Don't Mess With Taxes

A group of South Florida rappers allegedly created a music label as a front for a massive tax refund fraud ring.

Click image to watch the MoneyKing_GroundUP111 video on YouTube.

Maybe the erstwhile rappers should change their musical moniker to Doin' Time since six of them were sentenced to jail last week in connection with the tax fraud scheme.

Harlan Decoste of Miramar, Florida, who went by the alias Money King, created the label, according to the federal charges filed against him and his confederates back in August 2015 in the Southern District of Florida.

Decoste received the longest prison term of the group, primarily because, noted U.S. District Judge William Dimitrouleas in imposing the sentence, "He's the boss."

The five other conspirators were listed as officers in the ostensible music company.

Dimitrouleas, however, said, "I think it was a fraud factory."

$30 million in fake refunds: That's essentially what investigators from a variety of law enforcement agencies, including the Department of Justice, FBI and Internal Revenue Service Criminal Investigation (IRS-CI) division, had argued.

The court papers filed in the wake of the multi-agency effort alleged that instead of making music, the men were part of an extensive stolen identity tax refund fraud scheme based in a rented house in Miramar, located about halfway between Ft. Lauderdale and Miami.

There, according to the charges, the members of scheme used the personal identifying information -- names, dates of birth and Social Security numbers -- of more than 29,000 individuals to file thousands of fraudulent federal income tax returns.

At least 10 laptop computers were used between July 2011 and May 2013 to file fake federal tax returns seeking around $108 million. Investigators say the crooks actually pocketed nearly $30 million in fraudulent refunds using the stolen identities.

The operation was discovered when local police responded to a home invasion robbery at the house and found cash, computers, closets filled with expensive shoes and jewelry, bags of marijuana and other drugs, and dozens of prepaid debit and credit cards.

"This is one of the largest stolen identity tax refund fraud schemes prosecuted in the United States," said Kelly R. Jackson, IRS-CI Special Agent in Charge, in the announcement of the sentencings. "These defendants perpetuated an elaborate scheme driven by insatiable greed and a blatant disregard for the integrity of the United States tax system. This case is another example of IRS-CI's commitment to investigate individuals who participate in stolen identity tax refund fraud and hold them accountable for their actions."

Jail, money punishments meted out: Each of the defendants had previously pleaded guilty to charges of conspiracy to defraud the government with respect to claims; conspiracy to possess 15 or more unauthorized access devices; possession of 15 or more unauthorized access devices; and aggravated identity theft.

Five of the confessed tax felons were sentenced on Tuesday, April 5. The sixth was sentenced at a separate hearing Wednesday, April 6. The defendants and their court ordered punishments are:

Harlan Decoste, aka Money King and Moneyking_111, 27, of Miramar, Florida
234 months (19.5 years) in prison, to be followed by three years of supervised release. Also ordered to pay restitution of $28.2 million.

Kerby Luma, aka Money Makin Kerb, 26, of Miramar
132 months (11 years) in prison, to be followed by three years of supervised release. Also ordered to pay restitution of $28.2 million.

Frantz Decoste, aka Gripe_111, 21, of Miramar
54 months (4.5 years) in prison, to be followed by three years of supervised release. Also ordered to pay restitution of $28.2 million. He also pled guilty to one count of possession of stolen mail.

Francis Jeudy, aka Money Makin Rab and Brizzleon111, 26, of Miramar
116 months (9.7 years) in prison, to be followed by three years of supervised release. Also ordered to pay restitution of $28.2 million. He also pled guilty to one count of possession of stolen mail.

Andy Cherrelus, aka Risktakers111, 24, of Miami
94 months (7.8 years) in prison, to be followed by three years of supervised release. Also ordered to pay restitution of $10 million.

Chad Davis, aka Chadillac and Chadillac 305, 29, of Miami
Four months in prison, to be followed by three years of supervised release.

Paying back the U.S. Treasury: You probably noticed that four of the men sentenced last week also were ordered to pay restitution of $28.2 million, the amount of tax dollars Uncle Sam actually lost to the SoFla fraud scheme participants.

Each ordered payback technically was joint and several restitution. In cases where there are multiple defendants, the joint and several designation means that each can be held liable for the same event or act and be responsible for all restitution required.

Basically, this allows a person harmed by several parties, in this case the U.S. Treasury, to get the court-ordered restitution amount from any one single liable party, several of them or all of them. If Uncle Sam can get the illegally paid $28.2 million back from one of the South Florida fraud ring participants, say the big boss only, great. If, however, the feds get the total they lost in false refunds back via varying amounts from all who were ordered to pay restitution, that's great, too.

The joint and several system is designed to make it more likely that the wronged party ultimately will get paid back for his or her losses since there are multiple sources from which to get the money.

Joint and several liability also is in effect for married couples filing a joint tax return. In this case, the IRS can come after either spouse for payment of a tax bill, even though one spouse made most or all of the money that generated the tax bill.

So while it would be really cool (and profitable!) if the federal government got separate restitution payments -- more than $28 million each from four of the fraudulent tax filing felons and $10 million from a fifth -- that's not how it works. Uncle Sam is not going to get an almost $123 million total payback from this one tax fraud ring.

Still, recouping the $28.2 million in false refunds that the rappers-turned-tax-crooks actually received is a good result, along with the prison time for all involved.

And in honor of that judicial tax restitution effort, the $28.2 million court-ordered joint and several repayment amount is this week's By the Numbers figure.

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• IRS releases Top 10 identity theft, tax fraud cases
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