Tax fraud brings 27-month sentence Man bilked U.S. out of $200,000 BALTIMORE CITY

August 20, 1993|By Marcia Myers | Marcia Myers,Staff Writer

A Baltimore man who conducted an electronic tax fraud scheme that bilked the U.S. government out of about $200,000 was sentenced yesterday to 27 months in prison.

Joseph Vines Jr., 33, of the 1600 block of N. Patterson Park Ave., was one of three men who carried out the scheme between late 1991 and May 1992, prosecutors said.

The men paid people for the use of their names and Social Security numbers, which were used in filing false income tax returns.

Vines pleaded guilty in May to conspiracy to defraud the United States and making false claims to the government.

Before being sentenced yesterday in U.S. District Court in Baltimore, Vines told Judge Frederick J. Motz he was "extremely sorry and remorseful for being involved in the scheme" and called it a "dumb and foolish thing."

Vines had faced a maximum sentence of 15 years in prison and a $500,000 fine. He was not fined.

Vines participated in the scheme with Frazier B. Todd Jr. of Atlanta and Vincent Drone, a high school friend from Baltimore.

Todd and Drone pleaded guilty in similar schemes in Cincinnati and Atlanta, respectively, and cooperated in the Baltimore investigation, said Assistant U.S. Attorney Stuart A. Berman. Todd was sentenced to 30 months in prison and Drone to 15 months.

The Atlanta scheme brought in $400,000 in illegal tax refunds, and the one in Cincinnati brought in $31,000, Mr. Berman said.

In the Baltimore scheme, Vines took advantage of an Ohio bank that lent people the amount of their tax refunds in advance for a small fee. The Internal Revenue Service then processed the returns and paid the bank.

Domenic LaPonzina, chief spokesman for the Baltimore IRS office, said such programs are targets for fraud, since it can take a while for the IRS to determine the return is a fake. By then, the lending institution has already handed over the money and the IRS has probably paid the bank.

"We have worked very diligently with [tax preparation firms] . . . to educate them. . . . We tell them what to look for in clients coming to them. Several cases have come from preparers who believe the information they are receiving may be fictitious." Mr. LaPonzina said.

Phony names or false employer identification numbers on the returns are often the first signs of fraud.

The Baltimore scheme raised questions first at the IRS Service Center in Philadelphia, where inspectors could find no records for the company named on the phony W-2 forms. Baltimore IRS investigators then took over the case, reviewing 73 bogus returns, most listing the same nonexistent company.

Agents questioned those who had filed the returns and found that most were welfare recipients who had been paid $300 to $500 each for the use of their names and Social Security numbers on tax returns that paid refunds ranging from $2,063 to $3,156.

"The link, the name that kept coming up, was Mr. Vine," Mr. LaPonzina said. "His name even appeared on some of the forms."

Besides Vines, 27 others have pleaded guilty in the Baltimore scheme. Three received sentences requiring periods of home detention. Of the others, all but two were sentenced to probation.

4 Mr. Berman said none of the money was recovered.

"Evidence indicated it was all spent," he said.

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