It has to be more than a coincidence that the recent cyber theft of IRS tax data has been traced to Russian criminals. IRS investigators believe the identity thieves who stole the personal tax information of more than 100,000 taxpayers from an IRS website are part of a sophisticated criminal operation based in Russia, two officials told the Associated Press.
In fact, the connection between fraudulent tax refunds and actual officials of the Russian government has been well-documented by former Russian Hedge Fund Manager Bill Browder in his new book, Red Notice, which provides evidence of how Russian government officials were able to steal back $280,000,000 in taxes paid by his hedge fund, Hermitage Capital, which managed $4.5 billion in assets at the time.
“The information was stolen as part of an elaborate scheme to claim fraudulent tax refunds, IRS Commissioner John Koskinen told reporters. Koskinen declined to say where the crime originated,” said the AP report.
But this has happened in Russia. Russian officials have even stolen from their own government. It was Russia’s FSB Secret Police, successor to their KGB, that did the dirty deed in 1993, according to Browder. They had raided his Russian offices, and literally stole the corporate seals and legal documents of the corporations he managed that had paid $280 million in taxes the year before President Putin kicked him out of Russian.
When Russian officials found they couldn’t confiscate his assets—he had been able to sell all his Russian assets—they literally changed the ownership of his corporations and re-filed fraudulent tax returns. The refiled returns then reported sufficient losses that they could claim a refund for all of the $280 million in taxes his companies had paid to the Russian government.
This was so blatant a financial fraud that we can be sure our IRS must be aware of Russian government complicity. How? Because Browder was able to document the fraud, which resulted in a new U.S. law, the Sergei Magnitsky Act, which named the actual perpetrators of the tax theft —some 35 Russian government officials at last count—from ever entering the U.S. and freezing their assets.
Yet it seems even the IRS can be fooled. “In 2012, the IRS sent a total of 655 tax refunds to a single address in Lithuania, and 343 refunds went to a lone address in Shanghai, according to a report by the agency's inspector general. The IRS has since added safeguards to prevent similar schemes, but the criminals are innovating as well,” said the AP report.
The amount of rampant criminal fraud in Russia cannot have happened without Putin’s knowledge or assent. We know this because the very same perpetrators of the Browder-Hermitage Capital tax fraud were awarded medals by Putin for their ‘heroism’ in the scheme, believe it or not.
The Russian government then charged Bill Browder with the theft, which resulted in a call for his arrest by Interpol, and the resulting Red Notice—a notice the Russian government put out to Interpol for his arrest. They have put out a Red Notice 3 times to date, and 3 times Interpol has rejected their request because of the overwhelming evidence that the Russian government was behind the theft.
This shows the lengths corrupt officials have gone to cover up their thefts. That’s why we should have no illusion about the IRS tax return thefts. It’s a new cold war, of sorts. They want to continue stealing tax refunds from US taxpayers as they have done in Russia.
We also know this because Sergei Magnitsky, Bill Browder’s Russian attorney, was imprisoned and beaten to death by the same perpetrators for his refusal to recant the evidence of theft that defrauded the very same Russian people.
Harlan Green © 2015
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