Harlan Decoste, Kerby Luna, Francic Jeudy, Frantz Decoste, all of Miramar, and Andy Cherrelus of Miami, Florida have been arrested for running one of the biggest tax refund fraud schemes in U.S. history. The five men allegedly defrauded $108 million from the IRS using a startup rap recording label as a front. They face identity theft and income tax fraud charges. News sources did not specify attorneys for any of the men.
Authorities discovered the alleged scheme after the group reported an armed home invasion robbery at their Miramar house in 2013. Detectives who dealt with the home invasion case claim to have found over 600 debit cards in other people’s names, bundles of cash, expensive jewelry, and other valuable items in the house.
The five men ran the alleged fraud scheme under the guise of a startup rap record label. They illegally filed tens of thousands of income tax returns using false identities to demand tax refunds from the IRS, sources suggest. The alleged scheme was so extensive that agents from the IRS’s Criminal Investigations Division are still reviewing records to check for questionable returns.
IRS agents have so far found false income tax returns worth over $108 million filed by the group. It is believed that the tax agency was tricked into paying over $28.2 million in false refunds.
Investigators believe Harlan Decoste is the leader of the group, as he was the one who allegedly created GroupUp111 (the startup rap recording label that became the front for the group’s fraudulent schemes). The group’s other members, Cherrelus and Luma, acted as vice president and treasurer for the company, sources indicate.
When investigators searched the Miramar house, they found documents with detailed information of more than 30,000 stolen identities. The fraud scheme is believed to have been run from the summer of 2011 until 2013, when the home invasion robbery was reported to authorities.
Many of the identities the men stole belong to average U.S. citizens and resident workers, reports suggest. A significant percentage of the returns were filed under the names of prisoners and deceased individuals.
According to prosecutors handling the case, Harlan Decoste allegedly told investigators that he used over $1 million on illicit drugs over the past six years. The men purportedly regularly posted pictures of their extravagant lifestyles on various social media websites.
All five men pleaded guilty to identity theft and income tax fraud conspiracy charges in the beginning of the year. Three of the five men were sentenced in federal court by U.S. District Judge William Dimitrouleas on Tuesday. The judge said he believes it is important to punish offenders who “bilk the government” and he’ll impose prison terms that’ll discourage others from trying to do the same.
The length of each man’s punishment depends on his role in the crimes, the amount of money involved, and how much they owe the IRS in restitution. Luma, 26, was sentenced to 11 years in prison; Harlan Decoste’s younger brother, 21-year-old Franz Decoste, was sentenced to four years and six months in prison; and Jeudy, 25, was sentenced to nine years and eight months in federal prison. The remaining two men, Harlan Decoste, 27, and Cherrelus, 24, are expected to be sentenced this afternoon.
The IRS has been heavily criticized for falling for the scheme and paying out such large sums of money in fraudulent tax refunds. Authorities from the agency said they have now introduced new policies and safeguards to ensure fraud on this level never happens again.