May 13, 2014 in City
Wenatchee woman pleads guilty to $177,000 tax refund scheme
A Wenatchee woman who used a ploy developed by federal tax protesters for a $177,000 refund from the IRS has paid back nearly all the money and may avoid federal prison time.
Trisha M. Walker, 43, pleaded guilty last week in federal court to claiming a false tax refund. According to investigators, Walker claimed interest income of more than $280,000 and tax withholdings of more than $260,000 in 2009.
The IRS cut a check to Walker for $177,700 that she immediately deposited in separate bank accounts and used to pay off her mortgage and credit cards, according to court documents. She and her husband were entitled to a refund of just $1,340 that year, according to the IRS, which realized its error and demanded repayment a month later.
Walker, who has worked in a law office for more than a decade, told a federal judge on Friday she realized what she did was wrong.
“I took bad advice from my sister,” Walker said. “Common sense should have told me it wasn’t right.”
IRS investigators said Walker used what is known as a redemption scheme. The tactic has been used by adherents of the “sovereign citizen” movement, who say among other things that the federal government claimed bankruptcy when it moved off the gold standard in 1933. The ploy usually involves claiming interest earnings on money supposedly deposited in international bank accounts in the name of every citizen born in the United States since then.
Investigators say no such accounts exist. The tactic has prompted more than 400 criminal cases nationwide, many of them against people and groups calling for the dismantling of the IRS.
Ryan Thompson, spokesman for the IRS field office in Seattle, said agents there are aware of two redemption scheme cases in Eastern Washington and many more on the West Side. In the other instance, a customs enforcement agent from Yakima and his wife will be sentenced this summer after pleading guilty to a similar scheme, claiming close to $500,000 on their refund in 2007.
The IRS is alerted through an automated system to tax refunds that are significantly different from previous years, Thompson said, and follow-ups are carried out by agents.
“It’s just not feasible for us to review every little thing that comes in,” he said.
Thompson said the redemption scheme is a relatively new tactic in the long history of income tax return fraud. Washington agents started seeing evidence of the fraud about the time the Justice Department held a summit targeting the practice in the late 2000s, he said.
According to the terms of a plea agreement, Walker will serve three years of probation and continue making monthly payments of $4,200 to the Treasury Department. She already has paid back close to $162,000, according to court documents.
A judge will rule whether to accept Walker’s plea deal at a sentencing hearing tentatively scheduled for August.