Epic Tax Scam Uncovered in Tampa

It was addictive. Just like the dope they once sold on the streets, if not more. A highly lucrative business taking place in front of a laptop in the privacy and comfort of home. A business amounting to $130 million in tax fraud, costing Tampa taxpayers an estimated $15 million a day.

After all, they were not hurting anybody. Or so they thought. 

“They say it doesn’t involve violence, but it involves them taking our money, our earnings,” Tampa Police Department Chief Jane Castor said in a news conference today, addressing the widespread “tax fraud epidemic” that has recently plagued Tampa and Hillsborough County. 

Luxurious vehicles, jewelries,and refund cards are the seized evidence of the epic tax scam that authorities began investigating a year ago. 

The “Cash Back” Task Force involving the Tampa Police Department, Hillsborough County Sheriff’s Office, United States Secret Service, United States Postal Inspection Service, State Attorney’s Office 13th Judicial Circuit and the United States Attorney’s Office for the Middle District of Florida dubbed the investigation Operation Rainmaker, after the “money that was raining down on the suspects,” the chief said. 

The operation culminated this week, resulting in $100 million in intercepted taxes, $5 million in recovered taxes and assets, and $25 million in stolen taxes. 

“The scheme is extremely simple but extremely lucrative,” said U.S. Secret Service Special Agent in Charge John Joyce, standing in front of a display table with 10,000 seized envelopes containing $100 million in refund cards.

The scam involved creating a fake identity either by using websites such as Ancestry.com to steal identities of deceased or living victims, or buying large volume of identities from individuals with access to names and social security numbers from businesses, medical facilities or prisons. 

The next step was filing fraudulent tax returns online by using multiple electronic filing programs, such as Turbo Tax, Tax Slayer and Tax Hawk. 

The criminals requested the refunds on Green Dot credit cards or U.S. Treasury checks to be sent to vacant homes or innocent bystanders’ homes, where the crooks intercepted the mail. Refunds were also sent via direct deposit into fraudulent bank accounts.

Then, the real fun began.

Scammers withdrew money from ATMs with the refund cards or cashed checks at illegal businesses laundering the money. Other times, they used legitimate businesses to buy large money orders. 

According to Castor, the con artists went to tutorial classes taught by the pros and often threw tax filing parties at hotel rooms and residences all over town.

“Anybody who can use a laptop can do it,” Tampa Police Detective Sal Augeri said. “But they (suspects) are traditionally drug dealers.”

Former drugs dealers quickly “retired” from one illegal business after discovering another illicit but easier, safer and more lucrative one.

“Why would I take the risk to sell drugs and get busted when I can put $10,000 on a card and do it all day long from home while the cartoons are on?” a suspect asked Augeri. 

Augeri said that officers do not see crack and cocaine users wandering around the streets anymore.

The alarm went off when citizens started filing taxes online just to discover that they had already been filed. Meanwhile, police started pulling over people and finding them in possession of Green Dot credit cards and laptops.

Authorities knew something was up. Yet, federal tax law stood against them.

“We had to work around the spider of roadblocks that we had in front of us,” U.S. Secret Service Special Agent in Charge John Joyce said. 

The Internal Revenue Service (IRS) privacy restrictions prevent law enforcement from having access to tax return files, even if the files are fraudulent.

“Those laws that protected me are the same laws that prevented me from obtaining information from the IRS,” said Mark Scott, a Tampa Police Department Lieutenant and tax fraud victim himself. 

Like many others, he filed his taxes online just to discover his identity had been stolen.

None of the 49 people arrested in Hillsborough County during the investigation could be charged with tax fraud. Instead, authorities brought charges against them of money laundering and identity theft.

“The word on the street is that this is not a crime,” said Castor, adding that most of the fraudulent filings amount to about $9,500. 

Filing a tax return of less than $10,000 often goes unnoticed and is not investigated. 

This week, six search warrants were executed at businesses that are laundering stolen tax dollars. Computers, files, money orders, U.S. Treasury checks, cash, jewelry and vehicles were seized. The sixth search warrant was executed at a residence at 21118 E. Caracas St. 

Targeted businesses were: Palace Fashions at 2525 E. Hillsborough Ave., Advanced Auto Sales at 5018 N. 22nd St., Suit World at 5202 N. 22nd St., Empire Street Wear at 1925 E. Fletcher Ave., and Simmons Auto Sales at 4615 N. 34th St. 

“This kind of crime affects each one of us,” Castor said. “My gut feeling is that this is happening thoroughout the United States.”