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49 accused of tax fraud and identity theft

TAMPA — A $130 million case involving fraudulent tax returns and dozens of arrests is just the tip of the iceberg, Tampa Police Chief Jane Castor said.

Hillsborough County authorities have now arrested 49 people they say stole identities and used them to obtain millions in fraudulent tax refunds.

Operation Rainmaker, a yearlong effort by local and federal law enforcement, was able to intercept $100 million and recover $5 million in fraudulent refunds, cash, jewelry, cars and entertainment systems, officials said Friday. Another $25 million hasn't been recovered.

The suspects had "basically corrupted the online tax filing system." U.S. Secret Service Special Agent John Joyce said.

Court records detail how the scheme worked: A suspect fraudulently obtains someone's name, Social Security number and date of birth.

After making sure the Social Security number has not been used on a tax return, the person files online through companies such as Turbo Tax. A tax refund is then issued with a prepaid debit card, check or direct deposit.

Officials say the crime nets thousands of dollars each time, enough for luxury vehicles and other extravagant purchases. Ten of the 19 vehicles confiscated recently were on display Friday, including a pristine, white Mercedes-Benz CL550.

It is not a victimless crime: Tampa police Lt. Mark Scott tried to file his return this year through Turbo Tax online, only to get rejected.

"It said something was wrong with my Social Security number," he said Friday as he joined officials from the U.S. Secret Service, Tampa police, Hillsborough County sheriff and U.S. Attorney's Office.

Scott soon found out that someone had filed a tax return in his name and received a refund. When he tried to get access to his tax information to help investigators, the IRS told him it could not give out those details.

Tax laws meant to protect citizens often hinder local law enforcement agencies from bringing tax thieves to justice, authorities said.

Scott couldn't help investigate his own identity theft because of restrictions in the federal tax code.

"It felt like I was victimized twice," he said.

The Secret Service named the project Operation Rainmaker for a hotel party that was broken up by Tampa narcotics officers. Several people were caught filing fake tax returns and expecting the money to "rain down" on them.

The party host, Marterrence Q. Holloway, 32, of Tampa, was arrested on drug charges. On Thursday, investigators searched a E Caracas Street residence connected to Holloway and confiscated 22 Turbo Tax cards, $800, three sets of 28-inch rims, a 73-inch flat screen TV and more than four ounces of marijuana.

Four people were arrested in that search including Holloway, Kenneth Goodson, Quincy Wimbley and Janica Bullock.

Three clothing stores and two auto dealerships were also searched in connection with the case: Empire Street Wear, 1925 E Fletcher Ave; Palace Fashions, 2525 E Hillsborough Ave.; Suit World, 5202 N 22nd St.; Advanced Auto Sales, 5018 N 22nd St.; and Simmons Auto Sales, 4615 N 34th St.

Castor said the business were being used to launder the stolen money. Nearly $400,000 was seized from the businesses, including $333,000 in federal checks, cash and money orders at Empire Street.

On Wednesday, police arrested Russell B. Simmons Jr., 41, of Tampa, owner of Simmons Auto Sales, after discovering 134 Turbo Tax cards, two Jaguars, a Bentley, $38,000 in cash and money orders and $75,000 worth of jewelry inside the business. He was charged with grand theft, and four counts each of fraudulent use of a credit card and identity theft.

Raid Faria, 30, of Tampa, who is connected to Palace Fashions and Suit World, was charged with 33 counts each of credit card fraud and identity theft.

Tampa police Detective Sharla Canfield said authorities began discovering people with prepaid debit cards in other people's names during routine traffic stops.

Authorities said the crime is spreading rapidly: Suspects are teaching classes of 50 to 100 people at a time how to cheat the system. Canfield said there are even hotel room gatherings dedicated to filing tax returns, dubbed "drop parties" because the easy money is dropped onto the cards and into the mail.

Nearly 10,000 fraudulent refunds have been intercepted since the start of the operation, said Barney Morris of the U.S. Postal Inspection Service. Police have recovered nearly $10 million in tax refund debit cards in the past six months. The average value of the refund is usually $5,000, he said.

Castor said criminals have learned that filing a tax refund of less than $10,000 doesn't typically make the IRS suspicious, so most of the intercepted refunds are $9,000 to $9,500.

Suspects have the refunds mailed to vacant homes, co-conspirators and even the addresses of the victims.

"They sometimes watch the victim and know what time the mail comes and intercept the card before the victim even knows what's happened," Morris said.

Castor said many of the suspects have admitted to committing the fraud because they didn't think it was a crime. Word got around that police weren't even investigating cases.

Don't believe those rumors, Castor said.

49 accused of tax fraud and identity theft 09/02/11 [Last modified: Friday, September 2, 2011 11:36pm]
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