A group of sophisticated identity thieves managed to steal millions of dollars by filing bogus tax returns using the names and Social Security numbers of other people, many of them deceased, according to a 74-count indictment unsealed in Arizona Thursday.
The thieves operated their scheme for at least three years from January 2005 to April 2008, allegedly filing more than 1,900 fraudulent tax returns involving about $4 million in refunds directed to more than 170 bank accounts. The conspirators used numerous fake IDs to open internet and phone accounts, and also used more than 175 different IP addresses around the United States to file the fake returns, which were often filed in bulk as if through an automated process.
According to authorities a Californian, 29-year-old self-described hacker named Daniel David Rigmaiden, aka Steven Travis Brawner, was the ringleader of the group. He conspired with Ransom Marion Carter, III, 43 of Arizona and at least one other conspirator who was arrested in Utah in 2008 but has not been identified in court records.
Rigmaiden has been in custody since May 2008, but Carter is still at large. The two are charged with 35 counts of wire fraud, 35 counts of identify theft, one count of unauthorized computer access and two counts of mail fraud. Authorities are also seeking a monetary judgment in the amount of $5.5 million.
Rigmaiden is representing himself after firing three attorneys, and could not be reached in prison for comment.
The IRS allows taxpayers to file their returns electronically and obtain their refunds through direct deposit to a bank account or to a pre-paid debit card account, which lets them withdraw the funds from an ATM.
The scam took advantage of the IRS’ quick turnaround in processing refunds for electronically filed returns. The IRS typically processes a refund request without verifying the taxpayer’s information — such as whether the taxpayer is alive — or confirming that the taxpayer is legitimately owed money. The crooks just needed names and Social Security numbers of victims, which they acquired from various sources, and a company’s name and tax-ID number to list as an employer.