Identity Theft, Tax Fraud Snares Prisoners

3-14-15 National:

Corrections employees in several states face federal prosecutions

A raft of federal prosecutions has uncovered tax-fraud schemes involving the theft of Social Security numbers of U.S. prisoners, in many cases by corrections employees.

Last year alone, federal courts meted out prison sentences to an Alabama bail bondsman, two former Alabama corrections employees, a Florida corrections officer and a Georgia man, who were convicted separately of stealing the identities of more than 1,200 prisoners and claiming more than $6.5 million in tax refunds under the inmates’ names.

In January, a Kentucky judge sentenced a local corrections officer to three years in prison for filching prisoner information to open up credit-card accounts with Capital One, Barclays Bank and Victoria’s Secret.

Scores of prisoners also have been prosecuted in recent years for preparing false tax returns from behind bars to generate refunds, using their own and other inmates’ Social Security numbers.

A report by the Treasury Inspector General for Tax Administration, released last year, found that false returns filed with prisoners’ Social Security numbers had surged to about 137,000 in 2012 from 37,000 five years earlier. Refunds claimed in the false returns in 2012 amounted to about $1 billion; the Internal Revenue Service prevented all but about $70 million from leaving the Treasury, the report said.

The report doesn’t separate false returns filed by prisoners from returns filed by third parties using prisoner information, but the IRS said identity theft is prevalent. “Frequently, inmates are also victims of identity theft, which can lead to an overstatement of fraudulent returns filed by prisoners,” the agency said in a response to the September report.

The Senate Finance Committee discussed the report and other types of tax fraud at a hearing Thursday in Washington.

Alexis Roldan discovered his identity theft soon after his release in 2011 from a Rhode Island prison, where he served an 18-month sentence for drug crimes. A financial coach told Mr. Roldan that his credit report revealed several thousand dollars in unpaid medical, energy and insurance bills. “They got me pretty good,” said Mr. Roldan, a father of four who works at a restaurant in Providence.

Identity theft can make it even harder for ex-convicts, who already face hurdles getting a job or housing, to support themselves as they try to re-enter society, social workers say. ..Continued.. by Joe Palazzolo