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Identity Theft Prosecutions, #10: Setting up fake charities, filing fake returns and buying a bar

The IRS’s Top Ten Identity Theft Prosecutions of 2014

The IRS has released another list of favorites – this time the Top Ten Identity Theft Prosecutions of 2014.  This series of posts will provide an overview of the cases that warranted this level of notoriety, as well as the resulting charges and sentencing.  

# 10:  Setting up fake charities, filing fake returns and buying a bar

Who

Jonathan Webster, age 34

Where

Ohio

What he did

Using stolen identities, Jonathan Webster filed more than 500 fraudulent income tax returns with the IRS for the 2009, 2010, 2011 and 2012 income tax years. He worked on this tax scam from January 2010 until February 2013 and claimed $1,635,164 in refunds.  

How he did it

Webster set up fake charities such as “The Angel Charity” and “4 the Glory Charity.” He then placed advertisements in various newspapers promising financial assistance to needy individuals through these charities. Webster also set up a website where people responding to his ads were asked to input their personal identification information (e.g., name, social security number and date of birth). 

Most of the people whose identities Webster stole were destitute and therefore unlikely to file tax returns of their own. Webster proceeded to use the personal identification information provided to him by approximately 250 people in order to file false income tax returns in their names. He inserted false occupations, income and expense figures and claimed the Earned Income Tax Credit. Webster proceeded to collect tax refunds based on that fraudulent information. He had the refunds direct deposited into bank accounts that he controlled or had other people collect the money for him.   

Webster spent some of the fraudulent tax refund money on the purchase of a bar, despite the fact that he is an alcoholic with three alcohol-related traffic convictions – he was still on probation at the time he committed the identity theft and tax refund fraud.

The charges

Webster pleaded guilty to the following crimes:

The sentence

The judge was irate and sentenced Webster to nine years in prison, followed by three years of supervised release.  He was also ordered to pay $1,457,936 in restitution to the IRS. Webster was handcuffed and taken into custody immediately following the hearing (something uncommon in white-collar criminal cases).

Criminal tax defense attorneys at your service

This case was investigated by IRS Criminal Investigations (CI), which boasts a conviction rate of 93.4 percent - one of the highest in all of federal law enforcement.  At the first indication that you are being investigated for a federal tax offense, you need to contact the experienced criminal tax defense attorneys at Moskowitz, LLP. We have an excellent track record in averting criminal proceedings and eliminating or reducing penalties.  Call our San Francisco office today for a consultation. 


The IRS Dirty Dozen 2015, #7: Fake Charities

The New York Post recently reported that the founder of “Boobies Rock!” a fake breast cancer charity, was ordered to return $1.89 million he collected and will also have to pay $4 million in penalties.

The media is full of stories about fake charities so it is no surprise that they made the IRS Dirty Dozen tax scam list for 2015. 

Fake charity red flags 

There are some signs that the money you are being asked to give will not be used for charitable purposes. Watch out for:

  • People who call you or come to your door asking for a contribution – never give these people your personal or financial information
  • Requests for cash donations – make sure that your donation can be tracked and documented (this is difficult when you hand out cash)
  • Contributions sought exclusively through emails and websites – some scammers use  charitable solicitations in order to obtain credit card information for identity theft purposes or to install software on your computer or mobile phone that will enable them to control your device
  • Individuals unknown to you who are asking for money on Facebook, Craigslist and various online crowdfunding websites – many of these appeals involve fake victims
  • So-called charities that have names that sound like well-known, respected organizations
  • Solicitations from unknown individuals and organizations that connect themselves with a highly publicized crisis – scammers tend to focus on local and international disasters that have significant emotional appeal


Tips to ensure that your donation goes to the right people

There are many worthwhile charitable organizations that utilize most if not all of the money they receive for valid charitable purposes. After deciding what issue means most to you, do some research on organizations dedicated to that purpose:

  • Check to make sure that they are a valid charity through IRS Exempt Organizations Select Check
  • Ask for a copy of their 501(c)(3) determination letter from the IRS – this will ensure that your donation is tax deductible (note that this is not an absolute requirement for churches and other religious organizations)
  • Take a look at the charity’s annual 990 information returns to the IRS, available on The Foundation Center and Guidestar websites, among others (note that not all charities need to file a 990)
  • Get to know the organization – Ask to be informed of their activities. Maybe write a small check to start with and see how they respond. Did you receive a prompt thank-you note? An update on how your donation was used? Are there opportunities to see them at work?  What are the outcomes of their efforts?

Be a wise donor and make sure that your hard-earned money goes to a valid, responsible charity.  To learn more about sensible, effective and tax-deductible charitable giving methods, contact the tax professionals at Moskowitz LLP today.  


#8 on the IRS “Dirty Dozen” list of tax scams is Hiding Income with Fake Documents—will we describe those in our next blog post in this series.