July 26, 2019
Trends in Insurance | How Can We Prevent Fraud?
Across the board, insurers found they were experiencing a huge…
Few, if any, companies or government agencies store more sensitive personal information than the IRS, and consumers have virtually no insight into how that data is used and secured. But, as the results of a recent Justice Department investigation show, when you start poking around in those dark corners, you sometimes find very ugly things.
Beginning in 2008, a small group of people–including an IRS employee who worked in the Taxpayer Advocate Service section–worked a simple and effective scam that involved fake tax returns, phony refunds, dozens of pre-loaded debit cards, and a web of lies. The scheme relied upon one key ingredient for its success: access to taxpayers’ personal information. And it brought the alleged perpetrators more than $1 million.
The scam’s particulars are not unique. There have been a variety of similar operations that have come to light over the last few years, with IRS employees improperly accessing taxpayer records as part of a financial fraud or out of curiosity over what an athlete or actor makes. What sets this case apart is that the accused IRS employee, Nakeisha Hall, was tasked specifically with helping people who had been affected by some kind of tax-related identity theft or fraud.
“Taxpayers trust, and expect, that IRS employees, as a whole, will safeguard their most sensitive personal information.”
From that position, Hall allegedly tapped in to the personal files of an untold number of taxpayers and used the data she found there to file false tax returns in those victims’ names. The returns would be set up in such a way that the “taxpayers” would be due refunds. Hall typically would request that refunds be put on debit cards issued by Bancorp Bank or another bank, according to an indictment issued by the Department of Justice in December. The debit cards would be mailed to addresses that Hall had access to, and then Hall’s alleged co-conspirators Jimmie Goodman and Abdullah Coleman would pick up the cards.
From there, the crew would take cards to ATMs and withdraw money, or use them in stores, the DoJ said. Hall, Goodman, and Coleman were arrested last month on a number of charges related to the scam, including mail fraud and conspiracy to commit bank fraud.
“Taxpayers trust, and expect, that IRS employees, as a whole, will safeguard their most sensitive personal information. Taxpayers also must trust that IRS employees in the Taxpayer Advocate Service will not only protect their sensitive information but will actively assist them when it has been compromised by others,” said Joyce White Vance, U.S. Attorney for the Northern District of Alabama. “An IRS taxpayer advocate who exploits that trust, and with full knowledge of the significant impacts of identity theft, uses her IRS access to compromise taxpayers’ identities and steal a million dollars from the U.S. Treasury is committing a particularly egregious crime that will not go unpunished.”
IRS tax fraud schemes have become a scourge for consumers and businesses both. The ploys take a variety of forms, often involving repeated phone calls from fake IRS agents warning the victim that he is about to be arrested for unpaid taxes and demanding payment. In those cases, the victims have a chance to defeat the scheme and are aware that it’s going on. But in the case of the scam allegedly run by Hall, the victims had no idea what was going on and were betrayed by someone who worked in the IRS, the organization that is meant to be protecting their personal tax information.
Hall was arrested in Mississippi, and Goodman was arrested in Birmingham, Ala., in December. Coleman already was in prison for a separate charge in Wisconsin.