Former State Inmate Gets More Than Five Years in Federal Prison for Leading IRS Tax Fraud from Inside State Prison
|U.S. Attorney’s Office March 18, 2014|
BIRMINGHAM—A federal judge today sentenced the ringleader of a federal tax fraud that was run from inside an Alabama state prison to serve more than five years in federal prison, announced U.S. Attorney Joyce White Vance, Internal Revenue Service Criminal Investigation Division Special Agent in Charge Veronica Hyman-Pillot, and FBI Special Agent in Charge Richard D. Schwein, Jr.
Shermaine “Shade” German, 57, now paroled from state prison, was an inmate at Donaldson Correctional Facility in Bessemer when he orchestrated the far-reaching tax scheme that included taking identifying information of fellow inmates and using the information to create false income tax returns. The scheme, which German led for about five years, cost U.S. taxpayers more than $788,000. German pleaded guilty to the conspiracy in December.
U.S. District Judge Virginia Emerson Hopkins sentenced German to five years and six months in prison and ordered him to pay $788,280 in restitution to the government as proceeds of illegal activity. He is in federal custody. Along with German, six people from four cities across Alabama have pleaded guilty to the tax conspiracy. German and his co-defendants are jointly responsible for the restitution.
“This defendant took the identities of at least 70 fellow inmates and, from inside his cell, directed a complicated fraud that involved the submission of more than 2000 tax returns, the mailing of more than 500 false tax refund checks and a loss of hundreds of thousands of dollars to the U.S. Treasury,” Vance said. “Today’s sentence is proof that, with our law enforcement partners, we will track identity and tax fraud wherever we find it and prosecute those responsible.”
“IRS-Criminal Investigation has made investigating refund fraud and identity theft a top priority,” said Hyman-Pillot of the IRS Atlanta Field Office. “Filing fraudulent tax returns in the names of other individuals often results in significant harm to those individuals whose identities were stolen, as well as a monetary loss against the U.S. Treasury,” she said. “As we continue working through tax season, this conviction should send a message that the IRS will aggressively pursue all individuals who attempt to defraud the U.S. tax system.”
“The sentence imposed today speaks to the outstanding efforts of the FBI, IRS, and the United States Attorney’s Office who uncovered, investigated, and prosecuted German and all his co-conspirators who participated in these schemes,” Schwein said.
According to the indictment and other court documents, German and his co-defendants conspired to obtain payment of false claims for refunds from the IRS as follows:
From January 2008 to May 2013, while German was an inmate at Donaldson, he obtained the names, birth dates, and Social Security numbers of other people, often fellow inmates, including prisoners on death row and those serving sentences of life without parole. He used their information to create false income tax returns that contained fabricated amounts of tax withholdings.
German also created false power of attorney forms, which he mailed out of the prison along with the false income tax returns. Various other members of the conspiracy notarized the power of attorney forms and used them to cash or deposit income tax refund checks received as part of the scheme.
The co-defendants who have pled guilty to conspiring with German in the fraud are Ronald Webster, 56, and Yvette Berry Pinckney, 49, both of Montgomery; Marlo Yvette Miller, 46, and Irene King Douglas, 59, both of Huntsville; Cynthia Dianne Ware, 50, of Eufaula; and Barbara Ann Grimes, 63, of Mobile.
Judge Hopkins also sentenced Ware today, ordering her to serve six months in home detention as a condition of the five years’ probation the court imposed. Judge Hopkins also ordered Ware to pay the government $54,605 in restitution.
Miller, Pinckney, Douglas, and Webster are scheduled for sentencing April 1 in Huntsville. Grimes is scheduled for sentencing April 8 in Birmingham.
The IRS and FBI investigated the case, which Assistant U.S. Attorney Russell E. Penfield is prosecuting.