DIGITAL CRIME MILKS IRS FOR HUGE RETURN

TAMPA -- When drug dealers started disappearing from street corners
this year, Tampa police detectives thought something was going on.

And when officers made traffic stops, they began noticing something
odd.

They were finding "massive amounts" of preloaded debit cards along
with ledgers and laptop computers, said Sgt. Terry Goff in an
exclusive interview with The Tampa Tribune and News Channel 8.

They soon uncovered what Goff said was an explosion of tax fraud that
permeated the city's poorest neighborhoods and some of its most
influential conclaves. Erstwhile street criminals were using laptops
and mailboxes to steal hundreds of millions of dollars by filing
fraudulent tax returns with stolen Social Security numbers.

Investigators think Tampa is at the tip of a national trend that has
created a hemorrhage of federal tax dollars. In a six-month period,
Postal Inspector Doug Smith said his agents seized an estimated $100
million in fraudulent tax refunds destined for local mailboxes. And
Police Chief Jane Castor said she thinks that number represents less
than 10 percent of the total fraud.

If Castor's estimate is close, the total fraud in the Tampa area alone
could approach $1 billion.

Suddenly, the quick money to be earned selling drugs on street corners
didn't have the same allure. It was easier, safer and more private to
steal people's identities and then use the Internet to con the
Internal Revenue Service to deliver riches right to the mailbox.

For at least two months, the crooks even gave classes in Ybor City,
renting a social club every week to teach groups of 50 to 100 people
how to "make it rain" money courtesy of Uncle Sam. Students learned
how to use easily accessible Internet databases of Social Security
numbers of deceased people as well as personal information stolen by
employees from business customer files.

In exchange for the lessons, the teachers expected a percentage of the
loot, Goff said.

Castor said the criminals also threw filing parties where people got
together to file fraudulent tax returns, with incentives to get the
returns filed by certain deadlines.

The fraud is being done by virtually "anybody and everybody that can
get their hands on a computer," said Detective Sal Augeri, who
compared the its prevalence to the crack epidemic of the 1980s. "It's
just rock cocaine on a plastic card," he said. "Once you do it, it's
addictive. It's so easy to do that some of these people I don't think
could stop if they wanted to."

Investigators say the thieves appropriated the name of a popular tax
filing program, dubbing the fraud "Turbo Tax." It's even being
celebrated in locally made rap videos posted on the Internet featuring
flashy cars, wads of cash and laptop computers.

A spokeswoman for Turbo Tax, the corporation, said she could not
discuss the ongoing investigation. "The safety and security of our
customers' information is a top priority for TurboTax, and we
cooperate fully with law enforcement in any way we can when these
cases are brought to our attention," Colleen Gatlin said.

The reason Tampa appears to be ahead of the rest of the country "is a
mystery to us," Goff said, although he and Castor suggested it might
just be that police here have identified it first. Tampa police have
formed a task force with several other agencies, including the
Hillsborough County Sheriffs Office, postal inspectors, the U.S.
attorney's office and the Secret Service, to tackle the issue.

This week, investigators began a sweep of arrests and raids aimed at
shutting down at least a portion of the fraud while sending a message
to the crooks. They plan to announce the results of their offensive at
a news conference today.

"We feel that we have caught up with the people committing this
crime," Goff said. "And for those that think that nothing's ever going
to happen to them, that's going to end this week."

By Thursday, about 17 people had been arrested and five businesses,
including at least two car dealers, searched as part of Operation Cash
Back. Investigators seized numerous high-end cars, including a
Bentley, at least two Jaguars, two souped-up Corvettes and a Mercedes.

The cars, Goff said, are a symptom of the sheer amount of cash that
has flowed onto the streets through this kind of fraud. "When you can
go and you can buy a $100,000 car with cash, that's pretty phenomenal
to me," he said.

As word of the police crackdown filtered to the streets, detectives
were hearing reports of people smashing laptop computers and throwing
them in trash bins, police said.

Until now, police say, word on the street was that authorities
couldn't do anything about the fraud.

And for a time, the biggest obstacle investigators confronted, they
say, was federal tax law.

That's because privacy restrictions prevent law enforcement from
gaining access to tax returns. So even if someone is caught with
hundreds of debit cards loaded with fraudulent tax refunds,
investigators are not allowed to see the tax returns that were filed
to obtain that money.

"The federal law's so restrictive, (the Internal Revenue Service is)
unable to give local law enforcement any assistance," Castor said.
Detectives, she added, had to find "a way around the IRS restrictions
to investigate these cases."

The chief said the obstacles are so great, none of the people arrested
this week were charged with tax fraud, even though "that's what
they're doing."

Instead, she said, authorities are bringing charges of identity theft
and money laundering.

At the same time, minimal or nonexistent screening of electronically
filed tax returns, investigators said, makes it all too easy to commit
this kind of fraud.

The explosion in fraud has afforded criminals extravagant spending
sprees, said Goff, adding that detectives have seen people spend
$15,000 or $20,000 at a time in the Gucci store at International Plaza.

Among the searches conducted Thursday was an operation at a
single-story home on East Caracas Street. Among those inside, police
said, was Marterrance Q. Holloway, 32.

Holloway was arrested a year ago at the Howard Johnson hotel on North
50th Street, police said. When officers entered his room, they smelled
marijuana and saw drugs. After Holloway and several other people were
removed from the hotel, officers found four laptop computers they say
were being used to file fraudulent tax returns.

There also were lists of personal information with more than 1,000
names, as well as debit cards and financial records. Holloway
ultimately faced only drug charges in that arrest as police struggled
with the legal barriers to bringing tax fraud cases.

Goff said the path the task force has mapped out can be used as a
template by law enforcement agencies across the country. He said
investigators here are eager to share what they have learned.

Though street-level crime decreased for a time when some drug dealers
took to their computers, police later saw an increase in home invasion
robberies and carjackings when word went out about the amount of money
some people were making through fraud. This time, Goff said, the fraud
perpetrators were the victims.

Even before this week's sweep, investigators have been arresting and
prosecuting people for participating in the tax scam, including one
member of a notorious local family, Shawntrece Sims.

Sims, 31, pleaded guilty in March to federal crimes involving more
than $200,000 in tax fraud. After agreeing to cooperate with
investigators, she was allowed to remain free while awaiting her
sentencing hearing. But a judge revoked her bail on Aug. 11 after the
prosecution presented evidence that she continued the tax fraud even
after pleading guilty. After she signed her plea agreement, she stole
an additional $409,000, according to government court pleadings.

While free on bail, Sims used cash to pay a fertility clinic to undo
her tubal ligation to enable her to become pregnant before her
sentencing hearing, the prosecution says.

Sims tried to hide her actions from investigators by committing the
fraud partly using Internet service at a hotel that employs her half
sister, Tiffany McKinney, according to the court pleadings. McKinney
was released last year from state prison where she was serving a
sentence for manslaughter.

Their brother, Sedrick McKinney, was notorious in the late 1980s when
he became a symbol of revolving-door justice after serving only four
months of a nine-year prison term for shooting and paralyzing a baby
during a street-corner drug deal. He later was sent to federal prison
on a weapons offense after shooting a man in the face. He has been
released from federal prison.

Unlike perpetrators of murder and robbery and other street crimes,
Goff said, people who commit tax fraud think they aren't hurting anyone.

In his 29 years with the Tampa Police Department, Goff said, he never
has seen a crime that people so readily admit to committing. "When we
call the people in and we put them in front of us and we interview
them, the vast majority "" I'm talking about over 90 percent ""
openly admit it," he said. "They don't see anything wrong with it in
their mind."

Goff said the perpetrators don't think they are hurting anyone.
"They're not out robbing people, in their mind," he said. "They're not
putting a gun in your face; they're not breaking into your house.
They're sitting in their living room on a computer, and in their minds
they're doing "" the vast majority of them are saying "" they're
doing nothing wrong."

But those whose identities were stolen will have to contend with the
fallout, and there also is a loss to the American public.

"As a taxpayer," Augeri said, "I feel like I've had my money stolen
day in and day out."