Three Sacramento women face charges in IRS tax fraud sweep

Published: Saturday, Feb. 9, 2013 - 12:00 am | Page 6B
Last Modified: Sunday, Feb. 10, 2013 - 1:59 pm

In a sweeping crackdown on tax return fraud, the Internal Revenue Service this week announced arrests of nearly 110 individuals in 32 states, including three in Sacramento.

The IRS dragnet is part of beefed-up efforts to halt an increase in tax return cheaters, who use stolen Social Security numbers to file phony returns, collecting thousands of dollars in refunds in someone else's name.

The IRS provided only limited details of the local arrests. The three Sacramento residents – Tammy Lee, Heather Moses and Mandy Rice – were arraigned last week on felony charges of filing multiple "false, fictitious and fraudulent" returns.

According to the IRS, the three filed anywhere from 12 to 18 phony returns each, mostly between 2009 and 2011. Those returns resulted in tax refunds that ranged from $3,400 to $7,400 apiece.

All three pleaded not guilty and were released on bail.

If convicted, they face up to five years in federal prison and $250,000 in fines, plus $100 penalties per count.

"You will definitely see more cases like these coming out of our Sacramento office," said Arlette Lee, IRS special agent for criminal investigations, based in Oakland. Tax return fraud "is a problem and it's reflected in the very large sweep we saw in many areas of the country" this week, she said.

In some cases, fraudsters use Social Security numbers of deceased people to file phony tax returns. In other instances, they use stolen identities – such as a Tennessee case where a woman took information from a stolen Memphis Police Department arrest warrant book. She was sentenced in December to about 22 years in prison and ordered to pay $690,000 in restitution.

"Ultimately, when you have people getting refunds they're not entitled to, it's stealing from the government," said IRS agent Lee. "It affects everybody."

The IRS crackdown is operating on several fronts. The agency tripled the number of identity theft criminal investigations in the last fiscal year, bringing the number of cases to nearly 900. The number of convictions and length of jail time also increased.

It also has assigned more than 3,000 agents to identity theft and tax refund fraud, double the number in 2011.

Last month, IRS agents also visited 197 check-cashing outlets to ensure they weren't abetting tax refund fraud when handling checks. Those visits targeted 17 cities, including Oakland, San Francisco, San Jose, San Diego and Los Angeles.

In addition, the IRS has beefed up its computer systems, using more elaborate filters designed to detect tax return fraud. It says those efforts helped protect against $20 billion of fraudulent refunds.

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