Million Dollar Refund Ramon

[NYGman]

Another Genius claiming an unusually large refund on a small amount of income, and it was paid out. One bank even closed the account suspecting fraud, but that only allowed him to clean the IRS check and have a draft to open a new account where he claims it to be inheritance.

https://www.tampabay.com/business/a-tam ... -20190213/

TAMPA — At a time when millions of Americans are bemoaning their smaller-than-expected tax refunds, consider this:

Ramon Christopher Blanchett of Tampa once got a refund of $980,000. On a reported income of $18,497.

As with most things involving the IRS, this story does not end happily, at least for Blanchett, 29. But it does display a degree of ingenuity, as outlined in a federal forfeiture complaint recently filed in U.S. District Court in Tampa:

In February 2017, Blanchett electronically submitted a self-prepared income tax return listing his occupation as "free-lancer. '' He had W-2 forms from a Tampa nursing home and a Sizzling Platter restaurant in Murray, Utah.

One W-2 showed $17,098 in wages and $1 million of federal income tax withholding. In reality, the complaint says, Blanchett was paid just $2,098 and no tax was withheld.

The other W-2, which was accurate, showed $1,399 in income and no withholding.

"Based on Blanchett's submission of the (tax return), falsely representing that $1 million in taxes had been withheld, the U.S. Treasury issued checked number 4038088544305, made payable to Blanchett, for $980,000,'' the complaint says.

Blanchett deposited the money into two accounts at SunTrust. After freezing the funds for suspected fraud, SunTrust closed the accounts last May and sent Blanchett a cashier's check for $980,000. He used that to open a money market account with Grow Financial Credit Union, "falsely representing that the funds were from the estate of his deceased father,'' the complaint says.

Blanchett then transferred various amounts among various Grow Financial accounts, ultimately withdrawing $49,117 in the form of a cashier's check. On Aug. 9, he bought a 2016 silver Lexus RC350.

By this time, the IRS had realized it had a problem. Pursuant to a federal seizure warrant, an IRS special agent took custody of the Lexus and the remaining $919,251 balance in Blanchett's accounts. The IRS is trying to get back another $809, the amount Progressive Insurance refunded to Blanchett after he cancelled his policy because he no longer had the car.

Last month, the U.S. Attorney's office in Tampa filed the forfeiture complaint for the Lexus and the $919,251. A magistrate judge found that there is probable cause to believe that the $809 insurance refund is "the proceeds of (Blanchett's) wire fraud'' and is also subject to forfeiture. No date has been set for a hearing on the complaint.

Blanchett, who could not be reached for comment, has not been charged with a federal crime. He was arrested in Hillsborough County in 2016 for possession of drug paraphernalia and resisting arrest without violence. He was ordered to pay $274 after pleading guilty to resisting and a lesser offense on the paraphernalia charge. He also had a misdemeanor marijuana possession charge in 2014 but adjudication was withheld./quote]

[wserra]

Reading the govt's forfeiture petition - well, I hope a month of a used Lexus was worth the 2-3 years in prison that's likely to follow.

[Burnaby49]

It still just astounds me that any moron can write to the IRS effectively just saying "Give me a million dollars" and in a week or two the cheque is on its way. Quatloos has posted all kinds of these and it's still ongoing. I actually blame the government more than the scammers.

[NYGman]

It's only that was some sort of computer system that could flag a transaction like this is suspicious.

[Arthur Rubin]

It's only that was some sort of computer system that could flag a transaction like this is suspicious.

Withholding greater than income is usually a clue that something is wrong. (None of my clients have followed up on it, but I have recommended that some people allocate an entire paycheck to withholding. Under some circumstances, a W-2 can show the total withholding (including Federal tax withholding, Social Security, Medicare, and state tax withholding equal the taxable amount.))

[Gannibal]

I don't follow--what would the benefits be of dedicated a paycheck to withholding? Wouldn't that just be paying the withholding all at once, rather than steadily over the year's paychecks?

[KickahaOta]

It at least used to be the case that the IRS always treated a taxpayer's withholding as if it had happened evenly throughout the year -- allocating 25% of it to each tax quarter, in other words -- regardless of the actual withholding pattern during the year.

So if you got near the end of the year and found that you were in danger of being penalized for failure to make quarterly estimated tax payments, devoting a whole December paycheck to withholding could get you out of trouble, or at least reduce the penalties.

[Gannibal]

Ah, makes sense, thanks.

[Arthur Rubin]

Sorry, I should have made it more clear. But, even without withholding being allocated to each quarter, (I think it still is, but I haven't looked in detail at the new 2110/2120), if a taxpayer is not already making estimated tax payments, it's simpler to have added withholding than to try to locate or print a 1040-ES, and look up the address to send payment to.

[Gannibal]

That also makes sense. In fact, if I had thought of it, I might have done that back in December. Well, next time.

[Dark Optimist]

In the bigger sense, withholding on the W-2 is also a cash flow management tool. I have had clients who own pass through entities and were not always sure what their income would be for the year. So as part of year end planning, we would do a projection and determine the amount of withholding to pay as a bonus. I have seen many net zero paychecks with the full amount going to federal and state withholding and payroll taxes.

[notorial dissent]

In the bigger sense, withholding on the W-2 is also a cash flow management tool. I have had clients who own pass through entities and were not always sure what their income would be for the year. So as part of year end planning, we would do a projection and determine the amount of withholding to pay as a bonus. I have seen many net zero paychecks with the full amount going to federal and state withholding and payroll taxes.

At one place where I worked there was always the Dec, sometimes Nov, payroll change panic for some of our high dollar execs who managed to either just screw it up totally or just grossly underpay not only their fica but their withholding and so come Nov or Dec the panic would set in and they'd frantically change withholding, sometimes drastically, always entertaining, and there was always at least one who badly underestimated and ultimately underpaid. In fairness we had a fair number of highly compensated individuals, some of whom were paid on a very particular/ peculiar schedule and figuring taxes was sometimes problematic. There were also some who squeezed it til it screamed to and generally got caught short.

[Famspear]

For the record, the case is:

United States of America, Plaintiff v. $919,251.94 seized from Three Grow Financial Credit Union Accounts, 2016 Silver Lexus RC 350 and Approximately $809.94 held in Grow Financial Credit Union Account [acct # redacted], Defendant, case no. 19-cv-00144-JDW-AEP, U.S. District Court for the Middle District of Florida (Tampa Div.).

The complaint references 18 USC sec. 1343, which provides:

Sec. 1343. Fraud by wire, radio, or television

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation occurs in relation to, or involving any benefit authorized, transported, transmitted, transferred, disbursed, or paid in connection with, a presidentially declared major disaster or emergency (as those terms are defined in section 102 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5122)), or affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.

As noted elsewhere, Ramon has not been charged with any crime in connection with this matter (yet).