2 admit to tax refund scheme
Imagine becoming a millionaire and never legitimately earning a penny.
Cheryl Cobia, 28, of Williamsport, did just that, according to a federal prosecutor.
Cobia pleaded guilty Thursday to overseeing a conspiracy to defraud the Internal Revenue Service out of more than $1 million.
Before U.S. Middle District Court Judge Matthew Brann, Cobia and a co-conspirator in the case, Sharrieff Wilkins, 35, pleaded guilty in the conspiracy that took place between 2009 and 2011.
Assistant U.S. Attorney Wayne P. Samuelson described the scam as an “extensive income tax scheme operated on her laptop from her home.”
Cobia attempted to get more than $1 million in tax refunds and was successful in receiving $826,111 in tax refunds using deceptive means, he said. She also made false statements when applying for food stamp and Medical Assistance benefits.
Wilkins obtained $21,400 in tax refunds.
Investigators with the IRS, FBI and Health and Human Services closed in on Cobia in January 2011. When they checked her house later in the year, they found identities of 680 individuals in computer storage and companies in notebooks.
Cobia solicited individuals, including inmates while she was incarcerated on retail theft charges, to provide their names, dates of birth, Social Security numbers, employer names and/or identification numbers in order to prepare false working forms known as W-2s.
The forms contained names of employers who did not employ the listed workers as well as fabricated amounts of tax withholdings.
The tax refunds typically consisted of prepaid debit cards that contained the proceeds from the fraudulent tax returns, received through mail.
However, a different prepaid debit card was obtained for each individual for whom the co-conspirators filed a fraudulent tax return, according to the charges.
In some cases, money orders would be bought using the debit cards. The money orders were for dollar amounts that were less than the cards, which enabled the conspirators to make money on the false tax returns, Samuelson said. Some of the false returns included requests for receipts for child care expenses that were sent for the purpose of claiming false deductions and credits for child care, he said.
Brann accepted Cobia’s plea to charges of conspiracy to submit false income tax returns and wire fraud and for giving false statements to a federal department and Wilkins’ plea of defrauding the federal government.
The maximum penalty under the federal statute for each defendant is 10 years’ imprisonment, a term of up to three years’ supervised release and a $250,000 fine.
Attorneys for both estimated imprisonment for Cobia at 46 to 57 months while Wilkins could get 18 to 24 months.
Sentencing for Cobia is scheduled for 9:30 a.m. June 19. Wilkins’ sentencing is scheduled for 9:30 a.m. June 20.
Wilkins was released, but Cobia remains in detention at a nearby prison.