Authorities across the United States this week arrested dozens of gang members who stand accused of making millions of dollars stealing consumer identities in order to file fraudulent tax refund requests with the Internal Revenue Service (IRS). The arrests highlight the dramatic shift in gang activity in recent years from high-risk drug dealing to identity fraud — a far less risky yet equally lucrative crime.
According to a story last week at CBS in Los Angeles, some 32 members of the so-called Insane Crip gang and their associates were charged with 283 counts of criminal conspiracy, 299 counts of identity theft, 226 counts of grand theft and 58 counts of attempted theft. Together, they are accused of operating a $14.3 million identity theft and tax fraud scheme.
In Elizabeth, N.J., 14 members of a street gang were arrested in a 49-count indictment charging the defendants with a range of “white-collar crimes,” including filing false tax returns and manufacturing fake gift cards to collect thousands of dollars. According to NJ.com, the money from the scams was used to support members of the 111 Neighborhood Crips and to aid other gang members who were in jail or prison.
“All 14 defendants face charges under New Jersey’s Racketeer Influenced and Corrupt Organizations (RICO) statute,” NJ’s Tom Haydon writes. “Defendants allegedly bought stolen identities of real people for use in the preparation of fraudulent W-2 forms. Those forms were used for fraudulent income tax returns filed early in the tax season.”
Tax return fraud costs consumers and the U.S. Treasury more than $6 billion annually, according the U.S. Government Accountability Office. And that number is by all accounts conservative. It should not be a surprise that street gangs are fast becoming the foot soldiers of cybercrime, which very often requires small armies of highly mobile individuals who can fan out across cities to cash out stolen credit cards and cash in on hijacked identities.
Tax fraud has become such an ingrained part of the modern gang culture that there is a growing set list of anthems to the crime — a type of rap music that evokes the Narcocorrido ballads of the Mexican drug cartels in that it glorifies making money from identity theft, credit card fraud and tax return fraud.
A key component of cashing out tax return fraud involves recruiting unwitting or willing accomplices to receive the fraudulent refunds. Earlier this year, I wrote about Isha Sesay, a Pennsylvania woman who was arrested for receiving phony IRS refunds on behalf of at least two tax fraud victims — including Mike Kasper, the guy who helped expose the IRS’s pervasive authentication weaknesses and later testified to Congress about his ordeal.
Turns out, the sorts of gang members arrested in the above-mentioned crime sweeps have a different nickname for people like Ms. Sesay: Instead of money mules, they’re derisively known as “drop hoes.” In cybercriminal parlance, a “drop” is a person who can be recruited to help forward stolen funds or merchandise on to the criminals, providing a pivotal buffer against the cops for the thieves.
In this Youtube video (not safe for work), a self-styled rapper calling himself “J-Creek” opines about not being able to find enough drop hoes to help him cash out $40,000 in phony tax refund deposits to prepaid debit cards. It’s been a while since I’ve listened to pop music (let alone rap) but I think this work speaks for itself (if rather lewdly).
Here are a few choice quotes from the song (I cut out much of it, and someone please correct me if I somehow butchered the lyrics here). I think my all-time favorite line is the one about the role of Intuit’s TurboTax: “She got them stacks then went tax on the turbo.”
Without further ado:
“Tax season again
I need a drop hoe bitch
I wanna be your boyfriend”
“I wanna drop hoe
I mean a drop hoe
That’s waitin’ on the debit card to hit the box hoe”
“Shorty gotta a whole crib and a new range
Said her home girl came with a few names
Told me all a nigga need is a laptop
And she gonna show me what to do to make a tax drop”
“Got a check for forty grand she goin’ buy a hummer
Ball hard got it all from playin’ with numbers
Told her when she break me off I’ma buy a crib
And take it straight to the kit to teach her how to whip”
“I ain’t tryna be on trial resident of the state
You think I’m probably going down federal pen
Scared of money stay broke nigga fuck you
And I’ma steal your information on the dub too [W-2]”
“Bitch gimme nuff to fly stay sky high
Man I own a mother fucker on the Wi-Fi
Momma let that money flow cause she got mo
Hey fuck a dime piece bro I want a drop hoe”
“Shorty got big bank with four cars
Say she need an address she got more cards
Wanna be hood rich honey I’ma show you
Told me get a date of birth don’t forget the Social”
“Oh that’s all I gotta do you can bet that
Meet me at the Amscot I need a check cashed
Tryna’ find a drop hoe it ain’t hard
You can look for new rims and a paint job”
“Keep her hair done nails done nice clothes
Curly two strain twists on a micro
More money than you can spend but she get it in
Say she got a boyfriend but he in the pen”
“Thats everybody’s bitch Im’a bite though
I’m the type a nigga give you what you ask fo
Told that bitch I’m comin home like a furlough
She got them stacks then went tax on the turbo”
This is the latest in a series of stories I’ve been writing over the past few years about the growing menace of tax refund fraud. For more in this series, see this link.
By far, my favorite tax return fraudster is Lance Ealy, an Ohio scam artist who went on the lam after being convicted for tax refund fraud, and proceeded to lead U.S. Marshals on a multi-state chase — all the while continuing to file phony tax refund requests in the names of people already in jail (individuals that Ealy compensated by topping up their prison commissary funds).
Very disappointed in Krebs’. He knew this subject and his deliberate choice of video illustration would bring out the neo-confederates , but he allows the worst kind of racist slander and trolling in his comments.
His stature has really plunged in my eyes. He’s not above racist clickbait at all.
Yes, you figured me out. I ran this story to give racists an outlet for their hatred.
Seriously? Where do you get off making statements or conclusions like that?
Brian, it’s below you to respond to these kids. You know it’s just antagonization. The rest of us know the truth of it all.
Actually, given the language and phrasing used by these detractors I’m doubting they’re in the country.
Excellent, eye-opening story. While I am quite familiar with the rampant refund fraud, I was not aware of this angle and weird celebration through rap.
The bloods street gang in NJ is massively into identify theft and fraud. They use these hood houses to launder the proceeds. These are the same gang group that pepetrated my identify theft 2 years ago.
Secret Service told me that the major players sweet talk fat girls at companies to steal the info for them.
To “Elfdring” :
This is a legitimate news story, that accurately depict the foul-mouthed nihilism of U.S. urban gang members, who (unfortunately), happen to be overwhelmingly African-American.
Your “ask” of Mr. Krebs appears to be that he censor stories like this, because the facts included in the stories portray a subset of U.S. urban minorities in an uncomplimentary manner. Of course, by the same standards, CNN would have to censor stories about Dylan Roof and his racist rampage against a bunch of peaceful (black) church-goers in South Carolina.
That this is an untenable set of requests in a democracy built upon freedom of the press, should hardly need further elaboration.
Good job, Brian — keep informing us of what the criminals are doing, and pay no attention to politically-motivated complainers who want you to “just not talk about” subjects about which they are uncomfortable.
@A Telco Security Dweeb
I believe @Elfdring’s somewhat incoherent diatribe was directed more towards the comments section, instead of the article itself. I myself did not read this excellent article until a few minutes ago, so I do not know if there were previous inflammatory comments that have since been deleted.
I understand your sentiment that certain articles tend to attract ‘trolls’ and other people who enjoy posting hateful comments for unknown reasons. However it is ridiculous to suggest that Mr. Krebs should desist from covering incidents just because of that. Mr. Krebs has other things to be doing besides policing the comments 24 hours a day. The price you pay for having a quick discussion about the above article is the risk of reading the occasional abusive snippet. Better yet, ignore the comment section entirely, for the signal-to-noise ratio is often considerably low.
Thanks for a great read.
So … “drop hoe” is the “I go chop your dollar” of 2015? https://www.youtube.com/watch?v=kJOuvEcarNs
The State of Ohio singled me out. Two different news reports said Ohio had $180million and $250million in fraudulent refunds in 2014.
So, I take their online “test”. The Computer God says I failed. Hmmm. I noticed in the questions derived from online-people search “information” I was supposed to have lived in Texas (never did); Drove a Ford 150 (My Dad and Sister did); How old my relative ____? (Ahhh, How old is a dead person?); Where did I own a particular house? (Didn’t own any of them).
So now I was supposed to send in my Birth Certificate, Social Security Card, Copy of my Drives License; and whatever else. Even as my friends said, “Screw-’em” just forfeit your 4 figure refund.
I filed “snail mail” with the same return address used for a decade. Ohio Dept of Taxification is just too lazy to tap/key in an address check off previous returns. Even billing statements have a Change-of-Address box and lines.
I wrote Gov Kaisch and got a form letter back.