Christopher Zoukis's Blog - Posts Tagged "fraud"
Ex-convict Uses IDs of 700 Inmates to Gain $600K in Bogus Tax Refunds
Two California men are awaiting sentencing for claiming fraudulent tax refunds made with the names and identification information of more than 700 jail and prison inmates.
On Jan. 24, a jury in a federal case in California convicted Howard Webber, a 52-year-old ex-convict who has served time in Milwaukee, Santa Clara and San Quentin, of wire fraud, mail fraud and conspiring to commit mail fraud, for his part in the scam.
Webber and accomplice Clifford Bercovich, a 69-year-old disbarred lawyer, set up a bogus firm, Inmate Assets Recovery and Liquidation Services, and Webber signed up inmates incarcerated with him for a service that supposedly could help them obtain government benefits. At least some of the inmates reportedly received $75 from the schemers to provide their identifying information. Using the information, the defendants then filed for bogus tax refunds in the inmates’ names.
Over 700 tax refunds wrongly issued in the names of the inmates went not to the inmates in whose names the refunds were claimed, but instead to mail boxes and bank accounts Webber and Bercovich had set up. Federal prosecutors claimed the pair split more than $600,000 in the approximately two years (2010 to 2012) their scam was running.
The bogus tax returns claimed income from self-employment and took advantage of refundable tax programs like the Earned Income Tax Credit (EITC), the Making Work Pay Credit, or both. Those programs provide for cash refunds to low-to-moderate income taxpayers, even those not earning enough to owe taxes.
The programs have often been criticized as fraud-prone. The inspector general for the Internal Revenue Service has estimated over one-fifth of EITC payments are improperly issued, though defenders of the credit argue that payments can be deemed improper without being fraudulent. They also point out government officials estimate at least 3.5 million, and perhaps as many as 7 million, taxpayers who meet the standards for EITC payments do not file for them.
From a modest start in 1975, the EITC program has been repeatedly extended and expanded, and now is one of the federal government’s largest anti-poverty programs. Many states have also added similar programs to their tax laws. The program paid out more than $7 billion to about 29 million families in 2014. Even so, the EITC program is the only one at IRS which White House budget officials have designated as “high-risk.”
As a result, Congress has ordered a slowdown of refund payments to EITC claimants, to allow more time for checking for fraud or identity theft. The IRS says in 2014 it paid out $3.1 billion to identity thieves who filed fraudulent returns, down from $5.8 billion in 2013. During those two years, the agency says it detected and blocked payments on almost $47 billion in fraudulent claims for refunds.
Webber’s accomplice, Bercovich, pleaded guilty in December to conspiracy, mail fraud and aggravated identity theft charges. He initially persuaded the trial court he could not be charged with aggravated identity theft, since the identity information had been voluntarily provided. But a three-judge panel of the federal appeals court in San Francisco disagreed and reinstated that charge.
On Jan. 24, a jury in a federal case in California convicted Howard Webber, a 52-year-old ex-convict who has served time in Milwaukee, Santa Clara and San Quentin, of wire fraud, mail fraud and conspiring to commit mail fraud, for his part in the scam.
Webber and accomplice Clifford Bercovich, a 69-year-old disbarred lawyer, set up a bogus firm, Inmate Assets Recovery and Liquidation Services, and Webber signed up inmates incarcerated with him for a service that supposedly could help them obtain government benefits. At least some of the inmates reportedly received $75 from the schemers to provide their identifying information. Using the information, the defendants then filed for bogus tax refunds in the inmates’ names.
Over 700 tax refunds wrongly issued in the names of the inmates went not to the inmates in whose names the refunds were claimed, but instead to mail boxes and bank accounts Webber and Bercovich had set up. Federal prosecutors claimed the pair split more than $600,000 in the approximately two years (2010 to 2012) their scam was running.
The bogus tax returns claimed income from self-employment and took advantage of refundable tax programs like the Earned Income Tax Credit (EITC), the Making Work Pay Credit, or both. Those programs provide for cash refunds to low-to-moderate income taxpayers, even those not earning enough to owe taxes.
The programs have often been criticized as fraud-prone. The inspector general for the Internal Revenue Service has estimated over one-fifth of EITC payments are improperly issued, though defenders of the credit argue that payments can be deemed improper without being fraudulent. They also point out government officials estimate at least 3.5 million, and perhaps as many as 7 million, taxpayers who meet the standards for EITC payments do not file for them.
From a modest start in 1975, the EITC program has been repeatedly extended and expanded, and now is one of the federal government’s largest anti-poverty programs. Many states have also added similar programs to their tax laws. The program paid out more than $7 billion to about 29 million families in 2014. Even so, the EITC program is the only one at IRS which White House budget officials have designated as “high-risk.”
As a result, Congress has ordered a slowdown of refund payments to EITC claimants, to allow more time for checking for fraud or identity theft. The IRS says in 2014 it paid out $3.1 billion to identity thieves who filed fraudulent returns, down from $5.8 billion in 2013. During those two years, the agency says it detected and blocked payments on almost $47 billion in fraudulent claims for refunds.
Webber’s accomplice, Bercovich, pleaded guilty in December to conspiracy, mail fraud and aggravated identity theft charges. He initially persuaded the trial court he could not be charged with aggravated identity theft, since the identity information had been voluntarily provided. But a three-judge panel of the federal appeals court in San Francisco disagreed and reinstated that charge.
Massachusetts May Toss Thousands of Convictions for Drug Test Fraud
Annie Dookhan, a chemist working for a Massachusetts state drug-testing laboratory, was paroled last year after serving nearly three years in a state prison for her admitted perjury and evidence tampering in state-prosecuted cases.
Now state prosecutors, responding to an order from the state’s highest court, the Supreme Judicial Court, have dismissed 21,587 of the more than 24,000 criminal convictions linked to Dookhan’s unreliable court testimony and drug-testing reports.
In the largest-ever case of its type, Dookhan pleaded guilty to more than two dozen counts of tampering with drug samples, falsifying lab reports, and misleading investigators during the nine years she worked at a drug-testing lab run by the state’s Department of Public Health.
In some cases, Dookhan apparently did no actual testing, but still issued reports that samples submitted by police or prosecutors in fact contained controlled substances. In some cases, Dookhan signed reports not only for herself, but for other staffers who were supposed to supervise or confirm her work. Contrary to lab rules, she also took calls from police, who told her what drug they expected would be found in the samples they had sent her.
When Dookhan’s mishandling of samples, faked reports and other misconduct came to light in August 2012, the large number of cases potentially involving false evidence raised serious problems not just for defendants who may have been wrongfully convicted, but also for courts, prosecutors and public defenders.
Advocates, including the national American Civil Liberties Union and its state chapter, sought for several years across-the-board overturning of convictions in cases tied to evidence processed, or testimony given, by Dookhan.
Last year, the state’s high court declined, but ordered state district attorneys to winnow down the list of nearly 24,000 convicted in such cases to show which the prosecutors thought strong enough to be retried, without Dookhan-provided evidence. About 60% of those convicted with Dookhan’s assistance faced only minor charges for drug possession, and many have already completed their sentences. Prosecutors had earlier tried, but failed, to persuade the court to leave persons convicted in any of the cases to pursue individual legal remedies, at their own expense, with separate consideration of each case.
In January, the court ordered seven district attorneys to finalize their lists of cases from their districts they view as worth prosecuting again, and submit by April 18.
The approximately 2,500 cases the prosecutors opted to keep exceeds earlier estimates, which suggested fewer than 1,000 of the cases would survive. But the state court has the last word, since it reserved the right to dismiss additional cases if it thought prosecutors plan to re-file an unreasonably large number of cases.
The Dookhan scandal illustrates the dangers of relying on drug-testing labs, liked the one where Dookhan worked, which have few or no certification requirements, minimal training and lax supervision. One misdemeanor charge against Dookhan was that she had misstated her professional credentials, claiming a nonexistent master’s degree — a falsehood which went undetected by her employer.
In another drug-testing lab in the state, at about the same time as Dookhan’s misconduct, supervisors similarly failed to detect serious, long-running violations by another chemist – including stealing drug samples, smoking drugs in the workplace, and using the lab to manufacture crack cocaine.
Now state prosecutors, responding to an order from the state’s highest court, the Supreme Judicial Court, have dismissed 21,587 of the more than 24,000 criminal convictions linked to Dookhan’s unreliable court testimony and drug-testing reports.
In the largest-ever case of its type, Dookhan pleaded guilty to more than two dozen counts of tampering with drug samples, falsifying lab reports, and misleading investigators during the nine years she worked at a drug-testing lab run by the state’s Department of Public Health.
In some cases, Dookhan apparently did no actual testing, but still issued reports that samples submitted by police or prosecutors in fact contained controlled substances. In some cases, Dookhan signed reports not only for herself, but for other staffers who were supposed to supervise or confirm her work. Contrary to lab rules, she also took calls from police, who told her what drug they expected would be found in the samples they had sent her.
When Dookhan’s mishandling of samples, faked reports and other misconduct came to light in August 2012, the large number of cases potentially involving false evidence raised serious problems not just for defendants who may have been wrongfully convicted, but also for courts, prosecutors and public defenders.
Advocates, including the national American Civil Liberties Union and its state chapter, sought for several years across-the-board overturning of convictions in cases tied to evidence processed, or testimony given, by Dookhan.
Last year, the state’s high court declined, but ordered state district attorneys to winnow down the list of nearly 24,000 convicted in such cases to show which the prosecutors thought strong enough to be retried, without Dookhan-provided evidence. About 60% of those convicted with Dookhan’s assistance faced only minor charges for drug possession, and many have already completed their sentences. Prosecutors had earlier tried, but failed, to persuade the court to leave persons convicted in any of the cases to pursue individual legal remedies, at their own expense, with separate consideration of each case.
In January, the court ordered seven district attorneys to finalize their lists of cases from their districts they view as worth prosecuting again, and submit by April 18.
The approximately 2,500 cases the prosecutors opted to keep exceeds earlier estimates, which suggested fewer than 1,000 of the cases would survive. But the state court has the last word, since it reserved the right to dismiss additional cases if it thought prosecutors plan to re-file an unreasonably large number of cases.
The Dookhan scandal illustrates the dangers of relying on drug-testing labs, liked the one where Dookhan worked, which have few or no certification requirements, minimal training and lax supervision. One misdemeanor charge against Dookhan was that she had misstated her professional credentials, claiming a nonexistent master’s degree — a falsehood which went undetected by her employer.
In another drug-testing lab in the state, at about the same time as Dookhan’s misconduct, supervisors similarly failed to detect serious, long-running violations by another chemist – including stealing drug samples, smoking drugs in the workplace, and using the lab to manufacture crack cocaine.
