South side business tied to tax fraud scheme

More than $1 million in refunds tied to three addresses

IRS agents recently seized tax documents, computers and other storage devices from a retail store in the 1100 block of West Lincoln Avenue in Milwaukee as part of an investigation into the owners’ involvement in a fraudulent tax return scheme.

The scheme uses individual taxpayer identification numbers, used by those not eligible for social security numbers, to file fraudulent tax returns. The returns are often filed with Hispanic surnames as taxpayer names, claim head of household status, use false wage information and claim a number of child dependents to increase refunds.

The returns are often filed without a return address on the envelope and filers request a paper check to avoid being traced. The same address is often used repeatedly for different taxpayers with no history of living at that address

Agents have been investigating a number of ITIN schemes in the Milwaukee area. Sixteen search and seizure warrants filed since 2013 have resulted in the seizure of $1.5 million cash and $1 million in Treasury checks.

In the scheme involving the Lincoln Avenue store, investigators allege in search warrants the owners of the business have had returns sent to three different locations including the store and two in the 2000 block of South 13th Street.

The affidavits indicate 323 returns have been filed across the three addresses for a total of nearly $1.02 million.

BizTimes is not naming the business owners because they have not been charged.

In addition to searching the three addresses, agents also searched a storage unit in the 5000 block of South 13th Street.

According to the affidavit for the storage unit, agents first began investigating the store owners in 2013 after discovering tax documents and other evidence in the garbage of a 13th Street residence.

The case was bolstered by a cooperating witness who had cashed $27,000 in refund checks for the store owner and was paid $50 to $100 for each check. At a check cashing business in Milwaukee that was the subject of a search warrant in July 2014 investigators found the store owner had presented $1.1 million refund checks at the store between January 2013 and June 2014.

Investigators also received a letter from a woman who is believed to have fled to Mexico after a December 2015 search warrant was executed on her business and residence. The letter, received in January 2016, detailed her involvement in the scheme and listed the individuals who had received the most amount of money through the scheme.

The store owners had received the second most money.

Another cooperating witness told investigators the store owner purchased documents used for obtaining ITINs from the witness for $32,000 in cash for the documents for 15 to 20 families.

When agents searched the store owners’ residence they found documents pointing to the storage unit. The unit was under the name of the owners’ god daughter and her husband. The woman had no knowledge the unit was in her name and called her husband who said the store owner asked him to open it.

Agents searched the unit and found file folders with Mexican identification documents, tax returns and other tax documents.

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

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