Second state prison inmate pleads guilty to running tax refund scheme behind bars

A second Tennessee prison inmate has pleaded guilty to filing bogus federal income tax returns using the names of other prisoners and collecting tax refunds that, for the two men combined, total more than $310,000, reports the News Sentinel.

 Larry Steven Covington Jr., 38, pleaded guilty Wednesday in U.S. District Court to conspiring to defraud the IRS while serving time in a Tennessee penitentiary and using fellow inmates’ Social Security numbers he apparently purloined…. Career criminal James Glenn Collins pleaded guilty in December 2014 to a similar scam, and court records suggest he may have taught Covington the ropes in deceiving the IRS.

Between the two of them, they filed hundreds of tax returns claiming refunds owed hundreds of inmates, most of whom had been unemployed for years. Some had never worked a legal job in their adult lives.

Although the IRS rejected roughly $1.8 million in claimed refunds for inmates, it paid out $163,778 in Covington’s six-year scheme and $150,465 in Collins’ three-year scam, according to documents filed by Assistant U.S. Attorney Jennifer Kolman in the two cases.

… Tennessee Department of Correction spokeswoman Neysa Taylor did not say how the inmates’ personal information was obtained but suggested the inmates themselves were to blame.

“The Department warns offenders about oversharing their information with other offenders,” she said. “In (Covington’s) case, suspected fraud was investigated by our Office of Investigation and Compliance and later turned over to federal agents.”

But there is no indication in federal court records that any of the inmates whose identities were used by Collins and Covington volunteered the information or that any inmates were paid a cut of any of the scheme proceeds.

… Collins was still behind bars when his scheme was discovered. Covington, whose criminal history includes drug and gun offenses, was placed on probation late last year – while under probe in the tax scheme, records filed in Knox County Criminal Court show. It’s not clear why state authorities were unaware he was a suspect in a federal case.

His probation still hasn’t been violated. Technically, Covington didn’t commit his federal crime while on probation. That’s because he filed his last fraudulent tax return in 2015. He was placed on probation in October 2016. He was charged federally in April.

Collins was sentenced to 84 months for his crime. He’s also serving a decades-long state prison term, so he likely will never go free and or repay the IRS. Covington faces sentencing Oct. 18 before Senior U.S. District Judge Thomas Phillips.

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