Tax Fraud: Earl Worthy Sentenced for His Role in a Fraudulent Tax Refund Scheme
Alaska Inmate Sentenced for Identity Theft and Filing False Income Tax Returns
Anchorage, Alaska – U.S. Attorney Karen L. Loeffler announced today that Earl Worthy, 41, was sentenced to 70 months in prison for his role in a fraudulent tax refund scheme. The court also ordered Worthy to pay $159,628 in restitution to the IRS. Worthy pleaded guilty on May 9, 2016, to conspiracy to defraud the government, mail fraud, and aggravated identity theft. Worthy’s co-defendant, Tammy Jackson, was previously sentenced to five years of probation for her role in the conspiracy.
While an inmate at the Fairbanks Correctional Center, Worthy collected the names and social security numbers of individuals, many of whom were inmates. Between May 4, 2009, and Sept. 21, 2012, Worthy conspired with at least five others, chief among them Tammy Jackson, to use these identities to prepare and file false federal income tax returns with the purpose of obtaining a refund.
In some instances, the names and personal information used to file the false returns was obtained without permission. At other times, Worthy did obtain permission to use an individual’s name and information when he filed for the false tax refunds. Using the names and SSN’s of the various individuals, Worthy and Jackson prepared false individual income tax returns claiming false wages and withholding amounts listed on the tax returns for which there were no Forms W-2 issued. Worthy directed Jackson to use a template that listed amounts for wages, tax withholding, tax refund and other amounts that were essential to complete and file the tax return. Each return claimed that the taxpayer was owed thousands of dollars in refunds to which they were not entitled. In most instances, Worthy and Jackson forged the individuals’ signatures on the tax returns.
Worthy and Jackson submitted the false individual income tax returns in paper. The tax returns were submitted using the addresses of the Fairbanks Correctional Center (FCC) and other addresses most of which were associated with Tammy Jackson. Many of the Treasury checks were mailed to the FCC. In other instances, Treasury checks were mailed to addresses associated with Tammy Jackson. Worthy directed Jackson to cash the fraudulent refund checks. Worthy and Jackson obtained signed Powers of Attorney to allow the cashing of the checks. At other times, the refunds for the false returns were deposited directly into a bank account under the control of Worthy or a co-conspirator. Worthy authorized the co-conspirators, including Jackson, to retain a portion of the money from the Treasury checks or direct deposits.
“Identity theft and tax refund fraud is a top priority for IRS Criminal Investigation. It is particularly disturbing when these crimes are carried out by those serving in a correctional facility,” stated Special Agent in Charge Darrell Waldon of IRS CI. “Alaska has had a recent string of refund schemes perpetrated by prisoners.”
“The Department of Corrections is dedicated to public safety and will always respect the rights and dignity of victims of crime. The successful investigation by DOC staff and our law enforcement partners which led to Mr. Worthy’s conviction and sentencing shows our commitment in making sure laws are not broken inside in our institutions,” stated Dean Williams, Commissioner, Alaska Department of Corrections.
The case was prosecuted by Assistant U.S. Attorney Steven Skrocki of the District of Alaska. The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI), with the assistance of the State of Alaska Department of Corrections. For more information on ways to protect against identity theft and what to do if victimized by this crime, visit www.irs.gov.