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3/30/2013 1:36:00 PM
Alleged $1M tax scam foiled: 11 inmates charged with plotting to defraud IRS
Jail tax scam stopped by mailroom personnel
By Scott Orr

Contributing Reporter

PRESCOTT - A scheme hatched by inmates in the Camp Verde jail to defraud the U.S. government out of hundreds of thousands of dollars while still behind bars was stopped when workers in the jail's mailroom noticed unusual amounts of mail to and from the IRS, Sheriff Scott Mascher said Thursday.

Eleven inmates have been arrested so far, with charges ranging from conspiracy to fraudulent schemes and artifices to forgery. Two of those charged, Justin Eugene Shaw Young, 27, and James Edward Borboa, 47, have been identified as heading up the scheme, according to court documents.

The plan was to use other inmates' identities to file multiple years' tax returns requesting unwarranted refunds from the IRS, according to probable cause statements written by YCSO Det. Todd Swaim. Borboa is alleged to have explained to Young how the scheme worked, and Young ran with it, attempting to file 60 bogus tax returns asking for over $300,000 in refunds, Swaim said.

Young filed returns for 2010, 2011 and 2012, claiming that the inmates whose names he used worked in "jobs that did not even exist," Swaim said.

The plan was for those inmates whose IDs Young and Borboa used to kick back to them about $1,000 of the refund money they received; the refunds would have been placed on untraceable disposable debit cards.

Those inmates, Swaim found, believed they would be able to legitimately claim they had done nothing wrong if caught, because Young filled out and signed the tax returns for them.

Borboa attempted to file a false return for an 18-year-old fellow inmate, Tyler Ewert, who, he claimed, earned $52,000 when he was 15, asking for a $5,000 refund.

But the "foolproof scam" Young told the other inmates about apparently failed because mailroom staffers noticed a large volume of mail involving the IRS.

"That's what triggered it on our end," Mascher said. "And then, (we) started to use the intelligence network we have with other jails... and it does involve other jails in Arizona."

He said the scams usually come from gang members who have gotten out of prison and are back in jail, and bring their experience in defrauding the IRS. These schemes are more typically found in prisons, but are now expanding to county jails.

When investigators went through Young's records, they found he had handwritten detailed instructions on how the scheme was to be run, spreadsheets with fake business information, and "numerous" people's names and social security numbers, Swaim said.

Young reportedly told Swaim he started the scam "because he saw everyone else doing it and he thought he wanted in on part of it."

While "everyone" is an exaggeration, the problem is widespread.

A report issued in December by the U.S. Treasury Inspector General for Tax Administration (TIGTA) said these types of tax fraud schemes run by prisoners has gone up sharply in the last few years, from prisoners claiming $166 million in fraudulent tax returns in 2007 to $757 million in 2010, the last year for which data is available.

The IRS stopped most of those refunds from being paid, but prisoners still got hold of $35 million in 2010.

TIGTA blamed poor record-keeping and lack of sharing records for the IRS's inability to track down prisoners' identities, and said, "To combat this growing problem, the IRS compiles a list of prisoners from the Federal Bureau of Prisons and State Departments of Corrections. The IRS does not have the authority to disclose to the prisons information related to prisoner-filed fraudulent tax returns, limiting the prison officials' ability to curtail prisoners' abuse of the tax system. As a result, controls used to ensure the IRS identifies fraudulent refunds on tax returns prepared by prisoners are not fully effective."

Mascher said he tried to approach the federal authorities about the scam, but "they didn't want it. Now that we've started to make arrests, they've decided to re-look at it."

He added that there would likely be more arrests - "upwards of 20 or so" - to come.

Scott Orr
The Daily Courier

CAMP VERDE - Eleven inmates at the Yavapai County Jail have been charged with taking part in a scheme while they were behind bars to defraud the Internal Revenue Service to the tune of a million dollars, and more inmates may have been involved, according to court documents.

Justin Eugene Shaw Young, 27, is accused of being one of the ringleaders who ran the scam. He's facing 126 criminal counts, including fraudulent schemes and artifices, forgery, and identity theft.

Yavapai County Sheriff's Office Detective Todd Swaim headed up the investigation. In a probable cause statement, Swaim said Young had written plans for a "million-dollar IRS tax fraud."

Young's plan included other inmates, whose social security numbers and other information he wrote on the forms. They were to pay him $1,000 of the $3,000 to $5,000 they expected to get in the form of a tax refund they weren't entitled to, Swaim said.

If they were ever caught, the others were to "tell the truth and say they had never filled out or filed the fraudulent tax form," Swaim said. Young filed returns for 2010 and 2011 along with 2012 returns.

"(Young) was showing the subjects who gave their name and social security number working at jobs that didn't even exist or they had never even worked," Swaim said.

The refunds were to be placed on disposable - and untraceable - debit cards supplied by recruits outside the jail.

Young first tried to file 37 completed and signed 1040EZ forms, totaling over $137,000 in expected refunds, Swaim said, and five days later, another 23 fake tax returns with refund amounts that added up to $132,000.

Young allegedly planned to keep the scam running when he was sent to prison. "With... help on the outside," Swaim said, "they would be able to make 2.2 to 6 million dollars on this tax fraud and then leave the country to Belize where there is no extradition."

When confronted, Young admitted he had been operating the scam and said he had used more than 33 people's IDs to fill out forms, Swaim said.

Also implicated is James Edward Borboa, indicted on 55 counts, who Swaim said was running the scam with Young after Young told him how to do it.

Borboa's forms included one for an 18-year-old cellmate who, he said, made $52,000 at age 16 and requested a refund of over $5,000.

A confidential informant said Borboa had actually pulled off the scam "for years" by having inmates sign power-of-attorney forms so he could cash their IRS checks, Swaim said, and he cited one example of an inmate whose ID had been used to obtain a fraudulent $5,200 refund.

Swaim said Young and Borboa expected more than $340,000 from the falsified returns.

Others charged include inmates who participated with Young and Borboa:

• Scott Anthony Backus, 29

• Kevin Maurice Dancy, 23

• Tyler Patrick Ewert, 19

• Edwin Manuel Jaramillo, 47

• Steven Lewis Stinson, 22

• Andrew Lee Thompson, 29

• Marvis James Victor, 21

Two inmates whose names were not available Wednesday were also charged.

The Yavapai County Public Defender's Office has been forced to hire attorneys from Phoenix, Flagstaff and elsewhere because ethical conflicts prevent its own lawyers and "virtually every local contract attorney" from representing nine of the defendants, Dean Trebesch, County Public Defender, said.

"In the past, we (the Public Defender's Office) have represented more than one of these co-defendants on other various charges," Trebesch said. "Once you do that, you can't represent those defendants on new matters where they are co-defendants with each other and whose interests may be adverse to each other."

Trebesch said the ethical issues involved prevented him from speaking specifically on the cases.

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Reader Comments

Posted: Wednesday, April 3, 2013
Article comment by: Law N Order

Sheriff Joe has a web post called 'Mug Shot of the Day'

I would like to nominate Mr. Young for 'Hillbilly Head Shot of the Week!'

Posted: Tuesday, April 2, 2013
Article comment by: Johnny Law

I agree with Independent Person. The government steals our money and gets away with it why shouldn't we do the same? I was in the Verde Jail with a guy who was wrongly convicted of a crime he did not do. Once he was sentenced his Social Security payments were stopped. Now you tell me how that is legal. That was money he paid in all his life it's the same as them raiding your savings accounts. This government needs to be stopped...

Posted: Monday, April 1, 2013
Article comment by: Brian Carlson

What do you do to these guys? They are already in jail. Do you keep them in jail longer so they can come up with more schemes? I do not have an answer.

Posted: Monday, April 1, 2013
Article comment by: Samuel Raiburn

If they worked half as hard through honest labor in civilian world they wouldn't be in the pokey.

Posted: Sunday, March 31, 2013
Article comment by: David Alan

This types of tax scams are quite common in the Califorrnia State penal system, yet I've never once heard of anyone ever being prosecuted there.

Great Job Yavapai County!

Posted: Sunday, March 31, 2013
Article comment by: Independent Person

The government has been stealing our money for 100 years and nothing happens, but when someone dares to steal some back, there's hell to pay, what an interesting world we live in.I guess that there is a big difference between government sanctioned/sponsored theft and independent theft Our government has become way too big and way too powerful, don't ya think?

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