Two Florida men will spend time in federal prison for their roles in a stolen identity and tax refund fraud scheme. The men took thousands of names, addresses, and other personally identifiable information and used the data to file fraudulent tax returns between 2012 and 2014.
The men were discovered as part of a collaborative law enforcement program called “Project EFIN.” The program focused on Electronic Filing Identification Numbers (EFIN) with high rates of identity theft. Providers – either individuals or firms – need an EFIN to file tax returns electronically with the Internal Revenue Service (IRS). An EFIN is different from a Preparer Tax Identification Number (PTIN) issued to tax professionals who are paid to file tax returns. Most preparers need both.
The program identified 100 of the largest EFIN holders based on fraud indicators like 100% refund rates and high rejection rates. Investigators pegged approximately 60 EFIN holders who claimed roughly $150 million in fraudulent returns for the tax years 2011 and 2012, and 62 EFIN holders who claimed more than $138 million in fraudulent returns for the tax year 2013.
As part of the investigation, law enforcement was able to link potentially problematic EFIN numbers to IP addresses. Using a subpoena, they found that one of those IP addresses was registered to a company called Capital Financial Management, LLC (“Capital”). Among other things, Capital provided tax preparation services.
According to court documents, Ludrick Joseph worked for Capital. Maurice Marcellus was the manager and sole registered agent of the company and ran the day-to-day operations. Between 2012 and 2014, Joseph and Marcellus prepared and electronically filed federal tax returns for individuals who were later determined to be identity theft victims.
In 2014, law enforcement executed a search warrant at Capital. They seized debit cards, files, and other records containing thousands of names and personally identifiable information like addresses and Social Security numbers. Included in the data were the names of people who Joseph allegedly knew to be deceased. Also on the lists? Students who had previously attended the ATI College of Health in Miami, Florida. Marcellus accessed the information while he was an academic advisor for the ATI College of Health (the college closed in 2012): he passed the data along to Joseph so that he could file fraudulent tax returns.
After a lengthy investigation, a federal grand jury indicted Marcellus and Joseph on February 14, 2019. The pair pleaded guilty on November 13, 2019, to aggravated identity theft and possession of unauthorized access devices.
U.S. District Judge Marcia G. Cooke sentenced Marcellus to 60 months and three years of supervised release. Joseph was sentenced to 48 months and three years of supervised release. Both defendants are jointly responsible for paying $563,210 in restitution.
The sentence was announced by Ariana Fajardo Orshan, U.S. Attorney for the Southern District of Florida, and Michael J. De Palma, Special Agent in Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), Miami Field Office. Other agencies involved in the efforts include the Federal Bureau of Investigation (FBI), U.S. Secret Service (USSS), U.S. Immigration and Customs Enforcement Homeland Security Investigations (ICE-HSI), and the U.S. Postal Inspection Service (USPIS).
The pair are slated to report to prison next month.
The story is a good reminder that identity thieves are constantly looking for ways to steal the identities of taxpayers. Keep your personal information safe by remaining alert – and when in doubt, assume it’s a scam. For tips on protecting yourself from identity theft-related tax fraud, click here.