Thursday, January 10, 2013

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Syam Tax Services Charged with Tax Fraud and Identity Theft for Scheme Targeting Senior Citizens in East Texas

AUSTIN – Texas Attorney General Greg Abbott today charged Syam Tax Services, LLC and two of its officers – Shannon T. Mays and Marshrief Shead – with fraudulently obtaining elderly Texans’ sensitive personal information and illegally filing falsified federal income tax returns on their behalf. In response to the State’s enforcement action, Judge Michael Gomez of the 129th District Court of Harris County today froze Syam’s assets and entered a temporary restraining order against all named defendants.

“Targeting senior centers and churches, Syam Tax Services launched an apparently well-orchestrated scheme to defraud the elderly – and even worse, those who rely on federal benefits for their well-being,” Attorney General Abbott said. “My office is working to put a stop to this despicable fraud, and thanks to the court order we obtained today, Syam is prohibited from continuing to violate the law. We first informed Texans of this scam in December, and are now moving swiftly to shut down Syam’s deceptive operation and prevent other seniors from becoming victims of this scam.”

Media links

AG Abbott holds news conference to warn East Texans about tax fraud scam

East Texas victims of Syam scam discuss their experiences with the company.
Betty Murphy of Diboll; Jackie Waddelton of Lufkin whose mother fell victim to the scam;
and Eloise Davis of Lufkin, a tax specialist whose sister-in-Law fell victim to the scam
Temporary restraining order and asset freeze against Syam and its officers

Last month, Attorney General Abbott announced that the State was investigating Syam Tax Services, and cautioned Texans to avoid the defendants’ tax fraud scheme. The results of that investigation are revealed in court documents filed today, which explain how Syam enlisted recruiters to canvass East Texas churches and senior centers, where elderly Social Security or disability recipients could be recruited. When Syam’s recruiters approached potential victims, they falsely claimed that low-income Social Security recipients were eligible for “free stimulus money” or “social security stimulus.” Next, the recruiters explained that “stimulus” recipients had to provide certain sensitive personal information – including their date of birth, Social Security and bank account numbers, and a copy of their driver’s license – and simply sign a form in order to receive their alleged stimulus. Then, unbeknownst to the victims, the recruiters turned the form and sensitive personal information over to Syam, which prepared and filed a fraudulent tax return on the victim’s behalf. With the filing of the fraudulent tax return, Syam falsely claimed that the victim was entitled to up to $1,000 or more in refundable tax credits. Expanding on the fraudulent scheme, Syam built in unlawful profits for itself by directing the Internal Revenue Service (IRS) to deposit approximately half of the tax refund into Syam’s own bank account, while the portion that remained after Syam took its cut went to the victim.

In reality, there is not a federal stimulus benefit payment for low-income Social Security recipients. As a result, when the IRS discovers that the victim is not actually eligible for the tax refund, the federal government holds the victim responsible for repaying the entire amount of refund, plus penalties and interest. Since victims were unaware that Syam even filed a tax return on their behalf – much less retained a portion of the refund – most victims first learn they may be liable for the full amount of the fraudulent tax refund when they are contacted by the IRS. As a result, low-income Texans in the East Texas communities that Syam targeted have been left with a debt to the IRS that they cannot afford to repay, despite the fact that these victims thought they would financially benefit from a federal benefit to which they were told they were entitled. Further, because the victims provided Syam’s recruiters with their personal identifying and financial information, victims also face the risk of identity theft.

Based on the results of the investigation thus far, state investigators believe that Syam has filed hundreds of fraudulent tax returns, and may even attempt to use the same taxpayer information to file more fraudulent returns in future years. Thus, the Attorney General’s Office sought a temporary injunction and asset freeze to prevent Syam from continuing to violate state law. Today’s enforcement action charges Syam with multiple violations of the Texas Deceptive Trade Practices Act and the Texas Identity Theft Enforcement and Protection Act.