Wired reports that a group of "sophisticated" identity thieves received around $4 million from the government by filing fake tax returns for at least three years. Apparently the group was able to use names and Social Security numbers stolen from both the living and the dead. More than 1,900 fraudulent tax returns were filed, and the refunds were directed to more than 170 bank accounts.
Wired said that the group took advantage of the IRS' quick turnaround process for electronically filing returns--these are typically processed without verifying taxpayer information or confirming the actual amount. Rather than sending a check in the mail, the IRS will pipe the funds into a bank account or a pre-paid debit card amount.
In this case, the group, led by 29-year-old Daniel David Rigmaiden, used stolen IDs to create fake online and phone accounts using 175 different IP addresses. The fake returns were filed in bulk, making it appear as if they were submitted through an automated process. The FBI caught Rigmaiden back in May 2008, and since has charged him--along with side-kick 43-year-old Ransom Marion--with 35 counts of identity theft, 35 counts of wire fraud, one account of unauthorized computer access, and two accounts of mail fraud.
Authorities were tipped off about the scheme when another criminal--facing unrelated state charges in another fraud case--told them about Rigmaiden. The FBI signed him on as an informant who in turn slipped his way into the network and eventually uncovered one of Rigmaiden's IP addresses. Agents then located Rigmaiden's home and put him on surveillance--eventually he was finally arrested after retrieving $9,000 in cash as part of a fake $700,000 IRS refund.