A man dressed in a hoodie and knit cap using an ATM in the month of April seemed suspicious to many people in Vermillion, South Dakota. One concerned citizen contacted police, who then watched surveillance video of the man withdrawing money using a pre-loaded debit card issued for a tax refund. However, the tax refund wasn’t legitimate and the police had stumbled upon a scheme to defraud the Internal Revenue Service of $1.1 million dollars.
As Yahoo! News reported, the man observed withdrawing money from the ATM was a cornerback for the University of South Dakota, Alphonso “Rico” Valdez, but the card he had been using wasn’t issued to him.
After launching an investigation in 2012 that took several months, it was discovered that Valdez, along with 10 other people, had managed to net almost $400,000 in refunds in little over a year. Six of those involved with the scheme were teammates of Valdez at USD. Another of the co-conspirators had been on the track team and was once impeached as USD’s student government president for, ironically, misused funds.
As the Rapid City Journal reported, the 11 members of the fraud ring pleaded guilty to federal fraud charges in Sioux Falls. On Monday, the 23-year-old mastermind of the scheme, Valdez, and one of his co-conspirators will be sentenced.
Several of the fraud ring have already been sentenced and will serve time in prison, ranging from two years to more than five years. A joint restitution of $422,000 was ordered paid by all of the members of the fraud ring, except for three of its members.
Valdez had recruited his girlfriend, USD students, and other people that he knew in Tampa, Florida, to help with this scheme. He had them gather information like names, addresses, Social Security Numbers, and other identifying information. The scheme began in June 2011 and continued until May 2012, a month after a citizen alerted the police about the overdressed man at an ATM.
The information they gathered was then used to file bogus tax refunds, which were sent to addresses not associated with the identity theft victims and which allowed the ring to retrieve the funds. The co-conspirators communicated through text messages to coordinate their scheme. The texts contained much of the information needed to file the fraudulent tax returns.
Authorities are not sure where the bulk of the ill gotten gains are or how it was spent because there is no evidence that the group was spending money frivolously. The only known purchase was an airplane ticket bought by one of the members of the fraud ring. There were no known purchases of expensive jewelry, extravagant gifts and, as USD athletic director David Herbster said, none of the athletes seemed to have owned a car.
“They didn’t exhibit anything that you would be overly suspicious of as far as somehow coming into an excess amount of money. There were no really nice cars, there was not a lot of fancy clothes, fancy jewelry things like that that would lead you to believe, ‘How did you get that?'”
As evidenced by a report in the Inquisitr, schemes such as this one are hardly new and even IRS employees are not immune to identity theft and tax fraud.
Most of the conspirators in the USD fraud ring have expressed remorse for their actions, including the ringleader, Valdez, who hopes to someday coach football and teach young people the can overcome the mistakes they have made and “further their education.”
[Image via KSFY.com]