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WSB-TV Channel 2 Action News viewers help bust tax theft ring

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Updated: 8/27/2013 10:02 am
ATLANTA -- A WSB-TV Channel 2 Action News investigation helped the criminal investigation of a major tax theft ring after viewers called to help identify the suspects.

But now, prosecutors said they can only go after state charges, because the Internal Revenue Service has refused to help with the case.

"Everyone else in the case was very cooperative, we just didn't get that from the IRS. They were not willing to work with us in trying to resolve the case," said Cobb County District Attorney Vic Reynolds.

Reynolds formed a task force to get law enforcement working together after realizing three separate burglaries at local tax offices were likely related.

"It didn't take very long to realize these folks are not your typical run-of-the-mill criminal. They're individuals who've probably done it before," Reynolds told Channel 2 investigative reporter Jodie Fleischer.

Investigators believe the same thieves broke into C.C. Accounting and Tax Service, in Dallas; the Costen Tax Group, in Kennesaw; and Seals & Seals Tax and Accounting Services, in Austell; last December.

"It's been a nightmare not only for me but for my clients," said Sherrie Cornelius, who owns the Dallas office. "It makes me very mad. They trusted me with their private information."

At each office, the crooks stole computers containing the Social Security numbers and other personal information for previous tax clients.

"I was shocked. I was just totally shocked," Priscilla Diggs-Costen told investigative reporter Jodie Fleischer. "I hope these people are caught, they're prosecuted, and I hope that this information they have is taken off the street."

Costen owns the Kennesaw business.

This spring, during tax season, investigators realized how elaborate the scheme was.

Six hundred local victims filed their tax returns but had them rejected, because the thieves had filed first, requesting $3 million in bogus refunds.

"Guess who eats it? The taxpayers," added Costen.

In June, prosecutors shared with Fleischer a surveillance video and several fake identification photos connected to the case. Channel 2 Action News viewers responded with a positive identification.

"It helped certainly and ultimately in identifying suspects," Reynolds said.

He said he can't release the suspects' names or photos yet because the investigation is ongoing.

Investigators determined most of the fraudulent tax returns contained the same tax preparer information, with an address at a Marietta post office box. But Reynolds says the IRS would not disclose whose IRS-issued number that was.

"It disappoints me, it's frustrating," Reynolds said. "If you've got a county that's willing to step up and say, 'We'll prosecute these folks, we'll investigate,' you would think they'd be willing to do what they can to help us. But that's not the way it worked out."

Fleischer asked the special agent in charge of the Atlanta IRS office about the perceived lack of cooperation.

"I can't just take a person's tax information and provide it to any sort of police agency unless we're part of a formal grand jury investigation," said agent Veronica Hyman-Pillot.

Hyman-Pillot said federal law prohibits sharing information unless it's a federal case and accused Cobb of failing to follow required IRS protocols.

"But we have an agent standing ready to work the investigation with them and to help them get what they need," she added.

To recover what he can for Georgia taxpayers first, Reynolds is instead pursuing criminal charges for the state returns the fraudsters filed.

Investigators already recovered $67,000 left in a bank account and $140,000 in cash found during a search warrant.

Reynolds also plans to try to seize a $400,000 Buckhead condo purchased by one of the suspects, along with a $210,000 Porsche.

"The least I can do as district attorney is to do whatever I can do to make sure my victims are made whole. In the long run, the priority will be to send these folks to prison," said Reynolds.

"I'm hoping that this will wake up the [federal] government," said one Cherokee County victim, who did not want her name used.

She tried calling to warn the IRS right after the break-ins, hoping to protect her identity before it was stolen.

"They said, 'Well, it's our policy that we can't flag an account for fraud until someone has actually filed a false return, and it hasn't happened yet,'" the victim told Fleischer.

A few months later, it did happen, despite computerized warnings that are supposed to flag when hundreds of returns go to the same address.

Hyman-Pillot says detecting fraud has become the agency's top priority and that a team is constantly working on new flags for the computer system. She wasn't sure how this case avoided detection. She said she could not comment on whether the IRS would conduct its own investigation.

A U.S. Treasury Department investigation last year found the IRS paid out more than $5 billion in fraudulent tax refunds. Fraudulent returns have increased more than 400 percent in the last five years.

"To them, a few billion dollars isn't anything, but to all of us individuals who need and rely on our returns for our day-to-day living, it is a big deal," said the victim.
ATLANTA —
A Channel 2 Action News investigation helped the criminal investigation of a major tax theft ring after viewers called to help identify the suspects.

But now, prosecutors said they can only go after state charges, because the Internal Revenue Service has refused to help with the case.

"Everyone else in the case was very cooperative, we just didn't get that from the IRS. They were not willing to work with us in trying to resolve the case," said Cobb County District Attorney Vic Reynolds.

Reynolds formed a task force to get law enforcement working together after realizing three separate burglaries at local tax offices were likely related.

"It didn't take very long to realize these folks are not your typical run-of-the-mill criminal. They're individuals who've probably done it before," Reynolds told Channel 2 investigative reporter Jodie Fleischer.

Investigators believe the same thieves broke into C.C. Accounting and Tax Service, in Dallas; the Costen Tax Group, in Kennesaw; and Seals & Seals Tax and Accounting Services, in Austell; last December.

"It's been a nightmare not only for me but for my clients," said Sherrie Cornelius, who owns the Dallas office. "It makes me very mad. They trusted me with their private information."

At each office, the crooks stole computers containing the Social Security numbers and other personal information for previous tax clients.

"I was shocked. I was just totally shocked," Priscilla Diggs-Costen told investigative reporter Jodie Fleischer. "I hope these people are caught, they're prosecuted, and I hope that this information they have is taken off the street."

Costen owns the Kennesaw business.

This spring, during tax season, investigators realized how elaborate the scheme was.

Six hundred local victims filed their tax returns but had them rejected, because the thieves had filed first, requesting $3 million in bogus refunds.

"Guess who eats it? The taxpayers," added Costen.

In June, prosecutors shared with Fleischer a surveillance video and several fake identification photos connected to the case. Channel 2 Action News viewers responded with a positive identification.

"It helped certainly and ultimately in identifying suspects," Reynolds said.

He said he can't release the suspects' names or photos yet because the investigation is ongoing.

Investigators determined most of the fraudulent tax returns contained the same tax preparer information, with an address at a Marietta post office box. But Reynolds says the IRS would not disclose whose IRS-issued number that was.

"It disappoints me, it's frustrating," Reynolds said. "If you've got a county that's willing to step up and say, 'We'll prosecute these folks, we'll investigate,' you would think they'd be willing to do what they can to help us. But that's not the way it worked out."

Fleischer asked the special agent in charge of the Atlanta IRS office about the perceived lack of cooperation.

"I can't just take a person's tax information and provide it to any sort of police agency unless we're part of a formal grand jury investigation," said agent Veronica Hyman-Pillot.

Hyman-Pillot said federal law prohibits sharing information unless it's a federal case and accused Cobb of failing to follow required IRS protocols.

"But we have an agent standing ready to work the investigation with them and to help them get what they need," she added.

To recover what he can for Georgia taxpayers first, Reynolds is instead pursuing criminal charges for the state returns the fraudsters filed.

Investigators already recovered $67,000 left in a bank account and $140,000 in cash found during a search warrant.

Reynolds also plans to try to seize a $400,000 Buckhead condo purchased by one of the suspects, along with a $210,000 Porsche.

"The least I can do as district attorney is to do whatever I can do to make sure my victims are made whole. In the long run, the priority will be to send these folks to prison," said Reynolds.

"I'm hoping that this will wake up the [federal] government," said one Cherokee County victim, who did not want her name used.

She tried calling to warn the IRS right after the break-ins, hoping to protect her identity before it was stolen.

"They said, 'Well, it's our policy that we can't flag an account for fraud until someone has actually filed a false return, and it hasn't happened yet,'" the victim told Fleischer.

A few months later, it did happen, despite computerized warnings that are supposed to flag when hundreds of returns go to the same address.

Hyman-Pillot says detecting fraud has become the agency's top priority and that a team is constantly working on new flags for the computer system. She wasn't sure how this case avoided detection. She said she could not comment on whether the IRS would conduct its own investigation.

A U.S. Treasury Department investigation last year found the IRS paid out more than $5 billion in fraudulent tax refunds. Fraudulent returns have increased more than 400 percent in the last five years.

"To them, a few billion dollars isn't anything, but to all of us individuals who need and rely on our returns for our day-to-day living, it is a big deal," said the victim.


Video: WSB-TV Atlanta
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