on the scale of the transaction/company ledger (i.e. an "office space" scam), which makes it easier for the ledger to be doctored, or at least for transact
    • DBCooper. Nuff said. *micdrop*
      • by mark-t (151149)
        I didn't say it never happens... it just seems to happen very rarely that people who break the law manage to do so with enough competence that, although you don't necessarily abide what they did, you can at least respect that they had definitely considered all the possible angles.
  • Dumb plan (Score:4, Informative)

    by tukang (1209392) on Friday February 10, 2012 @08:50PM (#39002043)

    According to the DOJ, Richardson admitted that the tax returns were prepared without the authorization of the 58 taxpayers listed on the tax returns. All of the returns directed that the IRS pay the money to one of Richardson's bank accounts.

    I imagine a red flag was automatically triggered by the 58 returns going to one bank account. As a side note, I know people who write code for the Federal government that checks for irregularities like this and they do that for a living 40 hours a week, so if you're going to try to scam the IRS you have to be at least a little clever.

    • Re: (Score:2, Informative)

      by Gr33nJ3ll0 (1367543)
      I think you need to read that a little closer. It says bank accountS as in plural. Surprisingly a guy who was attempting to defraud the IRS from the inside was smart enough to open more than one account.
      • by tukang (1209392)
        It also says "one of", which they could have just left out if they meant that the money went to multiple accounts. Regardless, triggering a red flag on 58 returns going to one account owner (as opposed to one account) is just as trivial.
    • by Sir_Sri (199544)

      The red flag might have been a single employee doing a particularly large (or small) number of returns or returns of the wrong general value, in a 2 day period. Granted at 59 returns it's 130k per return, but that would mean this guy happened upon 59 filings from the top 1% of wage earners (the top 1% in the US now is around 300k/year in income so for 2005 tax returns paying out 130k should be relatively rare, unless you work on those, and if you work on the ones with big money I'd expect you to get more

    • by w_dragon (1802458)
      Maybe this doesn't exist in the US, but here we have places that advertise 'we do your taxes, you get your refund right away'. I assume that they do your taxes, give you the cash minus a fee, and set your refund to be deposited in their account. If that type of business exists then it wouldn't throw up any flags to have a bunch of returns done at once going to the same account.
  • by v1 (525388) on Friday February 10, 2012 @08:53PM (#39002055) Homepage Journal

    Richardson used his inside knowledge of IRS operations to commit his crime,

    So I wonder what aspect of "insider knowledge" he used? Logins and passwords? back doors? social engineering? test accounts? phone numbers to helpful clerks that don't think about what they're being asked to do? secret URLs?

    Is there a back door that anyone with similar "insider knowledge" can use, that's not a hole that's closable with say a simple password change? (has the hole been closed?)

  • IRS (Score:2, Offtopic)

    by roman_mir (125474)

    What this agent did was actually a minor correction of the fraud and crime that IRS is involved with on the daily basis. [slashdot.org]

    • by roman_mir (125474)

      A little typo: I don't mean to imply that identity theft is a 'correction' of the IRS fraud, only that what IRS does on daily basis is fraud [slashdot.org] and this guy is just a small part of that entire fraudster operation.

  • by sootman (158191) on Friday February 10, 2012 @09:22PM (#39002221) Homepage Journal

    Wow. That's like... four illegal downloads!

  • Glad to see /. sticking to their slogan of "news for nerds".
    • by Sir_Sri (199544)

      The thrust of the article is actually about the privacy concerns the IRS has, and this is the sort of thing that can go wrong. So it is topical, if you look past the summary.

    • Nerds are by their very natures polymaths. We like to stick our curious little noses in a lot of things people wouldn't expect us to be interested in.
  • by NotQuiteReal (608241) on Friday February 10, 2012 @09:57PM (#39002403) Journal
    Hypothetical, say you are a criminal, but want to avoid the fate of Al Capone and get busted for not paying your taxes. Can you use the capital gains rate if you have some sort of fraud that takes more than a year for the payoff?

    The best would be some sort of crime that pays off after the statute of limitations, and you only have to pay the lower capital gains rate. Win Win Win!
    • by hawks5999 (588198)

      Launder the money through a car wash. If you don't know how to do that... Better Call Saul.

  • TFA says all 58 returns directed money be deposited into one of the guy's bank accounts. Derp
  • Not bad, it would seem white collar crime really does pay.

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