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The Almighty Buck Crime Government Privacy

How an IRS Agent Stole $1M From Taxpayers (onthewire.io) 169

Trailrunner7 writes: Few, if any, companies or government agencies store more sensitive personal information than the IRS, and consumers have virtually no insight into how that data is used and secured. But, as the results of a recent Justice Department investigation show, when you start poking around in those dark corners, you sometimes find very ugly things.

Beginning in 2008, a small group of people–including an IRS employee who worked in the Taxpayer Advocate Service section–worked a simple and effective scam that involved fake tax returns, phony refunds, dozens of pre-loaded debit cards, and a web of lies. The scheme relied upon one key ingredient for its success: access to taxpayers' personal information. And it brought the alleged perpetrators more than $1 million.

What sets this case apart is that the accused IRS employee, Nakeisha Hall, was tasked specifically with helping people who had been affected by some kind of tax-related identity theft or fraud.

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How an IRS Agent Stole $1M From Taxpayers

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  • What sets this case apart is that the accused IRS employee, Nakeisha Hall, was tasked specifically with helping people who had been affected by some kind of tax-related identity theft or fraud.

    Awesome! So who watches the watchers?

    • Re:Classic! (Score:4, Funny)

      by LynnwoodRooster ( 966895 ) on Tuesday January 05, 2016 @03:08PM (#51243083) Journal

      None needed. The Government is MUCH more trustworthy than private enterprise, you NEVER have to worry about it...

      Do I really need the /sarc?

      • Do I really need the /sarc?

        Evidently yes

        • by rtb61 ( 674572 )

          You left out a bit, evidently yes because "the crew would take cards to ATMs and withdraw money, or use them in stores, the DoJ said. Hall, Goodman, and Coleman were arrested last month on a number of charges related to the scam, including mail fraud and conspiracy to commit bank fraud." It is called separation of powers and it exists because who watches over the government, other departments whose duty is to watch over the actions of government and when necessary investigate and prosecute those government

      • Yeah I mean you never hear about private enterprise swindling their customers, that's just unheard of.

        • The obvious solution is then, to remove the human factor involved. What could possibly go wrong?

          [looks around]

          I, for one, welcome our robotic overlords.

      • Re: (Score:2, Insightful)

        by jopsen ( 885607 )

        None needed. The Government is MUCH more trustworthy than private enterprise, you NEVER have to worry about it...

        Seriously, 1 million USD stolen by a few employees... That's not so bad. Considering the complexity of such a scam (ie. number of people involved), and the amount of money stolen I would say this is a minor case.

        Just saying there are bigger cases of fraud in both the private and public sector... So this isn't a good case for arguing government is bad.
        From the summary it seems multiple employees was involved, at which state YES fraud can happen. But the risk is small if multiple trusted employees need be

        • by SQLGuru ( 980662 )

          $1M is really just the rounding errors based on how much money flows through the IRS. She probably learned it from Richard Pryor.

    • Whoever caught Hall, obviously.

    • I dunno. Coastguard?

    • by sconeu ( 64226 )

      Awesome! So who watches the watchers?

      Horror film fans?

      http://www.imdb.com/title/tt2356526/ [imdb.com]

    • So who watches the watchers?

      We dooo, We dooo [youtube.com]

    • In this case, that would be the Treasury Inspector General for Tax Administration [treasury.gov] who answers to the Secretary of the Treasury who is a part of the President's Cabinet and thus answers to the President who answers to Congress and we pretend that Congress answers to the people.

    • by Anonymous Coward

      Snowden watches the watchers. And the rest of us stand idly by while the watchers throw Snowden to the wolves.

    • What sets this case apart is that the accused IRS employee, Nakeisha Hall, was tasked specifically with helping people who had been affected by some kind of tax-related identity theft or fraud.

      Awesome! So who watches the watchers?

      Apparently, Congress. Feel better now?

    • Well, she got caught didn't she?

  • The IRS steals money from taxpayers all the time through vague rules, questionable audits and outright confiscation. [forbes.com]

  • by avandesande ( 143899 ) on Tuesday January 05, 2016 @03:07PM (#51243079) Journal
    If you could get us a Finland or Netherlands style government I might change my mind, but after half a life time of watching our jokers at work, no way!
    • by JoshuaZ ( 1134087 ) on Tuesday January 05, 2016 @05:00PM (#51243793) Homepage
      To have a government like Finland or the Netherlands requires pretty left-wing policies and attitudes, including paying civil servants well, which requires a lot of tax money. If you keep insisting on low tax rates because we don't have a government type that doesn't arise unless one has somewhat higher tax rates, I'm not sure what to say.
      • Since the marginal total tax rate in the US is somewhat about 50% when you factor in everything, from where do you expect to get...more money?
      • To have a government like Finland or the Netherlands requires pretty left-wing policies and attitudes, including paying civil servants well, which requires a lot of tax money. If you keep insisting on low tax rates because we don't have a government type that doesn't arise unless one has somewhat higher tax rates, I'm not sure what to say.

        Feds earn 74% more than people in the private sector [govexec.com].

        The Cato Institute’s Chris Edwards compared data from the Bureau of Economic Analysis to show that, in his view, civilian federal workers are overcompensated. Factoring both salary and benefits, Edwards pointed to BEA data showing the average federal employee earns about $119,000 annually, compared to the private sector worker who earns $67,000 per year. When comparing just salaries, feds collect 50 percent bigger paychecks, Edwards said.

        More sources:
        U.S. Office of Personnel Management: "Senior Executive Service Performance & Compensation" [opm.gov]
        Congressional Research Service: "The Federal Workforce: Characteristics and Trends" [opencrs.com]
        Congressional Budget Office: "Comparing the Compensation of Federal and Private-Sector Employees" [cbo.gov].

        Apparently our Government is starved for cash? Here's where we tax [businessinsider.com]. Look at how it's spent [usgovernmentspending.com].

        • I forgot my summary. America has a spending problem and massive corruption.
        • Maybe the problem is that the private sector pays so little compared to the public sector. If you want to have a strong economy people need money to spend.

      • by khallow ( 566160 )

        To have a government like Finland or the Netherlands requires pretty left-wing policies and attitudes, including paying civil servants well, which requires a lot of tax money. If you keep insisting on low tax rates because we don't have a government type that doesn't arise unless one has somewhat higher tax rates, I'm not sure what to say.

        Who really buys that? We have plenty of examples where the US government already vastly overpays compared to countries like Finland and the Netherlands (eg, education, health care). My take is that if you double the tax revenue that the federal government gets, then fighter jets are going to cost $800 billion to develop instead of $400 billion and basic services that still somehow can't get properly funded. You need more than money to make this work.

      • You could simplify the ridiculously complicated tax code, which wouldn't require a small army of civil servants to manage anymore, increase the salaries of those left, and they'll never consider fraud in the first place.

        There problem solved. No left wing agenda required. I'll take my lucrative civil servant job now in payment.

        Of course a simplified tax code wouldn't let you hide tax breaks for the wealthy, so I guess that is a bit leftist.

  • What sets this case apart is that the accused IRS employee, Nakeisha Hall, was tasked specifically with helping people who had been affected by some kind of tax-related identity theft or fraud.

    Of course this would be the way to do it. Any losses that Nakeisha generated could be attributed to the fraud that the taxpayer was already suffering. Probably masked the losses quite nicely, at least for a time.

  • Irresponsible Retarded Scumbags?

    What? Don't ask me, I don't live in the U.S.A.

    • No, you got it right... Your definotion for IRS is a very appropriate description of the IRS!
    • the Tax men known for taking down the Untouchable folks.

      (just remember the IRS does not care where you get your money just that you properly (within the grimore that is the US Tax Code) pay the taxes.)

      • However, if Capone hadn't been taken down by the tax evasion, they would have had proof of his illegal activities, it is a catch-22.

        • Other people were trying to find solid evidence that he'd committed crimes, and were not doing well. If Capone had simply written much of his income in the "other, including illegal, income" space, the IRS would have had nothing against him.

          BTW, I've had dealings with the IRS, and they've all been fair and courteous (most of these were my fault; apparently my arithmetic ability is suppressed by tax forms). I knew an ex-IRS auditor, and she was a good person, and she told me that people keep asking them

  • by Anonymous Coward

    YallQaeda will find out and declare YeeHad on the IRS for violating Shania law!

    Damn I love twitter trolls! :)

    • by tnk1 ( 899206 )

      That's actually marginally funny. You could improve the redneck joke a little by calling it a Yeehawd. You see what I did there?

  • by ErichTheRed ( 39327 ) on Tuesday January 05, 2016 @03:14PM (#51243123)

    The whole security by obscurity thing happens way more than people think. Why do you think e-file refund scams work in the first place? Because (most likely) when the core system was designed, it was assumed that an IRS employee was entering the paper returns received in the mail by hand into an IRS-controlled computer. Therefore, the system only does a cursory SSN-to-name match as a sanity check before issuing a refund for whatever amount the return shows (as long as the math checks out.) The IRS is processing millions of returns a year, so this is only noticed when a taxpayer tries to file their return and is told they've already done so; it happened to a relative of mine a couple years ago.

    Not knowing the architecture, e-file really feels like a security by obscurity mess. Perhaps the IRS gives "trusted e-file providers" encryption keys for an Internet-accessible gateway, and the tax software just pumps the raw data directly into the main filing system from the end user. Also, once it gets inside the IRS, the data is probably considered "trusted" and not encrypted as it's passed around from system to system. People love to hate the IRS, and I'm sure that's reflected in budget appropriations, so whatever system is in place is probably never upgraded beyond skeleton crew maintenance stuff and new regulations coding.

    This is going to be the interesting part of the Internet of Things push -- take existing systems and slap them onto the Internet, no matter what it takes. I'm seeing this a lot in the private sector as well -- cloud cloud cloud! Get our previously inaccessible, vulnerable product out on the Internet before the competition does! IoT!! We're Agile, we'll fix all the problems as we go! Social! Apps! Etc...

    In this case, it's interesting psychology. The article even states it - people assume that their data is safe once it makes it inside the IRS. Same way people assume their banking or health data are safe, then find out it's not as protected as they think.

    • You are right about their budgetary concerns, but the situation is worse than you think. As of 2014 they were still using a system of vinyl cartridges as hard drives to store their tax information. And their budget is getting worse. For the last decade lawmakers, primarily on the republican side have been slashing the IRS's budget by labeling it a mechanism of evil and whatnot.

  • Meh. (Score:5, Insightful)

    by ScentCone ( 795499 ) on Tuesday January 05, 2016 @03:20PM (#51243161)
    Run of the mill embezzlement by someone placed in just the right spot to get away with it. But you know what? It's nothing compared to the Lois Lerner mess. This thief took advantage of IRS access to steal some cash. Lerner et al took advantage of IRS control to influence public discourse and a looming election.

    The tax code is incomprehensibly complex and burdensome. That's trouble all by itself. But because it plays out in the sprawling, no-accountability federal big government landscape, it provides fertile ground for everything from thievery (a la the linked-to story) to partisan shenanigans (a la Lerner-related issues).

    The drive to make government always bigger, always more complex, and always more insulated from consequence - that costs each of us real, serious money that produces nothing. We do need a tax enforcement agency. But we don't need it to be responsible for such mind-bogglingly byzantine complexity that it can't even keep an eye on its own people's ongoing criminal enterprises and partisan betrayals of trust.
    • by DaHat ( 247651 )

      we don't need it to be responsible for such mind-bogglingly byzantine complexity that it can't even keep an eye on its own people's ongoing criminal enterprises and partisan betrayals of trust.

      There is a reason for it, and it's not just about governmental size, to quote an older book:

      "Did you really think that we want those laws to be observed?" said Dr. Ferris. "We want them broken. You'd better get it straight that it's not a bunch of boy scouts you're up against - then you'll know that this is not the ag

      • An ironic [alternet.org] choice of author.
        • by DaHat ( 247651 )

          You really need to read up on the definition of 'irony'.

          Today we had a guy rail against access to guns who is protected by a group of guys with guns... care to say something on the topic of the discussion?

          • I find it especially ironic that none of the recent shootings that made the news would have been stopped by his changes if they happened first thing on his swearing in.

            He wants to stop the gun show vulnerability to the system, but that doesn't stop a broken background check system that allowed Dylann Roof to buy a handgun. http://www.nbcnews.com/storyli... [nbcnews.com]
            He went through the background check, but because the database being used sucks, he didn't get flagged.

            The changes wouldn't have stopped Adam Lanza from

            • by e r ( 2847683 )
              Because it's not about reducing crime. It's not about anything other than preparing for a proper tyranny that doesn't have to hide behind the fig leaf of our current system.
            • Conversely, it seems unlikely that many of those shootings would have been stopped by good guys with guns. There was a good guy with a gun at the Oregon shooting, and he waited for the police like everyone else.

        • How is that ironic? She paid into the system, why shouldn't she receive the benefits? I pay social security and medicare taxes, and I expect that when I retire I will use those benefits, this does not indicate however that I agree with the system, as I could easily invest the money in my 401k and come out way ahead of SS.

    • The IRS is a lot of things. Partisan isn't one of them. At least not in the way you are trying to portray :-) They will faithfully execute the orders from 'the boss', no matter which faction. Yes, even your "Lois Lerner mess" is just a run of the mill, everyday part of the show. Your righteous indignation over this particular target has been duly noted, thank you for participating...

      *ahem* Your bandwagon is reaching the end of the road. Are you all set to jump on the next one? Not many shopping days left

      • Re:Meh. (Score:4, Informative)

        by khallow ( 566160 ) on Tuesday January 05, 2016 @05:37PM (#51244055)

        The IRS is a lot of things. Partisan isn't one of them.

        Except of course, we have evidence [weeklystandard.com] to the contrary. Lerner's past history indicates she wasn't going to carry water in the manner she did, for a conservative administration. And it's worth noting that the same MO in her earlier harassment attack as an FEC bureaucrat mirrored her attacks as an IRS bureaucrat and against the same sort of targets.

        • She was following orders...

          • by khallow ( 566160 )
            You're making excuses. I personally don't believe she acted in a vacuum (she probably had enablers who knew of her previous work), but I doubt she would have done this effort for a conservative administration.
            • No, no excuses, I don't vote for the kinds of people that would hire them, so I don't care what she did or does. It is an issue the voters have to acknowledge and deal with themselves.

              Now, on the other hand:

              I doubt she would have done this effort for a conservative administration.

              This here is a perfect example of the kind of bullshit that your regular partisan hacks spew out in their little internet rags or on the radio. I expected better from you :-)

              • by khallow ( 566160 )

                This here is a perfect example of the kind of bullshit that your regular partisan hacks spew out in their little internet rags or on the radio. I expected better from you :-)

                It's true though. Let us recall that this particular subthread started because you asserted that the IRS wasn't partisan. But we see here an obviously partisan IRS manager doing the dirty work with a history of partisan dirty work.

                Ideologues don't trust outsiders to do the dirty work. For example, when the Bolsheviks took over Russia, they didn't keep the old administrations from the era of the Czars or the short-lived Russian Republic. They put their own people in charge and cleaned house even though th

          • by KGIII ( 973947 )

            She was following orders...

            So weren't the people who gassed the Jews. We've already, as a society, decided that culpability lies with the person(s) who give the order and the person(s) who follow them. "I was just following orders." Is no excuse at all.

            • I consider the Iraq/Afghanistan wars as criminal acts. Who takes the blame, Bush (Cheney), or the troops? And then why should giving the order be a crime if nobody follows? I can go either way with this, I'm easy.

              • by KGIII ( 973947 )

                The world doesn't work like that so I don't have much of an answer. You can blame anyone you want but that doesn't mean the rest of the world agrees.

                I'd only suggest that there are others who share culpability in many things and that this is one of those things. The person who did the deed is culpable - just like a murder for hire means the killer and the person who hired them share culpability. I suppose this is a bit less drastic than murder, however. The underlying principle is the same. We decided long

                • I'm not really making an argument one way or the other. My opinion means nothing. The voters are okay with it, not me. And the Nuremberg Defense is very selectively applied, by a democratic voting process it seems, or a committee, in the same fashion they decide who's a terrorist [straitstimes.com]

      • I didn't say the IRS was partisan. I said that the sprawling, un-supervisable, unaccountable nature of huge government bureaucracies like the one found at the IRS are unable to prevent people like Lois Lerner from bringing her highly partisan baggage to bear on her supposedly neutral role in her agency.

        That being said, the director of that agency IS a political appointee, and the current one has been in fact conducting himself in a highly partisan way in order to shield the agency's upper management from
        • Your projection notwithstanding, just follow the money. I would expect you to know the routine by now, but you seem to be a little too hung up on this 'nuance' thing that you like to use when, uhhh, different people are involved.

          Considering all the serious things happening out there, and that the whole 501(3) scam is nothing but a tax evasion scheme to begin with, yeah, you're on a silly media bandwagon... By its very existence, the IRS is a scandal, since the beginning, and it is non partisan, they are sim

    • The tax code is extremely complicated, and the US public as a whole can fix that. The problem is that we're a bit too selfish for optimum results. Suppose a Senator got more credit for cutting fifty billion dollars of government spending than funneling a billion to his or her state, and similar things happened with Representatives. What would happen with the deficit? Similarly, what if the citizenry demanded a simpler tax code without all the little corner cases enacted that give a small number of peop

  • by 140Mandak262Jamuna ( 970587 ) on Tuesday January 05, 2016 @03:29PM (#51243221) Journal
    What really upsets me is the lack of ambition and drive in the younger generation. This IRS agent could have made millions, but stopped at just one million. This really sucks, even when they can steal, they get lazy and take time off to post selfies in the facebook profile. There is no hope. Now, get off my lawn.
  • It's just like any other operating system. Once you know how it works, really really well, your mind turns to the thought of what you could do with yoru knowledge , if you wanted to. Most people don't act on it at all. Some people are inspired to make it more secure. Some people see it as an opportunity to be evil.

    When I was implementing an RFP back in the day for a certain protocol , it just so happened that what I wrote , when I posted it to a webserver, took that webserver DOWN. IT was just a quirk; noth

  • ...because that guy calls me a couple of times a month from all over the country about how I'm in trouble with the IRS, and they'll sick the local police on me shortly if I don't send them thousands of dollars, presumably by Western Union or in gift cards.

  • by Anonymous Coward

    There's still a long way to go for this country but, damn it, we're now in a position where African-Americans are in position to commit, and get convicted of, White Collar crimes. Just 30 years ago this crime of opportunity would have been almost exclusively available to privileged whites only. Dr. King's dream is one step closer to becoming reality.

  • He did his job. Duh.

  • WOW...I can't believe it. This could not have happened!

    Tthe king would not allow the IRS to perpetrate fraud!

    Nor would he permit the IRS to target anyone whose political leanings where presumed to be "offensive" to his beliefs.

    This story is a non-starter... Did anyone check Snopes to see if it was true?

     

  • An affirmative action government hire is caught entrenched in corruption and theft. Who is even surprised any more?

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