Staten Island Woman Admits Role In $65 Million Stolen Identity Income Tax Refund Fraud Scheme

NEWARK, N.J. – A Staten Island, New York, woman admitted her role in one of the nation’s largest and longest running stolen identity refund fraud schemes ever identified, in which more than 8,000 fraudulent U.S. income tax returns sought more than $65 million in tax refunds and resulted in losses to the United States of more than $12 million, U.S. Attorney Paul J. Fishman announced.

Elian Matlovsky, 29, pleaded guilty today before U.S. District Judge Claire C. Cecchi to an information charging her with one count of conspiracy to defraud the United States and one count of theft of government property.

According to documents filed in this case and statements made in court:

Matlovsky and others obtained personal identifiers, such as dates of birth and Social Security numbers, belonging to Puerto Rican citizens. They used those identifiers to create fraudulent 1040 forms, which falsely reported wages purportedly earned by the “taxpayers” and taxes purportedly withheld, to create the appearance that the “taxpayers” were entitled to tax refunds. The returns were filed electronically. By tracing the specific IP addresses that submitted the electronically-filed 1040s, law enforcement officers learned that just a handful of IP addresses created many of the fraudulent 1040 forms that lead to the issuance of tax refund checks.

Conspirators purchased mail routes, that is, lists of addresses covered by a single mail carrier. Conspirators applied for refunds, inserted addresses along the mail route as the purported home addresses of the “taxpayers,” and obtained the refund checks sent to the addresses. They also applied for checks using addresses otherwise controlled by, or accessible by, certain conspirators and collected the checks after they were delivered to those addresses. During the course of the scheme, hundreds of refund checks were mailed to just a few different addresses in a few different towns, including Nutley, Somerset and Newark, New Jersey, and Shirley, New York.

Matlovsky and others then deposited and cashed the checks. The conspirators used several methods, but Matlovsky opened several bank accounts, into which she deposited nearly $1 million in Tax Refund Treasury Checks. Once the Tax Refund Treasury Checks were deposited into Matlovsky’s accounts, she and others caused proceeds of the fraud to be withdrawn, and spent those funds.

During the course of the investigation, members of the task force identified certain “hot spots” of activity and intercepted more than $22 million in refund checks – that had been applied for fraudulently – before they were delivered to members of the conspiracy.

The conspiracy count carries a maximum potential penalty of five years in prison and up to a $250,000 fine. The substantive count of theft of government property carries a maximum potential penalty of 10 years in prison and up to a $250,000 fine. The theft of mail by a postal employee carries a maximum potential penalty of five years in prison and up to a $250,000 fine. Sentencing is scheduled for Nov. 18, 2014.

SOURCE: U.S. Attorney’s Office, District of New Jersey

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