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CBS4 Investigates: Gangs Move From Drugs To ID Theft

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(Source: CBS4) Tax check offered to cops by a gang member

(Source: CBS4) Tax check offered to cops by a gang member

Jim-DeFede-600x450 Jim DeFede
Jim DeFede joined CBS4 News in January 2006, providing reg...
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MIAMI (CBS4) – On the same night the Miami Dade Gang Task Force was out chasing gang members for the types of crimes what you would normally expect — dealing drugs, stealing cars, and carrying guns. Another operation was taking place.

In a parking lot for Miami Dade College’s North Campus, an 18-year-old arrived with a stack of corporate and tax refund checks not realizing his night was about to come to a surprising end.

Working with the U.S. Secret Service, the gang task force arrested the teenage gang member as he tried to sell the checks to an undercover informant.

“The treasury checks are real, they’re not fake checks,” Miami Dade Police Sgt. Joel Bello explained, flipping through a stack of the newly confiscated checks. “They had it pretty well organized where they initialed the checks and they put the face value right outside [on the envelope].”

Total value of the checks: $54,000.

For street gangs, identity theft and tax fraud are the new crack cocaine.

“Fact of the matter is there is a lot more money to be gained than slinging crack at the corner,” explained Lt. Luis Almaguer, head of Miami Dade’s gang unit. “We’re dealing with people who used to make a hundred here or there selling crack on the corner and now they are making thousands of dollars.”

In essence, as CBS4 investigator Jim DeFede discovered, the street gangs are diversifying into the highly profitable world of white collar crime.

“We are seeing the street gangs use the tax refund scams to fund their drug trafficking [and] to fund their ability to buy guns,” said Willy Ferrer, the U.S. Attorney for the Southern District of Florida. “Why? It’s lucrative, it’s less dangerous and it is something they can do easily.”

The key is having a supply of social security numbers. So how do you get them? Some gangs start small, using their members to break into cars and houses to steal wallets and purses – anything that might posses a social security number. Doctor’s offices as well as insurance and mortgage companies are frequent burglary targets.

“As soon as they have your ids you’re done,” Almaguer noted.

They then file a tax return in that person’s name electronically, directing the IRS to send the refund check to an address the gang controls.

“You can call it ingenious but it’s a thug trying to get over on somebody else,” Almaguer said.

“We have a case now where we are alleging that a postal carrier was murdered for his master key because the fraudster was waiting for the tax refund checks,” said Ferrer, who added the killer was a known gang member.

The real challenge for the gangs is then finding a way to cash those checks. This brought us to the evening’s sting operation.

“Tonight he thought he was meeting with somebody who would actually cash these checks for him,” Bello said.

Bello described the gang member arrested as a “mule” – a low-level player willing to take risks.

“So what the guy on top, the guy who is actually doing the fraud or obtaining the checks, does is he gives these guys a percentage of the face value of the checks,” Bello said. “That way he’s insulated. He won’t get caught because he’s not walking into a bank or a financial institution to do this transaction. So he’ll cut a deal with these younger guys – either 70-30 percent, or 60-40, which was the case in this instance, and he’ll give these guys 40 percent.”

In tonight’s operation, the teen thought he was selling the checks to a crooked employee from a nearby check cashing store.

“Sometimes we are able to get somebody higher up with the checks, somebody doing the fraud,” Bello said. “But what we’ve found is proving the fraud is very difficult.”

This is another reason the gangs have moved into this territory. Even if cases are made, the sentences are light compared to the types of sentences they risk if they are convicted of selling crack.

Another tactic the gangs use is to have the IRS electronically transfer the bogus tax refund onto a debit card — frequently called Green Dot cards.

“People describe it as cocaine on a card,” said U.S. Senator Bill Nelson.

The Florida Democrat recently held hearings in Washington on the sudden entry of street gangs into the world of tax fraud and identity theft

“They don’t have to use a crowbar or a gun or a knife,” Nelson said, “and the thief is nearly impossible to track down.”

Another issue Nelson uncovered in his hearings is that the IRS is reluctant to share information about possible fraud with local police agencies. Because of strict federal privacy provisions surrounding people’s tax returns, the IRS more often than not ends up protecting the criminals. Nelson and others complain.

One law enforcement source claimed that local police have to document at least $100,000 in fraud before the IRS will even show interest in the case. Others say the figure is much higher.

In March, CBS4 News was allowed to attend a briefing in which a dozen law enforcement agencies around the county shared their intelligence on gang activities. Tax fraud was the most common complaint.

“Tax refunds and green dot cards, it’s the man think right now,” said one detective.

Added another: “Everybody seems to be into the tax return fraud.”

One local police agency didn’t want to discuss the issue on camera because their officers had recently received threats from gang members angered that the police were interfering in their tax fraud business.

“We were taking some guys to the jail and they even made mention of it,” one detective recalled. “`Oh yeah they are coming for you because you are taking down all their [stuff].’”

And although the gangs are less likely to feud over street corners, the violence has not let up in other areas.

“What we’ve seen is an increase in violence because of the amount of money involved,” Bello said, adding that gangs now rip each other off for cash. “And the drugs aren’t going away because now you can go out and purchase drugs with the proceeds of your fraud and the profit is 100 percent profit.”

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