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Inmate Charged With Defrauding Other Inmates, IRS
01/05/10 - 04:18 PM
Jackson County Floridan
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click for larger image Jackson County, Fla:

An Apalachee Correctional Institution inmate is accused of using other prisoners’ names and Social Security numbers to obtain thousands of dollars in tax rebates — while he was behind bars.

Michael W. Joseph III is charged with organized fraud involving $50,000 or more, and seven counts of fraudulent use of personal identification.

His mother, Deloris Werner, who allegedly aided him in the scam, is charged with being a principal to fraudulent use of personal identification. She is cooperating with authorities, according to Assistant State Attorney Greg Wilson.

Wilson said Joseph was known in the prison yard as “H&R Block” because of his tax-filing prowess. Joseph was also known as a jailhouse lawyer, and filed motions on behalf of inmates from time to time. Wilson said it appears that while some inmates were in on the tax scam, others either believed their filings were legitimate or had no knowledge that Joseph was filing tax returns in their names.

Wilson speculated that in some cases, Joseph obtained inmates’ information when he was filing motions in court for them, and then used it without their knowledge in the tax scam.

In other cases, the inmates knew what Joseph was doing and agreed to give him more than half the money they would receive in rebates. Wilson said these inmates signed off to have the money deposited in accounts established by Joseph’s mother in Tampa. His mother would then send a portion of the money into the canteen funds of the inmates who were participating in the scam.

Wilson said it appears that 15 to 22 fraudulent tax returns were filed by Joseph between August 2008 and September 2009. 

Wilson has only pursued three of the fraud cases in court so far, and said that in all three case the inmates had no idea their information was being used for this purpose. These inmates are not accused of any wrongdoing in the matter.

Wilson said Joseph’s mother set up bank accounts where most of the money was electronically deposited by the IRS.

Wilson said she also led authorities to her boyfriend’s backyard, where $15,000 in cash was buried in a glass jar. Wilson speculated that some of the money from the tax scam was hidden there in the early stages of the operation as a test run, and as a way to ensure there would be some money left if the bank accounts were seized.

Wilson said the case has progressed to this point because of alert Department of Corrections staffers at ACI, who noticed that multiple tax returns were being sent by one inmate. They alerted authorities, and an investigation began.

Wilson said DOC and the U.S. Postal Service were key players in the investigation, which was led by the Florida Department of Law Enforcement.

If convicted, Joseph could face between eight to 90 years in prison on these charges, Wilson said.

Joseph had been in prison on after he was convicted of grand theft and cocaine charges, and his release date was nearing when the alleged scam was discovered.

When Joseph’s sentence was completed, he was turned over to law enforcement to face these new charges and was booked into the Jackson County jail late Monday.

The state named three specific victims in the charging document. In all three cases, the information was used without the consent of these individuals, the state maintains.

On or around April 9, 2009, the state alleges Joseph used the personal information of Edward Hodges to file a false tax return and obtained a $5,556 refund.

About a month earlier, on or around March 15, the state says Joseph used Hodges’ information to obtain a refund of $2,266, and on April 26 he again filed a false return using Hodges’ information, to obtain a $4,949 refund.

The state alleges Joseph turned his attention to new victims in May, using Warren Hayes’ information to obtain a refund of $1,364 on May 12, and a $1,315 refund on May 17.

On May 20, the state claims Joseph used Tracy Levine’s personal information to obtain a refunds of $1,013 and $1,418.

Wilson said the IRS declined to pursue the matter at the federal level because, in part, the amount involved was relatively small.

The IRS is working to help the victimized inmates clear their status with that agency, Wilson said.

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