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Millions in Tax Refunds Obtained Through Massive Identity Theft Conspiracy

Federal investigators in Western Pennsylvania have uncovered a national identity theft scheme that has been in operation for nearly a decade. Thieves used stolen IDs to open bank accounts, obtain credit cards and file fake tax returns that caused the IRS to pay millions in fraudulent funds.

Five suspects from New York, Rhode Island and Tennessee are being charged with conspiracy to commit wire fraud and aggravated identity theft.

U.S. Attorney for the Western District of Pennsylvania David Hickton says that the fraud was first detected in December of 2012. An Erie Credit Union employee came across several suspicious bank account applications with matching identification credentials and alerted the FBI.

Further examination by the FBI and IRS uncovered that these five individuals had been stealing and sharing thousands of identities since 2005. The suspects used the identities to file fake tax returns and open bank accounts under false identities to store the fraudulent funds. According to Hickton, the suspects filed more than 2,400 false tax forms, and obtained $10 million of the $21 million in returns they had sought.

A majority of the fraudulent behavior was committed through the Internet. According to Hickton, this allowed the suspects to go undetected for so long.

“They took great steps to identify what would be called a “clean” taxpayer who they could exploit before that taxpayer could file his or her return," said Hickton.

They also used e-filing methods and anonymizing software to avoid detection.

Patrick Fallon, Assistant Special Agent in Charge of the FBI’s Pittsburgh Office, says these five arrests are only a piece of a much larger investigation.

“We realize these cases expand not only across the nation, but across the globe. This case has ties to Nigeria and other foreign nations where identity theft is rampant,” said Fallon.

According to Fallon, the five suspects are all of Nigerian descent and two of them are believed to be immigrants from the African nation.

The five suspects are currently being held in Erie as legal proceedings begin. If given the maximum sentences, suspects could face between 20 and 38 years in prison.

Hickton says that this investigation is unrelated to the recent UPMC data breach that has put 27,000 employees at risk.