Image: Evangelos Soukas
Dennis Cook  /  AP
Evangelos Soukas made $43,600 one year by using stolen identity information to get refunds from the IRS.
updated 4/12/2007 8:42:35 PM ET 2007-04-13T00:42:35

A man serving prison time for fraud told Congress Thursday that using stolen identities to apply for tax refunds was “an easy way to make money quickly.”

“The system in my eyes is inviting criminals like myself to steal from the IRS, banks, et cetera,” Evangelos Dimitros Soukas said in testimony before the Senate Finance Committee.

Soukas, 28, serving nearly eight years in prison for defrauding the government, banks and individuals of $1.1 million, said he was puzzled why the Internal Revenue Service doesn’t require PIN numbers or use of a mother’s maiden name when filing electronically or seeking information from IRS call centers.

The head of the IRS told the panel that stopping identity thieves isn’t simple, but the senators weren’t mollified.

In a heated exchange, Finance Committee Chairman Max Baucus, D-Mont., asked IRS Commissioner Mark Everson why he didn’t carry out Soukas’ suggestions. Turning to Soukas, Baucus said his criminal acts were “not a mark of your accomplishment. It’s a mark of the government’s failure to protect taxpayers.”

Sen. Charles Grassley, R-Iowa, top Republican on the panel, also faulted the IRS, saying it was “not reaching out to help the taxpayers who fall victim, but is instead interrogating them as though they were the crooks.”

Everson said he would study new electronic safeguards but cautioned that there was a trade-off between adding new protections and efforts to make taxpaying more consumer friendly. “If you stop everything that you think is questionable, then you will be damaging the interests of many legitimate taxpayers,” he said.

Soukas’ testimony took place only after a U.S. district judge on Tuesday rejected a Justice Department argument that the committee had no right to ask a federal judge to order a federal prisoner to appear before the legislative body.

Prisoners have testified at hearings in the past and committee lawyers said this was the first time they’d heard such an argument. “Justice is doing several things that are baffling,” Baucus said in apparent reference to the dispute over the department’s firing of prosecutors. “That’s just one of them.”

Soukas said he was a “criminal already on the run from the FBI” in 2000 when he came across an Internet ad for quick tax refunds. Using his mother’s W-2 form, he said it took several hours to design a legitimate-appearing tax return. He said he received a refund of $3,614 within days after applying for a refund anticipation loan through a tax preparer.

The next year he made $43,600 by using stolen identity information, keeping each refund request under $5,000. One mistake, apparently undetected by the IRS, was having the refunds under different names all deposited in his checking account.

Soukas said he called the IRS call center several times to find out the status of the false returns. In 2003, in a phone conversation with an IRS agent, he confessed to his crimes. “The agent found it hard to believe I was able to do what I was doing with no education in taxes, and simple (sic) called me a genius.” Soukas, arrested two years later while living in Greece, said he never heard from the agent again.

Michael Phillips, a deputy with the Treasury Inspector General for Tax Administration said identity theft was involved in about 18 percent of the 45,000 fraudulent claims, worth $232 million in refunds, identified by the IRS in 2006.

He said that in 2005, in response to a report from his office, the IRS established its Identity Theft Program Office. “However, most of its efforts are still reactive, assisting victims after they come forth in response to an IRS notice or enforcement action.”

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