Matthew Cox | Inside True Crime Podcast - Exposing IRS Tax Scams | Kristine Stevenson

Episode Date: December 22, 2023

Exposing IRS Tax Scams | Kristine Stevenson

For a limited time at McDonald's, enjoy the tasty breakfast trio. Your choice of chicken or sausage McMuffin or McGrittles with a hash brown and a small iced coffee for five bucks plus tax. Available until 11 a.m. at participating McDonald's restaurants. Price excludes flavored iced coffee and delivery. So I'd look at the envelope that was stapled because they keep the envelope stapled to the back of the return. So then I'd look at the other tax return. Same handwriting. 25 in a row.

Wow. And they're going into nursing homes together. all the socials and the names and addresses of all these people that are sick in a nursing home that don't have a tax filing requirement on the street it's called the drop you know you file someone's taxes before they can file their taxes or you simply get someone's information you get their social security number and their name and then you go and you put in you say hey I'm so-and-so and I made 45,000 and I paid in 12 I'm owed seven thousand dollars can you please deposit it on this card.

Yes. And I am, although I, you know, just based on reading cases and speaking with these guys, I mean, I know that they, I understand that they have to give them the money, they file, you know, they're trying to throw up all of these, these ways to slow this down and stop it. They're giving people PIN numbers. They're having them call and all these things. What kills me is that the IRS doesn't know that Walmart didn't send in the $11,000 or $12,000 that you're saying they paid, you know, that you've paid in. Like the IRS doesn't. I understand they don't have a little account sitting there with your name on it. But like, why don't they?

Well, actually they do. You seems that. Well, okay. But so why don't. So why don't they catch the fact that you're saying, I worked for Walmart, I paid in $11,000, you owe me $7,000. Why don't they catch that? They do. They don't catch it immediately.

One of the departments I worked in, it's called Automated Underreporters. Okay. Okay. And that department works about eight to nine months after the fact, after the tax season closes in April. So along about now, late November, early December, automated underreporters department is starting to fire up 2022 the year we just finished in addition to all the prior years.

And so they're going to start catching some of these things. They're going to catch this return, this guy from Walmart that said he made 14 grand or whatever he made and now we owe him seven. They're going to likely catch that and there's a cycle that goes on

and they're going to send out. And he may have gotten the refund and it's really hard to get money back once the money leaves. Right. Well, especially if it's not him. Right. But it went to some place. It went to a bank, but to, you know, it goes to a bank. It doesn't go to, you know, a card per se. Well, I mean, it, you know, they were, initially they were, you could use like a green dot card or rush card. Yes, green dot, yes. A lot of those, they've shut down, but there's so many banks that are allowing you to open bank accounts online and they get the, you know, so I understand it goes to it. There's a lag. The reason they're not catching it is there's just there's a lag time. There are 300 million people, whatever, filing tax returns. And they just simply cannot catch them all right up front. It's overwhelming. It's overwhelming. And the things you're talking about, I saw those. I would, I would, in underreporters, I could see this bank and this account number getting more than one refund.

right but different names and different socials that are stolen or borrowed or made up or whatever it's it's so you know criminals are smart and they know how to manipulate the system and the IRS is slow to catch up CI is super strong and they really you know they've got systems in place their technology is just sort of now kind of catching up to to modern times so one of the guys spoke to it's funny because sometimes you'll talk to some guy who's like a literally like it was what was like what did you do before this and he'd say oh I was I sold drugs but he's never had a job he was a drug dealer for okay for 10 years and somebody taught him how to do this and he started doing this and you're like and you did this for five years yeah he made a million dollars doing it and

you're like this that's insane yes you know so and then you'll talk to someone else who owned a tax you know prepare with a tax preparer for 15 years and then he did it like Like, and I can understand getting away with it. But I spoke with a tax preparer one time. And he had, when I was saying, you know, why can't they stop this? And he said, well, you got to look at it like this. He said, at any given time, there's 100,000 corporations in the United States that are behind on their payroll taxes. He said, so you work at waterbed warehouse.

and they take you they've paid you $60,000 and they've removed they've taken they've withheld $15,000 from your check and they were supposed to forward that to the IRS but they're they have poor management they're behind on their bills and they haven't sent it now when you go to file you get your W2 you go to file your taxes he said is it fair that the IRS doesn't send you the money because they didn't pay it in legally the IRS or you have to allow them to withhold the money he's like so it's not fair that

the IRS is well wait a minute your employer hasn't sent us the money we're not going to send you the money so in their gut their gut reaction is send him the money that he says we owe him he said and then we'll figure it out if something's wrong he said but initially he said you need that money you deserve that money and what stop do you know how fast you were going I'm going to have to you a ticket to my new movie, The Naked Gun. Liam Neeson. Buy your tickets now. And get a free chili dog.

Chilly dog, not included. The Naked God. Tickets on sale now. August 1st. The waterbed warehouse ever pays the IRS. The IRS owes you the money. And I was, you know, that I, you know, and I admit it, I do, but it makes sense. Yeah. But it's still, it's still hard.

It's unpalatable. So, especially seeing these guys that would, they would say, oh, yeah, I would, you know, Initially, these guys would say, look, if I filed 10 of them, nine of them went through when I first started. And they said it got worse. It's gotten worse over the last five or six years. And now it's been. Worse as in, is it better for them or harder for them?

No, much harder. So now they're filing 10 and they're lucky if two or three go through. Yes. Yes, I was, yes, the ID theft unit was really starting to gear up about the time I was leaving. My unit, they asked for people in my department to, hey, do you want to go work in this new unit reforming? Right. ID theft, because they become more savvy.

And just as your person was saying, yeah, maybe two of ten go through. But they still go through. I talk to people two or three times a month. Hey, I tried to submit my tax return and the IRS rejected it and they don't know why. Right. figured out. And it turns out to be someone else filed a tax return using a social, either their social or some social that was on the tax return for a kid.

Yeah, I was going to say I had one guy who, he actually has an interesting story, but it's funny because he said, you know, he had a car lot, like a buy here, pay here car lot. He's not in a crummy area of town. And he said, these guys would come in and they just had tons of cash. He's like and he said more and more people were coming in and asking for higher end cars. He said, he said, listen, after six months he said this one guy who had bought like three cars i said listen man what are you doing you don't have a job you're not a normal guy is is it drug money like what is it he he said he's like i really didn't care he said i was making a ton of money i mean he should care i know but he's like i didn't care keep mind i met him in prison so um he's like i really didn't care but the guy was like

i remember he said to him he said is it drugs he is drugs he goes nobody sells drugs anymore he goes this is this is the this is the this is the drop and he goes what's that and he goes it's the pack And they call it, he was that we're, we're filing taxes on people that, you know, that are not even, they were doing it on people that didn't even, had never had a job. And so, so he got that guy to teach him how to do it. He started, he owned a car lot. I think he owned a couple car lots. He started doing it, did it for years. And he said he was much more successful because typically if, if one of the, the, the, the,

filings didn't go through these guys said oh okay didn't go through next he would call he said because they would like mail a letter and say you need to call you know call this whatever he said he goes I call and he said I'd call I'd argue with them I'd answer the questions I could answer he said typically I had most of of the answers he said if you called he said honestly said just calling almost got them to release the money. He said because most of the people just wouldn't call. And he said, if I knew one or two questions and if I, one or two of them, I was like, I can't remember. Are you sure that was, I don't think I ever lived there? Are you sure that? That doesn't, it might have been my mom's address. He said, if I just kind of, you know, try to fumble my way through it, he said a lot of times

they would cut him a check or not a check, but they would wire the money or just, yeah, it's insane. IRS is, uh, and, and those are, those are lower level employees. You're not Senior Executive Service, they're not revenue loss. There's an agent that he's talking to. And so they're regular people like you and I, and they don't necessarily have tax law knowledge, like understanding of return and things like that. They're following the internal revenue land.

Right. It's a giant if-then chart, if this, then that. If the taxpayer says X, Y, or Z, then, okay, release the money and code the account. Right. And, you know, here's the thing, like calling. I can understand that because I actually applied for a bank loan, and they sent me, you know, the documents to sign. And before they would let you sign them, you have to verify your identity.

Right, 2009. They asked me like six, well, they asked me like six questions, you know, what color was your BMW in 2000? Yeah, yeah, yeah. I couldn't pass them. Ah, couldn't verify your ID, yes. Some of the questions were 20 years old. Like, I don't remember. It could have been dark blue.

It could have been black. I don't know. So anyway, I ended up having to go to the bank and sign the papers. So I could understand, even if it's really you not getting the answer. So it's, it's tough. I saw so many schemes across my desk. I would get these bundles of tax returns, 25 and 50 in a bundle. Take, like, go to the cart, get them, take them back to my desk, sit down and start going through them.

Because there's some error codes that are coming up on these returns. So I have to clear the code, the error, to see if it can really muster and go on through the system. And I clear one, okay, that's fine, get the next tax return. And I'm handling paper documents. Right. And I see the next one. Oh, same error code. Oh, isn't that interesting?

Okay. Clear that one. Third one. Wait, this is the same error code. Let me look at these other two. And so I'd look at the envelope that was stapled because they keep the envelope stapled to the back of the return. And it's from, you know, podunk USA somewhere in Alabama or something, handwritten to the IRS with a handwritten return address and a postage, you know, that it was hand canceled in a post office. And so then I'd look at the other, the second tax return, same handwriting.

Same envelope. Same hand in a row. Wow, I mean And they're going into nursing homes Or they're working with someone inside a nursing home To get all the socials and the names and addresses Of all these people that are sick in a nursing home That don't have a tax filing requirement

And they make up a little bit of income Just enough to get Maybe $500 or $600 refund 200 or $300 or $300 change nothing But you multiply that Multiply, yeah, you start adding zeros and it becomes a lot of money. It becomes a lot.

And I would see these in bundles of 25. And then I'd be like, okay, wait, I need to stop. This goes to CI. And I would reroute it to criminal investigation. But you never know what happens. I don't know what happens. I would have to go find somebody in a week or something. I'd have to go and say, what's going to happen with that?

And then I'd check back and no, it's not like that. No. Not a big building. And they don't advertise what they're working on for obvious reasons. But they do post when a kid. case has finally come to resolution, it's gone to court. Some has been fined or sent to jail. Then they post what they've... They don't say you found it. They don't give you an add-a-boy, no att-a-boy.

No, they're not out for att-a-boys. They're like, hey, we caught the bad guy. Because ultimately, this person is defrauding you and your neighbors. Right. Oh, I mean, no doubt. I'm not saying, I'm not saying it's not wrong. I'm just, I'm amazed that someone stumbled across this, and then it spreads so rapidly. Yes. Yeah. When ITINs were first initiated the individual taxpayer identification number,

they had a unit in Philadelphia that was running that group. And then they moved it to Austin. And so they had lower-level employees looking at ITIN applications. This is for, someone that comes into the U.S. doesn't have a social, but they need some kind of tax ID number. Socials come from Social Security Administration. ITINs are issued by the IRS. So they would send

in a W-7, a form W-7, with lots of documents attached to it, like, you know, proof of citizenship and birth and all sorts of official documents, that IRS employees not to, you know, proof of citizenship, and birth and all sorts of official documents that IRS employees not trained in any kind of forensic analysis of, is this a real birth certificate or is this manufactured? You know, they didn't know. And they were shooting these applications through

and giving people ITN numbers. And those IT numbers were assigned to people that were being claimed as dependents on tax returns. Okay. You start claiming dependents. Yeah, you're getting your... You're getting credit. You're getting child tax credit, additional child tax credit.

And so they would be getting tens of thousands of dollars in refunds. And we would... My department, we would see this, and there's 100 people working out on the floor. And I'm just seeing... In my little shift, you know, how many am I stamping, okay, this passes? They get it. I'm just one person. This was early on.

They've cracked down now, and it's much more... it's it's tight now but does it get do people get do they just get greedy and next thing you know they have eight dependents and 10 dependents and they're just they're just they're just they're just they're just it's just a numbers it's just a numbers game

yeah that's the problem it's just really fresh and people at the IRS are very frustrated by it you know this is when I was there if you know we because we knew that this you know yeah it might be meeting technical aspects of the law but this is these people did not live here right you know all you had to do was prove that some way they're a

citizen of some other country and da da da and they get an i tin it was really frustrating um i wrote a i wrote a book about a guy the so i've written a bunch of truth that's kind of how this whole thing ended up yes yeah that's when i gathered yeah so i I was writing other inmates, you know, true crime stories and one of the most fascinating inmates, and I will bore you with the whole, the whole, his whole case, but I will explain this to you because you'll, you'll understand it. You'll go, you'll be like, wow, okay, listen to this. This was so, and this is very odd because it is very interesting because it was something I hadn't really heard before. So he was going in to destroy. companies and so your company's either about to claim bankruptcy and he was by the way at this time he was he was a bankruptcy attorney he was a despard bankruptcy attorney to be but he had been a bankruptcy attorney he eventually got disbarred and now he was more like you know he was investing capital in companies and one of his tactics would be to go in and

he would take a portion of his fee would be in, you know, in stock, you know, stock. And then he'd get so much after the first quarter and this sort of thing. And they'd say, well, we don't have any of we don't have that money. Don't worry. We will have the money. I'm going to take care of this. And of course, the first thing he did was he went and he renegotiated with all of the vendors by saying, I'm going to place the company in bankruptcy. And one of the first things he did was, so if your company has. you know, 400 employees, the first thing he would do is he would make sure he'd take all of your employees and he would have them, their pay would be outsourced to an employee leasing company. So that now the money goes to this employee leasing company. They do all the pay stubs. They do all withholding. They can renegotiate workmen's comp, you know, health insurance, whatever the case may be. But he owned that company.

And what he really did was, one of the things he did was he stopped sending the withholding, the employee withholding taxes to the IRS. Adult tax deposits, yes. He did this. Now, I'm not positive. One of the, this went on for years and years and years. And he would tell the IRS, he would notify the IRS. We're currently, you know, we're experiencing some, some issues. some liquidity issues, and he'd send him a letter.

And there was a form that you fill out, which you notified them. We've withheld the money, but we're currently, we're about to go, we were contemplating bankruptcy, and we're in the middle of audits, and withholding the money. And they'd notify the IRS, now apparently, according to him, if you notify them and withhold the money, you're within your rights, they become a creditor. So, but he would do this for months and months, and he would meet with the IRS and he would explain and they would say, how much do you have? I currently have this much money. We're working on this. We're doing this. We're about, we may be going into bankruptcy. And then sometimes he would even negotiate if he owed them $15 million. He would negotiate with the IRS for a lesser payment and put, get on a payment program. So he doesn't pay him $15 million. He paid. $5 million, and we're going to pay that over the next two years, and we'll be able to start paying again. He did this to the tune of, I don't know how many companies it was.

I don't know if it was $10 or $12, but it was $180 million by the time they were done. It was the largest tax, what would they call, employment withholding tax scheme that had ever happened. His name was Frank Amadeo. He was, he's from Orlando. You can look it up. He is fascinating. What I find most fascinating about the guy is that he's also, he has bipolar condition with features of schizophrenia. So he actually believes that, and only periodically.

Actually, he tell you he always kind of believes it. But he believes that since he was very young, God has been talking to him and telling him he's preordained to be emperor of the world. now I know and it it sounds ridiculous but everybody that I that I interviewed said they said oh no no he's been saying it forever like no he jokes about it they're like no he will joke about it and laugh about it I'm like so it's kind of like a tongue and cheek it's just a joke and they're like no no he's serious you know he's but you can joke about it with him he'll joke about it and kind of laugh it off but he believes a threat of truth in that then he thinks yeah and he does he does without a doubt, but $180 million.

He got 22 years. Yeah, I wrote a book about him called It's Insanity. There's been a documentary about him. He actually plotted a coup to take over the Congo. He actually backed a political candidate in the Congo, and eventually the military came in. They said it was an armed coup. He insists it was an armed. They, this, it's a fascinating story, but I, you know, so I had many, many discussions with him about the withholding taxes. And he was also one of the people that told me, he's like, oh, listen, he's like, there are companies all the time that are that are months, even years behind on the, on the, the, the, the, uh, their employees, uh, withholding. And I just remember thinking that, you know, that's crazy. But he was, you know, he explained it the same way the other guy. He's like, well, what's the IRS?

is choice. They're not going to come in and shut the company down. There could be 400 people working there. Like, as long as you're trying to pay and you can pay, and you're showing payment, you don't miss any payments, he's like, you know, he's like, and look, sometimes they go into bankruptcy. Sometimes they end up a creditor. So, isn't that, have you ever heard? That's a kick. I mean, that's a kick. And I will say this, I've been around some people that have bipolar disorder. And when they're on their manic high. I mean, brilliant. Oh, he's brilliant. He's brilliant. Amazing stuff. He's absolutely brilliant. I'll tell you something else, which is funny because anybody who watches my channels heard this. But this always makes people go, wow. So my original

sentence was 26 years. Frank Amadeo, I met him in prison. He filed what's called a 2255. It's a habeas. It's a motion in the court. He filed two of them. them for me once he got seven years off my sentence once he got five years off he got 12 years off of my 26 years sentence and had it not been for him i'd be in prison right now because my out date was 2030 so so you know i i i i although i will say and i really only and i i don't he wouldn't even consider it disrespectful because he'll say it you know he he's he's he's crazy he sounds crazy he He says crazy things periodically, but he's absolutely brilliant. Doesn't mean you can't be brilliant, right?

Yeah, he's, you know, but 180 million. He'll also try and tell you that, you know, oh, it was perfectly illegal. We notified the IRS. We were in negotiations. We were, yeah, but you were using that money to plot taking over other countries and buying other companies. And, well, you know, there may have been some discrepancy. Extenuating circumstances. Right.

You had me until you... Yeah. We tell ourselves stories. Yeah. He was great. That's my IRS story. Hey, if you guys liked the interview, do be a favor. Hit the subscribe button, hit the bell so you get notified of videos just like this.

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