The IRS Criminal Investigation Division announced the dismantling of a sophisticated identity theft operation on Tuesday that allegedly stole over $1.8 billion through fraudulent tax refund claims filed using stolen Social Security numbers. Federal agents arrested 28 individuals across 10 states.
The scheme operated by recruiting individuals through social media advertisements promising easy money, to file tax returns using stolen personal information. The refunds were directed to bank accounts controlled by the organization's leaders, who kept 40 percent of the proceeds.
"This was a professional criminal enterprise that treated tax fraud as a business model," said IRS-CI Director James Rodriguez. "The sophistication of their operations demonstrates that identity theft has evolved into organized crime."
The investigation, codenamed Operation Shadow Return, took 14 months and involved coordination between the IRS, FBI, Secret Service, and state tax agencies. Among those arrested is suspected ringleader David Chen, 38, who allegedly managed a network of over 400 identity thieves.
The IRS is urging all Americans to file their tax returns early and to monitor their credit reports for signs of identity theft. Officials warn that the personally identifiable information compromised in this scheme could be used for years to commit additional fraud.