IRS Workers Stealing Your Cash! Look Who's Cashing in Your Check to the Government
ABC News Uncovers History of Contract Workers, IRS Employees Stealing Taxpayer Checks and Cash
By VIC WALTER and MEGAN CHUCHMACH
April 15, 2009
Think your income tax check is safe when you send it off to the IRS? Think again. An ABC News investigation has uncovered case after case of checks being stolen, manipulated and cashed by contract employees responsible for processing them, resulting in delayed payments and heavily disrupted lives.
"It was beyond my wildest imagination that this theft would be an inside scam," Brad Miller of Garland, TX told ABC News.
Last year, Miller sent a cashier's check for more than $20,000 to the IRS, where it ended up in the hands of a Bank of America employee in Dallas who embezzled $485,539.76 in taxpayer remittance checks.
Miller said the theft left him out of a $400 fee he had to pay to stop payment on the check, not to mention the violation he felt knowing someone had accessed his money and personal information.
"I never before gave it a second thought that my check made out to the IRS would end up in the wrong hands," Miller said.
As it turned out, the Bank of America employee, Emmanuel Ekwuruke, had stolen nearly half a million dollars in taxpayers checks, many of which he manipulated from "IRS" to "MRS" by making the 'I' into an 'M.' He then added a "MR" and his wife's first and last name, before attempting to cash the checks. Just last week, Ekwuruke, a native of Nigeria in the U.S. as a permanent resident, was found guilty of theft, embezzlement, misapplication by a bank employee, as well as theft of public money and aggravated identity theft and sentenced to 66 months in prison.
The IRS Lockbox System
Lockbox banks have been used by the IRS since 1985, and the system is composed of three commercial banks that collect tax payments at eight lockbox sites. According to the office of the Treasury Inspector General for Tax Administration's (TIGTA) most recent data, the lockbox network processed over 67 million payments in Fiscal Year 2007, which added up to over $400 billion. Bank employees, many of which are contract or part-time workers, staff the facilities.
According to a press release from the Department of Justice announcing the indictment of a contract worker for stealing, bank employees at the IRS lockboxes collect checks sent in by taxpayers from post office boxes, process them and then forward the transaction records to the IRS.
"This speedy collection/processing service allows the U.S. Treasury to receive the funds promptly, thereby earning substantial interest revenue for the United States," according to the DOJ.
The IRS did not immediately respond for a request for comment.
GAO Report on IRS Lockboxes
Issues surrounding IRS lockbox banks are not new â€“ the U.S. General Accounting Office (GAO) reported in 2003 that oversight of lockboxes "was not fully effective to ensure that taxpayer data and receipts were adequately safeguarded and properly processed."
The GAO's report stemmed from a 2001 incident in which more than 76,000 income tax payments valued at $1.2 billion were lost or destroyed by a Pittsburgh lockbox facility.
Since then, other IRS contract workers have been indicted for stealing from IRS lockboxes.
In October 2008, Jacqueline White, who worked as a clerk for an IRS contractor as a lockbox facility in Windsor, Connecticut, was sentenced to three years probation for stealing eight checks worth $51,433 from taxpayers and then altering the payee to herself and depositing the funds into her personal checking account.
In 2007, Sharon Walker, an employee at an IRS lockbox in Ohio, was charged with one count of attempted theft after being caught on video surveillance removing a $100 bill from a taxpayer remittance and putting it in her pocket. According to TIGTA, Walker then admitted to taking the money, which was recovered by a TIGTA special agent.
In 2006, Bank of America employee Ursula Nicole Moore was charged with embezzling nearly $30,000 in money orders and checks, altering the checks, and then depositing the funds into her own bank account. Moore, who was working at the Dallas lockbox facility, pled guilty to one count of theft of government property and was sentenced to five years probation and ordered to pay back $17,256 to several banks.
In 2003, a temporary employee for Bank of America hired to process checks at the Dallas lockbox, Edmond Ekene, was charged with 18 counts of felony charges stemming from the theft of more than $127,000 in checks sent in by taxpayers to the IRS. Ekene was contracted to Bank of America from a staffing agency for the position. He was sentenced to 71 months in prison and ordered to make restitution of $194,369.39.
For Brad Miller, who testified at the trial of the man who stole and manipulated his check, the experience has been very worrisome. And as for this year? "I made my check out this time to the 'U.S. Treasury Department,' not the 'IRS,'" Miller said.
IRS Employees Also Commit Crimes
Contract employees at lockbox facilities are not the only ones who have stolen taxpayer money. IRS employees have also been charged with similar crimes.
In June 2008, Teresa Richardson, a mail clerk at an IRS Submission Processing Center in Fresno, CA, was sentenced to 36 months probation and ordered to pay $1405 in restitution for embezzling money orders submitted to the IRS by taxpayers.
And in May 2008, another IRS mail clerk was indicted for stealing more than $75,000 in taxpayer checks from the same Fresno service center. Shaun Lertswan was charged with six counts of theft of government property for manipulating the checks and depositing them into a personal bank account.
In 2007, IRS employee Mary Austin was sentenced in the U.S District Court for the District of Arizona to three years probation for stealing 10 cash remittance payments from taxpayers, totaling $5,103.32.
Other IRS employees have been charged with unauthorized inspection of tax return information. Those convicted are usually sentenced to probation or community service or required to pay minor fines.
"Protecting the integrity of tax administration is TIGTA's job, and we take it very seriously," said J. Russell George, the Treasury Inspector General for Tax Administration, in a statement to ABC News. "This includes investigating allegations of wrongdoing by IRS employees."
TIGTA said IRS employee integrity cases make up more than half of its investigations. The agency said that, when necessary, it refers cases to the Department of Justice for criminal prosecution and to IRS management for administrative sanctions.