Fraudster Scams $2.1 Million Tax Refund, Goes on Spending Spree

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Fraud Turbo TaxA Salem, Ore., woman who filed a fraudulent tax return and received a $2.1 million refund has been arrested following a wild spending spree.

Krystle Marie Reyes, 25, falsely claimed $3 million in income when filing her 2011 return using the program TurboTax, according to an affidavit obtained by The Oregonian. TurboTax then issued Reyes a prepaid Visa (V) debit card with the full seven-figure refund sum after the state approved her claim.

Reyes was only caught after she reported the card lost. The total bill for her post-fraud splurges came to more than $200,000, according to The New York Daily News.

The Oregonian reports that Reyes "apparently was caught on surveillance video using the card to make purchases at a number of Marion county businesses." She is said to have signed her own name for several transactions and given her actual address.

Reyes's fraud was finally uncovered on May 7. She was arrested on Wednesday and charged with computer crime and aggravated theft.

This massive swindle calls attention to a state Department of Revenue that was already perceived as troubled. Outside audits and an internal report concluded that "the state could do much more to identity and collect taxes owed," wrote The Oregonian; legislators have demanded that agency executives demonstrate increases in effectiveness and efficiency.

But the department is hobbled by a lack of up-to-date equipment: It currently processes around $7 billion in tax returns annually, using computer systems designed in the 1980s. A planned $100 million upgrade -- which would reportedly have paid for itself by catching tax evaders -- was canceled in January.

According to The Daily Mail, "Revenue officials estimate that, in 2006, Oregon's personal income tax compliance rate was 81.5 percent -- far lower than other states." That figure translates into "$1.2 billion in unreported or uncollected taxes that year."


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David

Try NC, SC and Florida. They are three of the most corrupt states in the union and believe it, 75 percent of the time its the Republicans stealing, so don't blame it all on the Democrats especially since you have a known thief like Scott for governor or Florida. Put a chamber pot on a ballot in SC under Republican and it would win over Jesus Christ if he was the Democrat running.

June 13 2012 at 8:43 PM Report abuse -1 rate up rate down Reply
BCZ282002

WOW!! Seems to be the trend with Turbo Tax, Cause this year I tried to file my taxes with them, the 5th straight year only this time, when all my w-2's came in, I pressed the electronic file button, BUT the message came up that my number was already filed. I called Turbo Tax up immediately, they looked my number up and found that someone had used my name and number to file on Jan 26 (2 and a half weeks before me).. Long story short I had to file an affadavit for the IRS and send in a ploice report. The IRS rep told me to expect my return in up to a year!! My Mass. State return was not touched only my Fed.. I hope they catch the F....n B.....d!! Also looks like it gives the IRS extra time to hold my money!! I bet if I owed, they would want there money ON TIME- NO DELAY - APRIL 15TH - NO EXCUSES. i TRY TO CALL FOR AN UPDATE AND THERE IS NO WAY TO TALK TO THEM, ONLY RECORDINGS FROM AUTOMATED MACHINES - NICE HUH??

June 12 2012 at 4:41 PM Report abuse rate up rate down Reply
2 replies to BCZ282002's comment
BCZ282002

typo : police

June 12 2012 at 5:20 PM Report abuse rate up rate down Reply
Linda

The same happened to me... they filed on Jan. 20th through Turbo Tax and I went to send mine on the 26.. I had to contact several different places... I also kept copies of all I sent to the IRS. It was stressful.. thankfully I pay my taxes at the end of the year... I was able to talk to them when it happened and I asked would I learn who did it.. they told me no.

June 15 2012 at 6:16 PM Report abuse rate up rate down Reply
phil.smith2

$200,000 went to stimulate the economy. How much was wasted in taxpayer money by the government doing the same thing?

June 12 2012 at 9:19 AM Report abuse +4 rate up rate down Reply
HonknDodge

Way to go Turbo Tax!!! 2.1 mil on a pre paid Visa debit card. There sure wasn't any red flags on this tax return were there?

June 12 2012 at 8:54 AM Report abuse rate up rate down Reply
The Boy

.....and she lost the card! Hahahahhahahaha. It looks like she spent the 200k on dorritos and tequila.

June 12 2012 at 8:23 AM Report abuse +4 rate up rate down Reply
smilepage

WOW! IF "the state could do much more to identity and collect taxes owed," wrote The Oregonian...AND the REFUND system is NOT corrected, THEN more scumbags can use more tax refunds for their own enjoyment. Ain't government accountability just grand.

June 12 2012 at 6:24 AM Report abuse rate up rate down Reply
BOBBY

illegals clam up to 29 kids many of the kids still live in mexico many are getting 30,000 they also use the child tax credit to get a thousand dollars for each kid some also living in mexico

June 12 2012 at 3:02 AM Report abuse +2 rate up rate down Reply
1 reply to BOBBY's comment
Chris..

Don't be stupid Bobby, illegals can't file tax returns. Any taxed income goes un-claimed then to SS.

June 12 2012 at 11:34 AM Report abuse -1 rate up rate down Reply
1 reply to Chris..'s comment
Deedeekins

Bobby isn't stupid, but perhaps you are...? The illegals file with a federal tax ID number and don't have to have any income to receive a tax credit. More reading and less commenting might be a good idea until you know the facts.

IRS Paid Illegal Immigrants $4.2 Billion in Fraudulent Child Care Credits (see link:)
http://www.pappasontaxes.com/index.php/2012/05/14/irs-paid-illegal-immigrants-4-2-billion-in-fraudulent-child-care-credits/

June 17 2012 at 11:13 AM Report abuse rate up rate down
awilson70

And that wasn't a red flag huh?

June 11 2012 at 9:51 PM Report abuse rate up rate down Reply
THIS NEW FORMAT

I want to know what deductions she claimed to get a refund of $2.1 Million on an income of $3 Million!

June 11 2012 at 9:49 PM Report abuse +3 rate up rate down Reply
1 reply to THIS NEW FORMAT's comment
jeviga

aly
Even if she had no deductions the maximum tax on a net income of $3,000,000 is about $1.2 million. Somehow she claimed a tax refund as if the federal tax rate was 70% when in fact it is almost half of that. Someone's head at the IRS should roll

June 12 2012 at 9:44 AM Report abuse rate up rate down Reply
goodgrief61945

Story headline says she filed her 2012 tax return. Kinda hard to do.

June 11 2012 at 9:39 PM Report abuse rate up rate down Reply
1 reply to goodgrief61945's comment
HonknDodge

The article reads files a 2011 tax return, you need glasses.

June 12 2012 at 8:57 AM Report abuse rate up rate down Reply