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May 21, 2019

Tax Preparer Charged for Using Customer Information in Scheme to Defraud

On March 13, 2019, in the District of Utah, Liberty Tax Service® employee Brittany Schalk was charged with wire fraud and aggravated identity theft in a scheme to defraud the Internal Revenue Service (IRS) and financial institutions.

According to the court document, Schalk was employed by Liberty Tax Service as a tax preparer and eventually as an office manager. Her employment granted her access to large amounts of personally identifiable information (PII), including, but not limited to, names, addresses, Social Security Numbers (SSN), dates of birth, and bank account information. Records containing such PII were maintained within the normal course of Liberty Tax Service’s business.

From about December 2013 through about February 2016, Schalk allegedly engaged in a scheme to defraud the IRS and financial institutions by seeking to obtain the payment and allowance of fraudulent claims. Schalk allegedly obtained the PII of customers and potential customers of Liberty Tax Service, as well as PII that had been stolen from individuals in burglaries, and used this information to create and file false tax returns, to alter and cash fraudulent checks, and to apply for fraudulent credit accounts.

For example, in furtherance of her scheme, Schalk is alleged to have changed the disbursement method for a tax refund that was to be issued to an actual Liberty Tax customer from a check to a prepaid debit card under her (Schalk’s) control. She also used the PII of another customer whose Federal income tax return she had completed in order to cash a fraudulent check. Another victim had started a tax return at Liberty Tax, but did not have the money to pay, so she never finished her return. Schalk subsequently added a fraudulent dependent to the unfinished tax return and filed it, claiming a refund of $5,316. Additionally, Schalk filed a fraudulent tax return and applied for two separate credit cards using the identity and PII of an individual whose wallet had been stolen approximately three months earlier.

If convicted, Schalk could face a maximum statutory sentence of 20 years’ imprisonment for wire fraud, plus a mandatory two-year sentence for aggravated identity theft.

Source:  The facts in this case narrative come from the following publicly available documents: D. Utah Felony Information filed Mar. 13, 2019.