'An Easy Way to Make Money Quickly'

April 12, 2007 — -- Members of the Senate Finance Committee have long suspected that the Justice Department fought so hard to keep convicted felon Evangelos Soukas from testifying today about tax fraud because it feared Soukas would illustrate how easy it is for anyone with the most rudimentary intelligence to game the system.

Based on Soukas' testimony and the visible frustration of IRS Commissioner Mark Everson, the Justice Department had every reason to be worried.

Soukas, 29, who bilked the IRS out of $43,600 in fraudulent tax rebates, told the senators that "it's not hard at all" to hijack someone's personal information.

And from his rough-hewn bearing -- Soukas is hardly an M.I.T. doctoral candidate -- it wasn't hard to believe him.

"They didn't recover none of the funds," said Soukas, wearing a tweed sports jacket over his prison orange jumpsuit. The stolen money was spent on numerous trips abroad, he testified.

From 2000 through 2005, Soukas was able to get the IRS to send him rebates using nothing more than the names, social security numbers and dates of birth of other taxpayers, which were obtained from a partner in crime, an entry level employee of a cell phone company. It took approximately two hours per return, Soukas said, incredulous that the IRS system didn't require more than basic information.

"What I don't understand is why doesn't the IRS have some type of security measure by issuing out a PIN number or even using a mother's maiden name when filing electronically or even calling in the call center," Soukas said. "There should be some type of extra measure to safeguard the people's tax records in my opinion."

"Not even a mother's maiden name!" he said. "Everyone has a mother's maiden name or a password."

All of these fraudulent refunds for other taxpayers went into Soukas' personal bank account, which stunned the ranking Republican on the committee, Sen. Chuck Grassley of Iowa.

"If Chuck Grassley got a refund and it was going to be deposited in Jim Smith's account, wouldn't that raise a red flag?" Grassley asked.

"People have joint accounts," said a flummoxed Everson. "I'm not sure what the protocol is."

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Everson was not as impressed with Soukas' crime as much as the senators, noting the relatively small amount of money Soukas stole. "That case would frankly not be accepted by many U.S. attorneys," he said, under intense questioning from committee chairman Sen. Max Baucus, D-Montana. "In most districts across the country you would not get prosecuted for $40,000 in a refund crime."

Everson said putting more safeguards on the IRS rebate process would hurt "in some instances poor people who were entitled to the refund…If you stop everything that you think is questionable, then you will be damaging the interests of some legitimate taxpayers."

"In all due respect, that is not a satisfactory response," Baucus said.

Soukas was ultimately arrested in January 2005 not for the fraudulent tax refunds, but for more than a million dollars in other kinds of fraud and identity theft. In June of that year he pleaded guilty, and he is currently serving seven-and-a-half years in prison for wire fraud, mail fraud, fraudulent use of another person's means of identification and identity theft.

Soukas said he was first inspired to conduct his criminal acts in March 2000, when he stumbled upon an H&R Block advertisement on the Internet promising users, "Receive your tax refund within days of filing!"

"For a criminal already on the run from the FBI, this was a easy way to make money quickly," Soukas said. First Soukas filed a tax return for himself, "making up a W-2 entry on the Web site from which I had copied from my mother's tax return. It took me a couple of hours to work it out to make the tax return look legitimate."

It was simple, he said. Obstacles were easily overcome. When the site required a nine-digit tax code for an employer, Soukas obtained one from a past employer's human resources office. Soon enough he was using the H&R Block Web site to file with the IRS a refund request of $3,614.00. He also received an anticipation loan for that amount, receiving the money in his checking account within days.