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Father and Daughter Convicted for $100M Fraudulent Tax Refund Scheme
- drakenot 7y agoI'm surprised at the large sums of money the IRS was willing to send out with essentially zero validation. These people were claiming they had paid the IRS millions of dollars and were due massive refunds, but there is nothing in place to check what the IRS has actually received from individuals before cutting 6-7 figure checks?
- deleted 7y ago[deleted]
- clubm8 7y agoEspecially since... how long did it take them to notice? Hypothetically someone could get these funds into their account, transfer them offshore, flee the country, and probably live out their life in a low cost of living area without extradition. They seem to assume if there's an error they can drag the person into court, but if you have ~3 million you've changed into gold/diamonds/cash it'd be very hard to catch you...
- giancarlostoro 7y agoThe alternative is a system like Google's infamous autobanning. Being jailed because the IRS AI / software says you owe them millions and have refused to pay. All due to some software bug. Great read: https://idiallo.com/blog/when-a-machine-fired-me https://idiallo.com/blog/when-a-machine-fired-me
- OnlineGladiator 7y agoThe alternative is we better fund and support the IRS. If ever there was a government branch that would clearly return more money than invested, it is obviously the IRS.
- scarejunba 7y agoUSA: Issues convoluted tax code so that the only way to do it right is use software. Doesn’t validate results. Everyone else: Just have the government handle tax filing USA: loses 3 million to scammer Everyone else: ... USA: the only other way is auto-banning using AI
- brianwawok 7y agoUSA: makers of tax software donate millions to help politicians run for office Everyone else: don’t allow unlimited donations by corporations to political offices
- apta 7y agoActual solution: don't allow any donations by corporations (or anyone) to political offices.
- Spooky23 7y agoNo the alternative is to fund and allow the agency to be competent. States manage to be much better.
- xyzzyz 7y agoThere are lots and lots of legitimate refunds of this quantity. IRS doesn't have enough resources to look too hard at each one of them, as the wait time for refunds would then be unacceptable.
- m11a 7y agoSure. But a computer can check/crosscheck this. If someone wins a lottery, for example, I imagine the lottery provider has to send an IRS form. A computer can easily crosscheck to see if a form exists with that amount. If not, manual review. Similarly, a simple cross-check to see if the refund is feasible considering the other filings by the same individual/entity. Certain refunds cannot be cross-checked as easily by a computer (eg reclaiming VAT on purchased goods). But basic refund fraud on lotteries? That shouldn't really be a thing in almost 2020.
- xyzzyz 7y ago> Similarly, a simple cross-check to see if the refund is feasible considering the other filings by the same individual/entity. I presume that it's how they ultimately caught them. Overall, I think that while your suggestions obviously make sense, it's probably pretty hard to theorize like this without knowing the reality on the ground. Maybe implementing systems like this is very slow and very expensive (like everything US government does), so we'll need to wait a few more years. Maybe it would result in too many false positives, which would seriously degrade its value. Maybe people who could implement this simply don't care, because it's not their money being stolen.
- boublepop 7y agoNo matter the quantities and amounts, any system or process where “I payed you X give it back” results in performing a payment without checking the assertion is fundamentally flawed. If you can’t prove the assertion don’t make the payment, no matter how many months that means people might have to wait.
- zingermc 7y agoEh, I see this as a form of eventual consistency.
- deleted 7y ago[deleted]
- tptacek 7y agoIs this a real site? It looks fake, and the writing is super weird. Here's the DOJ version: https://www.justice.gov/usao-sdfl/pr/daughter-father-charged-filing-lottery-ticket-tax-refund-claims-seeking-175-million https://www.justice.gov/usao-sdfl/pr/daughter-father-charged... It has more information, is better written, and is from April.
- organsnyder 7y agoGood call. Looks like it's run by a libertarian think tank: https://en.wikipedia.org/wiki/Idaho_Freedom_Foundation https://en.wikipedia.org/wiki/Idaho_Freedom_Foundation
- deleted 7y ago[deleted]
- Waterluvian 7y agoThe coloured background gives me a cozy 90s internet feel.
- dang 7y agoOk, changed to that from http://www.idahoreporter.com/2019/florida-man-got-3-4-million-in-tax-refunds-from-irs-after-claiming-to-win-lottery-he-never-won-authorities-say/ http://www.idahoreporter.com/2019/florida-man-got-3-4-millio.... Thanks!
- gruez 7y agoIt really should be https://www.justice.gov/usao-sdfl/pr/fort-lauderdale-father-and-daughter-convicted-trial-involvement-100-million-fraudulent https://www.justice.gov/usao-sdfl/pr/fort-lauderdale-father-..., because he was convicted a few days ago.
- dang 7y agoWe'll change to that above and point to the previous link. Thanks!
- nostromo 7y agoTax refund fraud is big business. These two are not very smart. The smarter criminals steal someone’s identity, file a fraudulent tax form using their identity, steal the refund, and then let that poor soul deal with the IRS when it comes after them to get their money back. If you ever try to file and get a notice that you already filed, jump on it right away because you may have been targeted.
- rhacker 7y agoMaybe that IS what happened?
- m11a 7y agoHighly unlikely for a few reasons. 1. IRS and prosecution would've determined this and hence this case wouldn't've been brought forward. There's a case because both felt these were the ones that did it. Also, they were convicted, which is an even higher bar. 2. "Shortly after law enforcement left, despite warnings not to do so, K. Edmonson went to his bank to attempt to withdraw the funds from the account that received the fraudulent refund check." Not something an innocent person, a victim of identity fraud, does. 3. Cheques were sent to them, presumably to the address on file, which was probably also their actual residence. 4. "D. Edmonson deposited this tax refund check into her bank account and used the funds to purchase a luxury vehicle." I'd bet that vehicle was sitting in her driveway when law enforcement came.
- onetimemanytime 7y agoYou'd better be a Mother Russia citizen and have a way to transfer funds there since there's no extradition. Otherwise they'll spend 100X your fraud to get you. But I guess, years pass by the time a human looks at it
- H8crilA 7y agoTransferring funds is easy, use Monero or just ship some gold in small pieces. And IRS is notably underfunded: https://www.accountingtoday.com/news/irsac-warns-about-irs-underfunding https://www.accountingtoday.com/news/irsac-warns-about-irs-u... My bet is that this type of activity will expand rather than contract.
- olliej 7y agoWait, so they report earning some large amount of money, and claim they overpaid taxes on that? And then get a refund? ... is that seriously all it took?
- patio11 7y agoThe IRS accepts most statements made regarding facts on return unless there is clear error, in particular because refunds are due (per statute) much faster than the IRS is able to gather all relevant information on whether it is factually owed or not in some edge cases. The backstopping function is that stealing from the IRS is a really bad idea because you'll probably be interacting with them the rest of your life and because you probably want access to the US financial system at some point.
- deepspace 7y ago> The backstopping function is that stealing from the IRS is a really bad idea because you'll probably be interacting with them the rest of your life Unless you are a foreign criminal stealing a US citizen's identity, in which case you don't care a hoot about their future relationship with the IRS.
- mkopinsky 7y agoIt's one thing for them not to know what is owed. But surely they know what's already been paid? No amount of errors on a W-2 or 1099 or whatever will make me eligible to receive a refund of taxes I never paid.
- chrisbennet 7y agoThe IRS is starved for funds. The powers at be (wealthy) wouldn't benefit from aggressive enforcement of tax law. https://www.propublica.org/article/how-the-irs-was-gutted https://www.propublica.org/article/how-the-irs-was-gutted
- TAForObvReasons 7y agoThe most insane part, for the alleged "fiscal conservatives" who push for gutting the IRS, is the crazy ROI on IRS funding. Estimates range $4-$8 revenue per dollar spent. At that rate of return, basically every company would be frothing at the mouth to invest.
- ReaLNero 7y agoSource for the $4-$8 revenue per dollar estimate? Don't forget that there's a difference between average return, and marginal revenue. More funding should be given if the marginal revenue is larger than the funding. The average revenue takes no part in this decision.
- TAForObvReasons 7y agoThanks for making me look, the numbers are even more extreme in some cases: https://www.finance.senate.gov/ranking-members-news/irs-budget-cut-translates-to-huge-tax-loss https://www.finance.senate.gov/ranking-members-news/irs-budg... > IRS Research Division estimates in the 2003 GAO report, however, placed returns for activities such as tax enforcement at more than ten – and in some cases more than 20 – dollars collected for every dollar spent. Phone calls to follow up on tax debts owed were estimated to return 13 dollars for every dollar spent. Audits by mail returned as much as 11 dollars for every dollar spent. Using the overall rate of a four to one return, this year’s $100 million budget cut translates to a $400 million loss. Imagine 20 dollars per dollar spent, that's the type of unicorn investment that basically every VC hunts for.
- bobthepanda 7y ago
- 1f60c 7y agoIt will never cease to amaze me that the US DOJ and media publish full names. In The Netherlands, only the first name and the first letter of the last name will be made public—and the full name could remain a secret for many years.
- rapnie 7y agoThat amazes me too, especially since people might still be innocent. They do this in other countries too. Like Belgium, where after the Zaventum airport bombings the wrong guy was arrested as 'the terrorist with the hat that got away'. His full name published all over the place. His life destroyed now, lost girlfriend, friends, job, etc. Plus Belgium police keeps arresting him to nail him for something, anything really, to make good for their initial blunder.
- 4ntonius8lock 7y agoIt has to do with the concept of government transparency. In the US, from what I understand, the founders of the country feared secret courts issuing secret sentences for secret reasons. So the idea is that almost all government stuff is public information. It's why FOIAs are so powerful. Literally anyone can ask the government to open up it's docs on virtually anything as long as national security isn't involved (and this is abused, but to a degree only) it has to comply. Now, such a tool will inevitably have good and bad. Just as having private court cases will also. Personally I think we need to create a privacy reform similar to the Civil Rights act of 1964 to address this and many other concerns. I'm simply explaining the thought process where our current tradition came from. Florida actually has much broader public information laws than the rest of the country. That's why you see so many 'Florida man' stories. My understanding is FL takes it a step further than just being public, they publish much of it by default, making it easy for reporters to sift through and find headlines.
- jdmichal 7y agoThe Florida laws are colloquially known as the sunshine laws. And it's not just public records. It also includes pretty much all meetings between officials, even informal ones. And it also includes judicial records, which is why Robert Kraft's defense cares so much about suppressing the video from his case. https://en.m.wikipedia.org/wiki/Freedom_of_information_legislation_%28Florida%29 https://en.m.wikipedia.org/wiki/Freedom_of_information_legis...
- ksec 7y agoRelated Topic: You have to Paid Tax for Winning Lottery in US? Assuming that is how the Refund is taking place because of prior tax paid. What other countries have similar law? I was always under the impression Lotto is free from Income tax, at least that is the case in UK and AUS. The tax system in US, judging from reading online media, especially with filing tax, credit, etc are so complex and felt so foreign to many abroad, where really dont have to do much.
- inerte 7y agoIn Brazil they're taxed, but the published numbers are after tax. So you essentially get more than what's advertised, then taxes are applied at the source, and you end up with exactly what you expected.
- tareqak 7y agoIt’s the same in Canada.
- drdec 7y agoIn the US, all the lotteries are run by states, not the feds. The state has no standing to forgive your taxes due to the federal government. So one would also have to pay federal income tax on lottery winnings. From there it varies by state. Some states tax the winnings (e.g. New York), others do not (e.g. California) and some states of course do not have income tax at all.
- ksec 7y agoArh I see. That make sense, Thank You. ( Not sure what's with the downvote )
- anongraddebt 7y agoIt really is quite incredible. I took a tax law class in grad school, taught by an expert's expert. The class is taught in such a way that you end up with a good feel for the conceptual topology of tax law. I've done my own taxes awhile now. Then, last year, I helped my girlfriend (a management consultant) do her taxes. She had three client projects that year, all in different states. There were multiple issues in navigating that hall of mirrors, not the least of which was understanding how 'residency' was understood and impacted her taxes. Simply filing them was also a chore. Some states didn't have e-file. Others sort of had it. I do not wish the unique hell of U.S. tax filing on anyone.
- deleted 7y ago[deleted]
- dang 7y agoEarlier part of the story: https://www.justice.gov/usao-sdfl/pr/daughter-father-charged-filing-lottery-ticket-tax-refund-claims-seeking-175-million https://www.justice.gov/usao-sdfl/pr/daughter-father-charged... Submitted article was http://www.idahoreporter.com/2019/florida-man-got-3-4-million-in-tax-refunds-from-irs-after-claiming-to-win-lottery-he-never-won-authorities-say/ http://www.idahoreporter.com/2019/florida-man-got-3-4-millio... ("Man got $3.4M in tax refunds from IRS after claiming to win lottery he never won"). Changed via https://news.ycombinator.com/item?id=21873501 https://news.ycombinator.com/item?id=21873501.
- ngold 7y agoStill paid out with no other corroborating anything. Makes you wonder how often this happens with people that actually have money, and could turn around and say woops. "According to the affidavit, K. Edmonson filed a fraudulent tax return in September 2017 seeking a refund of approximately $725,111. The return contained false and fraudulent claims that K. Edmonson had paid a substantial amount of withholding taxes. The IRS did not receive corresponding forms to support the claimed payments. Despite the false nature of the tax return, on January 28, 2018, the Department of Treasury mailed a tax refund check to K. Edmonson for $734,266.27 (including $9,036.27 in interest). Shortly thereafter, K. Edmonson deposited this tax refund check into his bank account."
- bluejekyll 7y agoCould the IRS have done this to get a larger conviction based on him actually taking the money? Rather than just a charge of committing fraud on the tax returns, it’s also now an added charge of stealing the money.
- axaxs 7y ago65 years for tax fraud? I mean, it's scummy, sure, but that long? First degree, premeditated murderers get less...