Scam of the day – April 6, 2015 – Guilty pleas in 20 million dollar military identity theft scam

Following a joint investigation by the IRS and U.S. Army investigators, nine women from Alabama and one woman from Georgia have pleaded guilty to identity theft involving 7,000 soldiers, many of whom were deployed in Afghanistan.  The personal information stolen was used to file phony income tax returns and resulted in the criminals receiving more than 20 million dollars in bogus refunds from the IRS.  One of the criminals, Tracy Mitchell worked at a military hospital at Fort Benning, Georgia where she had access to military records that included the Social Security numbers of the military patients of the hospital.  Fraudulent refund checks were cashed at a Wal-Mart money center where one of the other criminals worked.  The scam went on for almost three years before law enforcement was able to shut it down.  Sentencing will occur for most of the defendants in June and each faces a long prison sentence.

TIPS

This case is just another example of the fact that regardless of how good you are at protecting your personal information, you are only as safe from identity theft as the places with the weakest security that hold your information.  This also is another example of the problems that the IRS still has with income tax identity theft to a great extent because it still does not compare W-2s filed by employers with those filed with the tax returns of taxpayers before sending out refunds.  About the best thing you can do to protect yourself from income tax identity theft is to file your income tax return as early as possible to beat an identity thief to the punch.