Identity thieves used college student accounts to defraud IRS: prosecutors

[November 19, 2014]  By Zachary Fagenson

MIAMI (Reuters) - U.S. law-enforcement officials on Tuesday arrested 17 people accused of trying to collect almost $2 million in bogus tax refunds using college student accounts, the latest identity scam to defraud the Internal Revenue Service.

Identity thieves in South Florida, the top U.S. target for such criminals, used the students' financial accounts to receive the fraudulently obtained tax refunds, according to federal prosecutors.

"The disturbing fact is that (many) of these individuals are current or former students who allowed their accounts to be compromised," United States Attorney Wifredo Ferrer told a news conference.

The 17 arrested were among 21 people charged on Tuesday, including some who were paid anywhere from $100 to $1,000 to allow use of their Higher One accounts as part of the scheme to collect $1.9 million in tax refunds. In one instance, the ringleaders attempted to direct 92 tax refunds into a single account, law-enforcement officials said.

A financial aid disbursement service, New Haven, Connecticut-based Higher One channels students' loans directly to universities and issues debit cards with the loans' remainder to the students for additional expenses.

Ferrer said the scheme affected 644 victims from across Florida and netted nearly $500,000.

A spokesperson for Higher One said the company applauded the announcement of the arrests, and that it would "continue to be vigilant in safeguarding our customers' personal and financial information".

Florida leads the nation in identity theft despite a major federal crackdown. Thieves have targeted patients' hospital records and broken into mailboxes to obtain personal information, even killing one postal worker to steal his keys.

Identity theft in Florida reached "epidemic proportions" last year, according to the Department of Justice. Officials registered more than 190 complaints per every 100,000 individuals, while in Miami that figure nearly doubled to 340 complaints per 100,000.

Florida in 2013 had the highest per capita rate of fraud, with 804.9 people reporting a problem out of every 100,000, according to the Federal Trade Commission.

Since an Identity Theft Tax Fraud Strike Force was created in August 2012, South Florida prosecutors have charged 296 people for roughly $485.5 million in attempted stolen identity refund fraud, and more than $106 million in actual payments.

(Editing by David Adams and Ryan Woo)

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