For the most recent filing season, the Internal Revenue Service issued 101,407,000 federal income tax refunds totaling $273.548 billion. Just over 80% of those refunds were issued via Direct Deposit: the remaining 18,876,000 refunds were issued by mail. At an average refund of $2,698, that means that approximately $50,927,448,000 in tax refunds would be traveling through the mail.
That kind of traffic apparently gave Brooklyn resident - and U.S. postal worker - Oscar Lopez an idea.
Lopez was arrested yesterday on charges of conspiracy and theft of government funds. Lopez is accused of using the names and addresses of residents in his delivery route (ZIP Code 10460) to run an income tax refund fraud scam.
As part of the scam, Lopez used stolen Social Security numbers to file false tax returns. A number of those stolen Social Security numbers were issued in Puerto Rico. I've reported before that Puerto Rico is a prime target for Social Security theft since the U.S. granted citizenship to Puerto Ricans in 1917 but under the law, they don’t have to file with the IRS or pay federal taxes unless they have certain kinds of income. As citizens, they tend to have Social Security numbers – unused Social Security numbers – making it easy for fraudsters who steal those numbers to use them for years without detection.
That's what happened here.
Those Social Security numbers were used to file false tax returns claiming bogus refunds. Lopez then lifted the tax refunds during his mail sort and gave those refund checks to others as part of the fraud. Those people, an unidentified cooperating witness and another person who faces charges as a co-conspirator, helped deposit the checks in bank accounts. Lopez got a cut of the money for his efforts in the scheme.
The checks were deposited over a three year period. Lopez is accused to have helped steal more than $1 million in federal tax refund checks on his route.
Philip Bartlett, Inspector-in-Charge of the New York office of the U.S. Postal Inspection Service, called the allegations against the defendant "disturbing," saying, "I have little tolerance for those who would use their position of trust to facilitate criminal activity, as is alleged in this investigation."
Disturbing perhaps - but not novel. If you think you've heard this story before, you're right. Last year, then 29 year old Elian Matlovsky of Staten Island, New York, pleaded guilty to similar conspiracy and theft charges. Matlovsky was one of 14 defendants initially charged in a scheme that authorities described as "one of the nation’s largest and longest running stolen identity tax refund fraud schemes." Matlovsky and the other defendants were accused of filing more than 8,000 fraudulent U.S. income tax returns seeking more than $65 million in tax refunds using - you guessed it - stolen Social Security numbers, many from Puerto Rico. To collect, Matlovsky and other defendants purchased address lists in New Jersey and New York, all covered by a single mail carrier. Those addresses were used for as mailing addresses for the returns. Matlovsky, a former public school teacher, was eventually sentenced to two years' probation and fined $3,000 for her role in the scheme: since she used the money to finance a life lived on credit, she's also banned from seeking a new credit card "any new monetary loan, obligation or debt" without the approval of her probation officer. Despite outrage from the community, she is still employed by the New York Department of Education. One of the masterminds of the scheme, Jose Torres, also pleaded guilty and is serving a nine year prison term.
If convicted in this scheme, Lopez faces up to 15 years in prison.
