NEWARK, NJ – Two East Orange, New Jersey, men are charged today with filing false federal income tax returns on behalf of inmates at the Essex County Correctional Facility (“Essex County Jail”) in order to fraudulently obtain income tax refunds that were used to pay for bail, lawyers, and other expenses, U.S. Attorney Paul J. Fishman announced.
Reginald Eaford, 45, and Winfred Moses, 48, are each charged by complaint with one count of conspiracy to defraud the United States and one count of aggravated identity theft. Both defendants are currently in custody. Moses will appear this afternoon before U.S. Magistrate Judge Cathy L. Waldor. Eaford will appear on a date yet to be determined.
According to the complaint:
Eaford was an inmate at the Essex County Jail from approximately May 20, 2013 through Feb. 12, 2014. Law enforcement became aware that during his incarceration, Eaford deposited unusually large amounts of money into his inmate account.
Through a review of the recorded telephone calls and records maintained by the Essex County Jail, law enforcement officers learned that Eaford, Moses, and others conspired to obtain social security numbers, dates of birth, and other information from inmates at the Essex County Jail.
Eaford and Moses would then generate false W-2 forms indicating that the inmates had earned income during the relevant tax year and that federal income tax had been withheld from their paychecks. Eaford and Moses would then file false federal income tax returns on behalf of the inmates and refund checks would be sent to the Essex County Jail or to Moses’s East Orange residence. The proceeds of the fraud were split among Eaford, Moses, and the relevant inmates.
According to interviews conducted by law enforcement of current and/or former inmates at the Essex County Jail, the fraudulent tax proceeds were used by inmates to pay for bail, lawyers, or other needs.
For example, on Nov. 2, 2013, Eaford placed a telephone call from the Essex County Jail to Moses. The call was recorded by the Essex County Jail. During the call, Eaford and Moses discussed the refund status for a tax return filed using a social security number belonging to an inmate at the Essex County Jail (“Inmate 1”). IRS records indicate that Inmate 1’s 2013 tax return was filed electronically on March 18, 2014 by an individual using an IP address registered at Moses’s residence. In addition, Inmate 1’s 2013 tax return included a bogus W-2 form that claimed that Inmate 1 had earned $70,021 in wages, even though he had not received any W-2 form from any employer that year.
From Jan. 28, 2014 to April 22, 2014, 60 tax returns were filed in the same manner using an IP address registered at Moses’s residence, for a total of $368,557 in fraudulently-obtained tax refunds. The majority of those fraudulent tax returns were for current or former inmates of the Essex County Jail. Of the 60 tax returns, 24 listed Moses’s residence as the taxpayer’s address and 59 of the 60 tax returns contained W-2 forms that did not match IRS records.
The conspiracy charge carries a maximum potential sentence of five years in prison. The aggravated identity theft charges carry a mandatory sentence of two years in prison that must be served consecutively to the punishment imposed on the conspiracy charge.
U.S. Attorney Fishman credited special agents of IRS–Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, postal inspectors from the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge J.R. Ball, and the Internal Affairs Division of Essex County Jail, under the leadership of Warden Roy Hendricks, with the investigation leading to the charges.
The charges and the allegations contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.