Texas tax fraud case puts focus on identity theft

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DALLAS (AP) - The recent case of a Texas man convicted of tax fraud highlights one part of the lucrative black market for stolen personal information that the IRS estimates altogether costs U.S. taxpayers more than $6 billion a year.

Luigi Montes was sentenced in 2013 to five years in prison for organizing a scheme to steal the identities of Puerto Ricans in order to file bogus tax returns and receive refund checks. As many as 18 people were involved, authorities say.

Residents of Puerto Rico have Social Security numbers but aren’t required to pay federal income taxes unless their employer is based in the U.S. This makes it more difficult for authorities to track fraudulent tax returns.

More than 140 returns and the personal information of others were found at homes tied to Montes in Houston and the Dallas suburb of Balch Springs, according to a report published Monday by The Dallas Morning News (http://dallasne.ws/1ndjeQH ). Meanwhile, Montes opened private mailboxes to collect stolen information in 2007 and 2008 in the Dallas area using his Florida ID as well as a fake Florida ID with his photograph and a different name. IRS agents and U.S. postal inspectors learned that Montes also had private mailboxes in Houston, as well as cities in Oklahoma and Louisiana.

Montes told agents he initially traveled to Puerto Rico, a U.S. territory, to buy stolen identifications to use in the tax fraud. He said he later hired a woman there to send him personal information that she got while posing as a door-to-door life insurance saleswoman.

Andy Williams, the federal prosecutor in Montes‘ criminal case, said the mailboxes were a key element of the scheme. It’s difficult to trace who opens them, particularly when false IDs are used, he said, and investigators had to prove who retrieved mail from the boxes.

“This was going on all over the country. We just attacked our part of it,” he told the Morning News. “It’s cost the government a lot of money.”

Five other defendants, including Montes‘ wife and mother-in-law, also were convicted in the estimated $3.4 million scheme, and now the U.S. government is going after Montes‘ assets as he sits in prison.

The Internal Revenue Service and other federal agencies have for several years been investigating Puerto Rican identity theft and the connection to tax fraud. Their efforts have resulted in convictions for similar scams in other states.

In New Jersey, for example, a task force in 2012 broke up what officials called the nation’s largest tax fraud scheme that sought $65 million in refunds.

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Information from: The Dallas Morning News, http://www.dallasnews.com

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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