ATLANTA - A federal jury today found Bernando O. Davis guilty of conspiracy, wire fraud, and aggravated identity theft for using stolen identities to file false federal income tax returns that claimed millions of dollars in bogus refunds.
“Almost every day we learn of another identity thief who has found a unique way to steal personal identifying information. The common theme is that the thieves always use the information they steal to commit a second theft: the theft of money," said United States Attorney Sally Quillian Yates. “Today, a federal jury brought this defendant’s identity theft scheme to an end."
“These unscrupulous defendants thought they had figured out a clever scheme to thwart the IRS and steal from American taxpayers," said IRS Criminal Investigation, Special Agent in Charge, Veronica F. Hyman-Pillot. “Today’s verdict clearly demonstrates that taking advantage, manipulating, and stealing from the American people will not go unpunished."
“This case is just another prime example that demonstrates the hard work and collaborative law enforcement effort to fight against perpetrators committing fraudulent acts against the American public. The U.S. Postal Inspection Service will continue to aggressively investigate all crimes where illegal use of the U.S. mail is used to further fraudulent schemes." said Keith Fixel, Postal Inspector in Charge, U.S. Postal Inspection Service - Charlotte Division."
According to United States Attorney Yates, the charges and other information presented in court: From approximately July 2010 to January 2013, Davis operated “Davis Tax Service," a tax preparation business in Clayton County, Ga. Davis, working with others, including Kevin J. Sonnier, and Carla L. Jefferson of Palmdale, Ca., led thousands of victims to believe that they could apply for “government stimulus payments" or “free government money" from the federal government by providing their names and Social Security numbers. Davis and his co-conspirators used toll-free telephone numbers, web sites, flyers, and radio advertisements to advertise the “stimulus payments" and collect victims’ personal information. They also recruited “runners" who promoted the scheme by word of mouth and collected victims’ personal information. In addition to the “stimulus" charade, Davis and his co-conspirators acquired names from a variety of sources, including prisons and homeless shelters, to use in the fraud. Many victims testified that they had never heard about the “stimulus payments," but their identities were nonetheless used by Davis and his co-conspirators to file bogus tax returns.
In actuality, no stimulus payment existed, and Davis and his co-conspirators used the victims’ personal information to file fraudulent tax returns that claimed a total of over $19 million in bogus refunds. On the returns, Davis claimed false income amounts and student credits to generate the bogus tax refunds. In many of the returns, Davis directed the IRS to pay the refund amounts to bank accounts he or his co-conspirators controlled. Davis and his co-conspirators shared in the profits generated from this scheme. The victims did not know that Davis had filed tax returns in their names.
The evidence at trial showed that Davis had over 1,600 tax refund checks sent to his home address in Stockbridge, Ga., by listing his home address as the victims’ address on the tax returns he filed in their names. In addition to the checks, Davis received thousands of letters addressed to the victims from the IRS, Social Security Administration, and other government agencies. After seeing such a large number of Treasury checks coming to Davis’ home address, a mail carrier seized over 1,000 of these checks and provided them to law enforcement.
Federal agencies executed a search warrant at Davis’ and Sonnier’s business location in February 2013. There they found numerous lists of names, Social Security numbers, and birth dates of victims which were used to file tax returns. They also found tax forms with victims’ signatures taped onto the forms to make it look like the victims had authorized the tax returns. In reality, Davis and his co-conspirators had cut the signatures from the “stimulus" applications and taped them to the tax forms to make their business appear legitimate if anyone asked any questions. When agents first entered the business to execute the search, Davis fled out of the back of the building and was arrested with the assistance of Clayton County law enforcement.
Davis also faxed a fraudulent Georgia driver’s license and tax forms to a Texas detective in 2012, when the detective asked questions about a tax return Davis had fraudulently filed in a Texas victim’s name. Davis falsely represented that the license had been given to him by the taxpayer. Numerous text messages were also introduced at trial where co-conspirators sent Davis names and Social Security numbers, including from prisoners, for use in the scheme.
In June 2012, Davis, 27, of Stockbridge, Ga., entered into an “Assurance of Voluntary Compliance" with the Administrator of the Georgia Fair Business Practices Act, in which he agreed to modify his business practices. The evidence at trial demonstrated that despite entering into this agreement, he continued to file false tax returns using the identities of unsuspecting victims. Over 20 victims testified at trial. The scheme affected over 15,000 victims in virtually every state across the country.
The jury convicted Davis of one count of conspiracy, 15 counts of wire fraud, and 15 counts of aggravated identity theft. The wire fraud counts each carry a maximum sentence of 20 years in prison, the conspiracy count carries a maximum sentence of 5 years in prison, and the aggravated identity theft charges each carry a mandatory two-year sentence. At least one of the two-year sentences for aggravated identity theft must run consecutively to any other sentence imposed. Each count also carries a fine of up to $250,000. Davis was detained after the verdict.
On Nov. 20, 2013, Jefferson pleaded guilty to conspiracy for her role in the scheme. On May 22, 2013, Sonnier, 44, of Ellenwood, Ga., pleaded guilty to conspiracy, wire fraud, and aggravated identity theft for his role. As part of his plea agreement, Sonnier agreed to forfeit his interest in 17 separate pieces of real estate located throughout Clayton County, thousands of dollars that were previously seized from his bank accounts, and over 80 electronic devices and items of jewelry that were previously seized by the government. In addition, Sonnier agreed to a money judgment of at least $7 million and full restitution to the IRS.
In determining the actual sentence, the Court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.
Sentencing for Davis is scheduled for Feb. 19, 2014, at 10:00 a.m. before United States District Judge Charles A. Pannell, Jr. Sentencing for Sonnier is scheduled for January 7, 2014, at 11 a.m., before Judge Pannell. Sentencing for Jefferson is scheduled for Feb. 18, 2014, at 10 a.m., before Judge Pannell.
This case is being investigated by Special Agents of the Internal Revenue Service Criminal Investigation and Postal Inspectors with the United States Postal Inspection Service. If you believe you may be a victim of tax return-related identity theft, please contact the IRS Identity Protection Specialized Unit at 800-908-4490, extension 245 (Mon. - Fri., 7 a.m. - 7 p.m. local time).
Assistant United States Attorneys Stephen H. McClain and Thomas J. Krepp are prosecuting the case.
For further information please contact the U.S. Attorney’s Public Information Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6016. The Internet address for the HomePage for the U.S. Attorney’s Office for the Northern District of Georgia is www.justice.gov/usao/gan.
Source: U.S. Department of Justice, Office of the United States Attorneys
