Marketing experts say that there are few words as powerful to persuade as “free.” One enterprising scamster took that concept and ran with it to steal unsuspecting taxpayers’ tax refunds.
While living in sunny San Diego, Maxim Maltsev of Russia, blended the persuasive power of the word “free” with the fact that the IRS has a free electronic tax return filing program, and harnessed the awesome reach of the Internet, to steal tax refunds owed to ordinary taxpayers, looking to get their returns prepared and filed as quickly, easily and cheaply as possible.
Maltsev admitted in federal court in California that he was part of a conspiracy to obtain federal income tax returns requesting refunds before they were electronically filed with the IRS.
The success of the scheme depended upon taxpayers being fooled into using apparently free electronic tax return filing services which were, in fact, fake.
This was possible at all because the IRS sponsors a program called “Free File,” which allows taxpayers who are “eligible” to prepare and electronically file federal tax returns for free. And, most taxpayers are eligible to take advantage of the Free File program.
For example, in 2006, the time period when Maltsev carried out his scam, approximately 70% of all taxpayers were eligible to use the Free File program. Also at that time, there were 19 Free File affiliate companies formally approved by the IRS.
These approved affiliates linked to the IRS’s official website, making possible the electronic filing, and facilitating taxpayers taking advantage of this program.
Maltsev and coconspirators (three friends of his) created websites which appeared to be Free File affiliates. The Maltsev crew then advertised their bogus sites on the Internet and through email. Taxpayers taken in by the scam filled out their income tax returns online on the websites of the fake services Maltsev & company created.
Before actually filing the tax returns with the IRS, Maltsev’s fake services changed the taxpayers’ banking information so that refunds would be sent to one of Maltsev’s own bank accounts instead of the bank account belonging to the actual taxpayer.
Maltsev’s scheme then actually filed the modified tax returns with the IRS by submitting them through the real Free File affiliate websites – those 19 affiliate companies which were actually approved by the IRS.
Ultimately, Maltsev’s scam took in more than 65 taxpayers and it redirected (i.e., stole) approximately $136,000.
In 2009, Matsev was indicted for his 2006 crime, one count of conspiracy to defraud the United States. He pled guilty and was sentenced to 18 months in federal prison and ordered to repay $136,000 to the Internal Revenue Service.
Leave A Comment