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Technology
Artifcial Intelligence CyberCrime Identity Theft Tax Fraud Technology

How Can You Safeguard Against the Dangers of AI Tax Fraud?

 




The digital sphere has witnessed a surge in AI-fueled tax fraud, presenting a grave threat to individuals and organisations alike. Over the past year and a half, the capabilities of artificial intelligence tools have advanced rapidly, outpacing government efforts to curb their malicious applications.

LexisNexis' Government group CEO, Haywood Talcove, recently exposed a new wave of AI tax fraud, where personally identifiable information (PII) like birthdates and social security numbers are exploited to file deceitful tax returns. People behind such crimes utilise the dark web to obtain convincing driver's licences, featuring their own image but containing the victim's details.

The process commences with the theft of PII through methods such as phishing, impersonation scams, malware attacks, and data breaches — all of which have been exacerbated by AI. With the abundance of personal information available online, scammers can effortlessly construct a false identity, making impersonation a disturbingly simple task.

Equipped with these forged licences, scammers leverage facial recognition technology or live video calls with trusted referees to circumvent security measures on platforms like IRS.gov. Talcove emphasises that this impersonation scam extends beyond taxes, putting any agency using trusted referees at risk.

The scammers then employ AI tools to meticulously craft flawless tax returns, minimising the chances of an audit. After inputting their banking details, they receive a fraudulent return, exploiting not just the Internal Revenue Service but potentially all 43 states in the U.S. that impose income taxes.

The implications of this AI-powered fraud extend beyond taxes, as any agency relying on trusted referees for identity verification is susceptible to similar impersonation scams. Talcove's insights underscore the urgency of addressing this issue and implementing robust controls to counter the accelerating pace of AI-driven cybercrime.

Sumsub's report on the tenfold increase in global deepfake incidents further accentuates the urgency of addressing the broader implications of AI in fraud. Deepfake technology, manipulating text, images, and audio, provides criminals with unprecedented speed, specificity, personalization, scale, and accuracy, leading to a surge in identity hijacking incidents.

As individuals and government entities grapple with this new era of fraud, it becomes imperative to adopt proactive safety measures to secure personal data. Firstly, exercise caution when sharing sensitive details online, steering clear of potential phishing attempts, impersonation scams, and other cyber threats that could compromise your personally identifiable information (PII). Stay vigilant and promptly address any suspicious activities or transactions by regularly monitoring your financial accounts.

As an additional layer of defence, consider incorporating multi-factor authentication wherever possible. This security approach requires not only a password but also an extra form of identification, significantly enhancing the protection of your accounts. 

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Tax Fraud
advance payment scams and money laundering Black Axe Gang Credit Card Fraud Cyber Crime cybercrime gang Email Scams Financial Fraud inheritance scams Interpol Tax Fraud

Operation Jackal: INTERPOL Shuts Down African Cybercrime Gang


A recent operation by INTERPOL on the West African cybercrime organization led to several bank accounts being frozen, with suspects detained and a series of financial investigations organized worldwide. 

Operation Jackal, conducted between May 15 and 29, apparently mobilized police forces, financial crime units and cybercrime agencies across 21 countries in order to launch a targeted strike on Black Axe and related West African organized criminal gangs.

As of now, more than 200 illicit bank accounts that were linked to online financial crime have been blocked, with several associated suspects arrested whose networks in cybercrime pose a severe threat to international security. 

“Organized crime is mostly driven by financial gain and INTERPOL is committed to working with our member countries to deprive these groups of their ill-gotten assets. This successful operation involving so many countries clearly shows what can be achieved through international cooperation, and will serve as a blueprint for concerted police action against financial crime in the future,” says Isaac Kehinde Oginni, Director of INTERPOL’s Financial Crime and Anti-Corruption Centre (IFCACC). “It also sends a strong message to West African crime networks that no matter where they hide in cyberspace, INTERPOL will pursue them relentlessly. The illegal activities of Black Axe and similar crimes syndicates will remain a priority for INTERPOL.”

In Portugal alone, four such investigations led to the accumulated seizure and recovery of around 1.4 EUR million.

A total of 34 suspects have been arrested in the Irish phase of the operation. Amongst these arrests, 12 were detained for investigative purposes and 22 on suspicion of money laundering and gangland-style offences. 

According to Deputy Head of the National Central Bureau of Dublin, Tony Kelly, ‘It became apparent early in the investigation that international cooperation and the use of INTERPOL’s analytical and coordination capabilities was essential to the investigation, and remains a pivotal element to the success to date and the ongoing investigation into this group.”

More such investigations have been witnessed across the world as intelligence agencies are putting efforts into investigating the issue.

Black Axe and other West African organized cybercrime syndicates are popular malicious gangs known for cyber-enabled criminal offences like financial fraud, mostly done by compromising company’s email systems, romance scams, inheritance scams, credit card fraud, tax fraud, advance payment scams and money laundering. 

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U.S
Banking fraud Cyber Crime Scheme Cyber Fraud Tax Fraud U.S

U.S. Charged Eight in $45 Million Cyber Crime Scheme

The United States Department of Justice charged eight people on Wednesday in connection with a racketeering (RICO) conspiracy. 

Following a multimillion-dollar fraud that took place, threat actors stole money from hacked accounts at banks and financial institutions, laundered it, and sent it overseas. 

The defendants, Dickenson Elan, Andi Jacques, Jenkins, Louis Noel Michel, Monika Shauntel Jeff Jordan Propht-Francisque, Vladimyr Cherelus, Michael Jean Poix, and Louisaint Jolteus, allegedly worked together to perform computer fraud and scams. 

According to the Department of Justice, the campaign was started in 2011 when threat actors began to gain access to accounts at 15 big financial institutions including Citibank, E-Trade, PayPal and TD Ameritrade, JP Morgan Chase, payroll processor Automated Data Processing (ADP), and niche organizations including the U.S. military's Defense Finance and Accounting Service. 

As per the data, the defendants along with others from 2015 and 2019, including a now-deceased conspirator referred to as Rich4Ever4430, banded together in a cybercrime and fraud scheme involving tax returns. 

The indictment claims, Jenkins, Michel, Propht-Francisque, Cherelus, and Rich4Ever4430, purchased on the dark web server credentials for Certified Public Accounting (CPA) and tax preparation firms and used the data to gain access and exfiltrate the tax returns of thousands of people. 

"Hackers only need to find one vulnerability to cause millions of dollars of damage," said Mark Rasch, a former federal cyber crimes prosecutor, based in Bethesda, Maryland. 

Overall, they have stolen more than $36 million in false tax refunds. The estimated loss surpasses $4 million however, the exact amount is yet to be confirmed. 

The eight defendants have been charged with conspiracy to commit wire fraud, conspiracy to commit identity theft, and conspiracy to commit money laundering. According to the law, defendants could face fines and up to 20 years in prison on each of the first two charges, and 15 years on the third. 

The case is referred as "United States of America v. Oleksiy Sharapka, Leonid Yanovitsky, Oleg Pidtergerya, Richard Gundersen, Robert Dubuc, Lamar Taylor, Andrey Yarmoltskiy and Ilya Ostapyuk," number 13-06089, at the U.S. District Court for the District of New Jersey.
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Tax Fraud
Child Identity Theft Cyber Crime Data Theft New York Tax Fraud

New York tax Fraudster Sentenced to 12 years in Prison for Child Data Theft Ring

 

A court in the United States has sentenced New York resident Ariel Jimenez to 12 years in prison for stealing the identities of thousands of children on welfare and using those identities to falsely claim tax credits on behalf of his customers. 

The clients of Jimenez exploited the stolen identity data which included names, dates of birth, and social security numbers to add the children fraudulently as dependents on their tax returns to receive a refund when they filed their taxes. 

Ariel Jimenez, 38, of the Bronx, New York started the fraud ring in 2007 and is believed to have made millions of dollars. With the assistance of his co-conspirators, Jimenez began to sell the identities of hundreds of vulnerable children (siphoned by a New York City's Human Resources Administration fraud investigator) to thousands of people profiting from this fraudulent operation. 

"While working at the HRA, CW-1 obtained children's names and identifying information from the Welfare Management System and sold those names to [..] the defendant," court documents explained. The investigation by IRS-CI has revealed that the defendants engaged in large-scale identity theft and tax fraud schemes through which (a) identifying information of minors, including names, dates of birth, and SSNs, was obtained, including through payments to a corrupt New York City employee." 

The fraudster demanded a cash fee, on top of tax preparation charges, to "prepare and file tax returns that falsely claimed that the individual taxpayer had one or more minor dependents, to take fraudulent advantage of at least one tax credit, thereby inflating the refund paid to the taxpayer." 

He used the profits from his tax fraud operation to acquire millions of dollars of real estate and fund his lavish lifestyle. By his own admission, JIMENEZ spent more than $5.5 million to buy worldwide real estate, cars, jewelry, and in gambling. 

The defendant was first arrested in November 2018 along with multiple co-conspirators, including his sisters Evelin Jimenez and Ana Yessenia Jimenez. He was convicted in February this year of aggravated identity theft, fraud, and money laundering crimes following a two-week jury trial. 

The judge in charge of this case sentenced the fraudster to 12 years in prison on Monday and ordered him to pay $14M in damages, turn over numerous properties, and pay over $44M in restitution. 

"Ariel Jimenez's tax and identity theft crimes cruelly forced his victims to endure bureaucratic snafus and agonizing delays for their much-needed tax refunds," U.S. Attorney Damian Williams stated earlier this year in February. 

"Today's sentence holds Jimenez accountable for brazenly selling the identities of children to his customers for his own profit," Williams further added.
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