Nigerian Citizen Living in North Carolina Arrested for Phishing Scheme Targeting Connecticut and Minnesota School Districts

Nigerian citizen Daniel Adekunle Ojo was arrested last week at his residence in Durham, North Carolina.  He is being charged with fraud and identity theft charges filed by Connecticut U.S. Attorney Deirdre Daly.  

According to prosecutors, an employee of the school district in Glastonbury, Connecticut was duped by a phishing scam which Ojo was allegedly behind.  A phishing scam is one where an e-mail that appears to be legitimate asks for private information or asks the recipient to log into an account via a link in the e-mail that leads to a fake site.  Any information obtained via a phishing e-mail can then be used to commit financial crimes.

In the scam in this case, Ojo allegedly spoofed the e-mail address of one school employee to make it appear that that school employee had e-mailed the duped school employee requesting tax information for approximately 1600 school district employees.  Not realizing that the e-mail was not legitimate, the school employee provided the requested information, which was then allegedly used to file 122 bogus tax returns for nearly $600,000.00 in tax refunds.

At least six of the fake tax returns were successful, resulting in $37,000 in refunds being electronically deposited into various bank accounts.

It is also believed by authorities that Ojo is not a first time phisher.  Ojo's e-mail address is allegedly linked to a phishing scam in Bloomington, Minnesota earlier this year and that he may have been involved in a similar phishing scheme that targeted the school district in Groton, Connecticut.

A federal magistrate judge has ordered that Ojo be transferred to Connecticut for prosecution.

My advice on phishing:  Never, ever, ever click a link in an unsolicited e-mail even if it looks like it legitimately came from a company with which you do business.  Phishers used to be easy to spot due to their poor grammar and odd phrasing used in their e-mails.  But they have gotten better and thus less easy to spot.  So think hard before you click.

Former Member of U.S. Air Force Sentenced for Identity Theft

A Chicago federal judge has sentenced former U.S. Air Force member Ronnie Allen II to four years in prison for identity theft.  Allen, a 28 year old from Greensboro, North Carolina, used his position in the Air Force to illegally steal an Air Force personnel roster.  The roster contained the private identifying information of approximately 1400 Air Force members stationed in Idaho at Mountain Home Air Force Base.  The personal identifiers contained on the illegally obtained roster included the names, Social Security numbers and dates of birth of the Air Force personnel.

According to prosecutors, Allen distributed the private information contained on the stolen personnel roster with the hopes of profiting financially from the information's dissemination.  The information was then used to file tax returns and fraudulently open financial accounts using the names and other personal identifiers of the Air Force personnel on the list.  It is unclear how many Air Force members were affected by the dissemination of their personal identifiers.

Identity thieves often open credit cards and obtain loans using the names and other personal identifiers of their victims.  The criminals then make purchases using the credit cards and loans.  The charges are never paid, thereby ruining the victims' credit history while the criminals profit without any consequence unless caught.

Forged tax returns are a slightly different version of identity theft and has become more prevalent in recent years.  Instead of opening new financial accounts, the identity thief completes a fake tax return in the name of his or her victim.  This is usually done as early in the year as possible before the victim files his or her real return.  The taxes on the forged tax return are calculated in such a way as to result in a refund, which is then received by the identity thief instead of the victim.  The IRS has been cracking down on this type of identity theft over the past few years, including issuing pin numbers to persons who have been victims in the past to prevent the crime from reoccurring.

While four years seems like a light sentence to me (the damage to the victims' credit histories will last longer than that), it is good to see an identity thief like Allen being forced to spend at least some time behind bars.

Death and taxes - identity thieves put both to work with latest scam

They* say that the only certainties in life are death and taxes.  Identity thieves are now taking advantage of both in a new scam.  Thanks in part to the publication of the "Death Master File" (sounds like something from a Hitchcock movie) that lists the Social Security number and other information about the deceased, identity thieves are being able to file tax returns in the names of dead people or use deceased persons as dependents, thereby increasing their tax refunds.

According to the IRS, tax related identity theft has victimized nearly 500,000 tax payers since 2008.  The IRS has already flagged another 91,000 suspicious returns for investigation this year.

Another problem is that the IRS won't tell victims of this or other tax related identity theft who the suspected perpetrator is.  This protects the privacy of the criminal but also makes it harder for the victim to defend himself from other forms of identity theft committed by the criminal.

I have had many calls about tax refund identity theft over the past two years.  The problem is there really isn't anyone to sue (unlike when accounts are fraudulently opened, you can sue the company that negligently opened the fraud account or the credit bureau that continued to report the fraud account after being alerted to its fraudulent nature).  So its hard for me to do anything with these cases other than give the victim some advice, primarily do whatever the IRS says so they can get it straightened out.   And that's the same advice I give to all of you, that and be vigilant and diligent in your fight if your identity is ever stolen.

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*  As my wife always says, who is this "they" you speak of?

Identity theft ranked No. 1 of the dirty dozen tax frauds

The IRS annually lists the "dirty dozen" tax scams in an effort to protect the public and itself. This year, identity theft is ranked as the top of the dirty dozen scams.

Identity thieves use a taxpayer's identity to file a tax return and fraudulently obtain a tax refund. The IRS reported that it blocked $1.4 Billion from going to the wrong person last year. Small wonder identity theft is ranked no. 1.

Other scams include "phishing" (i.e. tricking people into revealing personal identifiers), hiding funds offshore, reporting false income and abuse of charitable organizations.

If you suspect you are the victim of tax return identity theft, you should contact the IRS immediately.

Tax Refund Identity Theft

Its that time of year again.  Millions will file their tax returns between now and April 15.   An increasing number of those tax return filers will find to their dismay that their refunds have already been swiped by an identity thief.

The scam is pretty simple.  Identity thieves forge tax returns using your identifying information.  All that has to happen is that the Social Security number must match the name on file with the IRS.  The address does not have to match, since the person could have moved since the last tax return was filed.  The identity thieves use this loophole to provide an address that they can use to pick up the tax refund.

By filing these forged tax returns early and using bogus income totals that result in a refund, the identity thieves receive the refunds before the unsuspecting victim ever files his or her return.

If this happens to you, immediately contact the IRS.  They will provide you with the appropriate forms to dispute the fraudulent tax returns and obtain your rightful refund (assuming you are eligible for a refund).  Also, only use reputable tax return preparers, as a lot of this type of identity theft seems to occur when less than professional tax return companies are used the year before.

The IRS has allegedly stepped up its efforts to prevent this type of identity theft.  They have allegedly added some "filters" to the screening process that will supposedly catch this fraud at the outset.  I hope this is true as I have seen a marked increase in calls to my office about this type of identity theft.  And, unfortunately, there is usually no legal recourse that I can use to help these victims (unlike victims of traditional identity theft) so its up to the IRS to take measures to protect the public from this type of fraud.

Its tax time ... which means its time for tax time scams!

In my line of work as a consumer attorney, I see the tragic results of a lot of different types of scams.  One type of scam that I am seeing more of is scams involving tax returns.

A couple of tips -

First, never sign a blank return.  That's just dumb.  That return can then be used to send your refund to some other person's account or some other similar scam. 

Second, never pay someone a percentage of your refund to prepare your tax return.  That is also silly and usually means the tax return preparer is less than above board.  A legit tax preparer will charge you a flat fee or a set hourly fee.

Lastly, never use any tax preparer that tries to get you to make false or misleading deductions or do anything else that's not totally accurate.  Doing so just brings the IRS to your door and where will that tax preparer be?  I don't know but neither will you, so you will be on your own.  Reminds me of a cartoon I saw one time about a guy visiting his doctor.  He asks the doctor to recommend a good laxative.  The doctor replies "A letter from the IRS always works for me."

Don't be that guy.

Fraudulent tax returns a real problem for IRS and identity theft victims

The Government Accountability Office reported that in 2008 the IRS had cataloged over 50,000 incidents of identity theft related refund fraud and employment fraud.  Approximately 90% of those incidents were stopped before refunds were issued, with about 15 millions fraudulent refunds being sent out.

90% sounds good, but that's only including the incidents that the IRS recognized as fraud.  The IRS does not know the amount of tax refund fraud that goes undetected.  In 2008, the IRS implemented new initiatives to protect consumers from fraudulent activity, including utilizing an identity theft indicator that it places on victims' accounts so IRS personnel can more readily recognize the victim if future problems occur.  They have also decentralized the fraud assistance process, making the area of the IRS that discovers the problem responsible for getting it corrected. 

The IRS claims it is hampered in its efforts because of privacy concerns, which limits its ability to coordinate with other agencies. 

The report from the GAO does not include the IRS' role in other instances of identity theft.  For instance, I am currently represnting an identity theft victim whose identity thief obtained student loans using my client's name and SSN.  When the student loan was not paid by the identity thief (or my client who had no idea there even was a student loan in his name), Sallie Mae, the servicer of the loan, assigned it to a collection agency for collection.  My client was contacted and he repeatedly disputed the fraudulent student loan with Sallie Mae, the collection agency and the CRAs.  Despite his disputes, Sallie Mae caused the IRS to seize my client's legitimate tax refund (approximately $3100).  After disputed this some more, the IRS wrote him and told him the hold on future refunds was lifted, but it did not pay him the $3100 it had already seized.  Then, the next year, the IRS again seized my client's tax refund and then, after the seizure, wrote another letter that the hold had been lifted. 

I doubt the GAO's survey includes this particular type of fraud being committed on the IRS, fraud by Sallie Mae and its collection agencies.  But something needs to be done about that to protect future consumers.