Eleventh Circuit Upholds Convictions in Stolen Tax Refund Check Scheme.

(Parker Tax Publishing May 2, 2015)

The Eleventh Circuit upheld the convictions and 133-month prison sentences of a pair of co-conspirators who, with the help of a United States Postal Service worker, stole and cashed hundreds of federal income tax refund checks. U.S. v. Jones, 2015 PTC 121 (11th Cir. 2015).

Background

In May 2011, Trevayne Jones and Dontreal Jenkins were arrested after state and federal authorities discovered that the pair had cashed 342 stolen federal income tax refund checks with a cumulative value of $713,000 at a convenience store in Albany, Georgia over a five month period. Jones and Jenkins were tried before a jury in January 2013, during which several witnesses, including Nainesh Patel, the owner of the convenience store, and Jamal Williams, a cooperating codefendant, explained how the pair carried out their scheme.

In early 2011, Jones approached Patel with a Treasury check claiming that his sister had a tax business, and informed Patel that he would be bringing income tax refund checks belonging to her customers into the convenience store for Patel to cash. Although Patel never took steps to confirm the tax business existed, he did verify the authenticity and amount of each check using the Treasury Department's website. After a short time, Jones told Patel that Jenkins also would be bringing in checks to be cashed as part of the same business.

Co-conspirator, Jamal Williams procured several checks from Deborah Echols, an employee at the United States Postal Service in Atlanta, and transported the stolen Treasury checks from Atlanta to Albany. Initially, Williams gave Jenkins two or three checks to test whether the process was reliable and after the first visit was successful, Williams requested more checks from Echols. By the third visit, Williams was transporting checks with a cumulative value of $80,000 to Albany for Jenkins to cash.

The scheme unraveled in May of 2011 after Williams was stopped for speeding during his fifth meeting with Jenkins. Because he had been smoking marijuana, the police searched his vehicle and found twelve stolen Treasury checks. When law enforcement later searched Williams's cell phone, they discovered that he had sent identifying information from two of the checks to Jenkins by text message.

In January of 2013, a jury found Jones and Jenkins guilty of three offenses: conspiracy to embezzle public monies; embezzlement of government property; and aggravated identity theft. The district court sentenced each of the men to a total term of 133 months imprisonment, and three years of supervised release. The court also ordered Jones and Jenkins to pay restitution to Patel in the amount of $713,000. The men appealed to the Eleventh Circuit.

Analysis

On appeal, Jones and Jenkins first argued that that there was insufficient evidence from which a jury could find them guilty, because Williams's testimony only established their connection to around forty stolen checks, claiming that the government did not present sufficient evidence that they cashed each of the checks.

The Circuit Court disagreed, noting that the trial record contained sufficient evidence for a jury to find the two guilty. Patel had testified that Jones and Jenkins cashed over 300 Treasury checks at his store, and that he kept detailed records of which checks were brought in by each of them. Patel also had explained the contents of surveillance footage that the jury could reasonably believe corroborated his account.

Second, Jones and Jenkins contested the sufficiency of the evidence to support their convictions, arguing that the trial evidence could support the inference that Patel was the operator of the check cashing scheme, not them.

The court found this argument meritless because the record contained more than enough evidence to support Jones and Jenkins's convictions, and the court could not discern any error in the jury's verdict. The jury could reasonably conclude based on Patel and Williams's testimony that Jones and Jenkins, not Patel, converted the checks to their own use without the victims' knowledge or consent. The Court saw no reason to disturb the jury's findings of Patel's credibility.

Lastly, Jones and Jenkins challenged their convictions claiming there was insufficient evidence to establish that they knew the checks belonged to real people. They also claimed that signing a person's signature was not "using their name" for purposes of liability for identity theft.

The court was unconvinced, concluding the jury could reasonably find based on "ordinary human experience" that the pair knew that the stolen Treasury checks had been issued to real people. Moreover, Patel's testimony that the defendants had consistent success cashing the checks and that he verified the authenticity of each check using the Treasury Department's website supported the conclusion the two knew the checks belonged to real people. Additionally, the court noted that a signature is a form of a name,' and thus Jones and Jenkins used the names of the victims without lawful authority, committing identity theft.

Finding none of their arguments convincing, the Eleventh Circuit affirmed each of Jones and Jenkin's convictions.

Practice Tip: Taxpayers who have not received an expected refund check, or have lost a check they received, can initiate a refund trace by completing Form 3911, Taxpayer Statement Regarding Refund. Once the trace is complete, if the check was not cashed, the government will issue a replacement check after the original check is cancelled. If the refund check was cashed, the Bureau of the Fiscal Service (BFS) will provide a claim package that includes a copy of the cashed check. BFS will review the claim and the signature on the cancelled check before determining whether a replacement can be issued. (Staff Editor Parker Tax Publishing)

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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