A Texas man has pleaded guilty in a conspiracy to file fraudulent federal income-tax returns that used stolen information from a Kentucky bourbon distillery and other companies across the country.
Earnest Taylor Jr., of Houston, pleaded guilty this week in a Kentucky federal court to one count of conspiracy to defraud the U.S.
Taylor said in his plea agreement he took part in a scheme to submit hundreds of fraudulent tax returns along with two other men charged in the case, Stephen Olewe and Hillary Kubwa.
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Olewe and Kubwa had a legitimate tax-preparation business in Houston, but in 2017 and 2018, working with people in Africa, ran a side scheme to file fraudulent returns, according to Taylor’s plea agreement.
The scheme involved sending hundreds of emails to companies across the country seeking W-2 information on employees, which would include how much money they made, the amount of taxes withheld and personal identifying information.
The emails identified the sender as an executive of the company, which was false, and were “designed to create urgency” for the person who received the email to respond quickly, Taylor’s plea document said.
That kind of a scam is called phishing, which typically involves sending deceptive emails to try to trick people into giving out financial information such as credit card numbers.
The charges against Taylor and the others don’t identify the Kentucky company that fell victim to the scam in 2017, but a defense attorney said in one motion it was Four Roses Distillery in Lawrenceburg.
The charges were filed in Kentucky because the scam involved a company here.
To use the information they stole, Olewe, Kubya and Taylor worked together to get control of electronic accounts used to file tax returns online, according to a court document.
The IRS allows people who prepare tax returns to set up those accounts in order to file them.
Taylor and those charged with him tricked the registered owners of filing accounts into giving them control or used identifying information on other people to set up accounts, Assistant U.S. Attorney William P. Moynahan said in one court document.
That allowed people involved in the scam to avoid linking themselves directly to fraudulent returns, Moynahan said.
Taylor convinced two women in Houston to apply for electronic filing numbers and then took control of the accounts, according to his plea agreement.
He provided the filing number to Olewe to use in filing fake returns.
People involved in the conspiracy split money from the refund checks, according to the court record.
All told, the people involved in the conspiracy used information from more than 30 businesses or organizations around the U.S. and filed more than 500 fraudulent returns, Taylor’s plea deal said.
The returns submitted though two of the four electronic filing accounts sought a total of $718,728 in fraudulent refunds.
The IRS didn’t pay all of them, but people involved in the scam received $352,381 in fraudulent refunds through the two accounts Taylor had the women set up and then took over, according to his plea.
The indictment said people involved in the conspiracy filed fake returns seeking a total of $2 million in refunds.
Olewe and Kubwa pleaded not guilty and were scheduled for trial last September, but left the country and are still fugitives, Moynahan said in a recent motion.
In addition to conspiracy, they are charged with aggravated identity theft.
Taylor faced up to 10 years in prison on the conspiracy charge, but he entered what is called a binding plea calling for a sentence of 15 months.
That means that’s what his sentence will be if U.S. District Judge Gregory F. Van Tatenhove accepts the plea when he sentences Taylor.
The FBI received more than 800,000 complaints in 2022 of what it calls “cyber-enabled frauds,” including phishing, according to the agency’s Internet Crime Complaint Center.
The total number of complaints was down a bit from the year before, but the potential loss grew from $6.9 billion in 2021 to more than $10.2 billion in 2022, according to its annual report.
The Federal Trade Commission has tips on how to avoid being victimized by a phishing scam.