Florida Brothers Scam IRS

An image taken inside the townhouse by the confidential informant. U.S. Attorney’s Office for the Southern District of Florida

The two brothers argued in Creole about whether the white man parked outside was a cop. Bechir Delva, 24; his brother, Dan Kenny Delva, 27; and two other men nervously discussed whether the person near the red Spanish-tile-roofed townhouse on a man-made lake 20 miles north of Miami was monitoring their identity-theft operation. The South Florida apartment they were in was a mess, strewn with debit cards and paperwork, and there was an AR-15 assault rifle propped up next to a large flat-screen television hanging on the wall.

They were right to worry. In fact, one of the men with them inside Apartment 105 was an informant cooperating with federal agents and wearing a hidden microphone and camera, which were recording the entire argument.

The Delva brothers are bit players in the hierarchy of those who commit stolen-identity refund fraud (SIRF), which criminals have used to loot $6 billion a year in tax refunds. "South Florida is the fraud capital of the country," says one person involved in the Delva case. The agent parked outside Apartment 105 was part of the South Florida Identity Theft Tax Fraud Strike Force, which has arrested 433 defendants responsible for $142 million in stolen-identity refund fraud since its creation in August 2012.

Bechir Delva, left, and Dan Kenny Delva, right. Broward County Sheriff's Office

"Yeah, I see him. He's in the car. A white guy," Dan Kenny Delva said in Haitian Creole on June 9, 2014, according to a transcript of the recording filed in court. "The guy might be trying to pick up signal.… The car really looks funny, Zo. I'm not lying, man. A white guy just staying there sitting in the car doing nothing," the elder brother says, adding that he wanted to move their setup to a hotel and that he's not taking any chances: "M'pral pran on chanm Marriott." (I'm going to get a room at the Marriott.)

The men even discussed the security of their Internet hookup, according to the transcript. "We were working on the fucking Linksys," another man in the apartment says. "The Linksys is ours. It's connected on us.… He won't be able to pick up who is sending things on it."

"Don't be so sure," Dan Kenny Delva replies.

After hearing the brothers debate plans to meet up that night at a strip club in Miami's Little Haiti neighborhood ("Ya turning up tonight?") and talk about the need to clear the apartment of incriminating evidence ("If they know you're here, I would just clean up the whole house"), the confidential informant walked out of the townhouse into the 90-degree heat and rendezvoused with the federal agents waiting outside.

"The cooperating defendant told the agents that the individuals inside the apartment, which included the defendant, were concerned about the presence of law-enforcement and were going to relocate their operation," according to court papers filed by federal prosecutors in the Southern District of Florida. After getting that news, two agents from Homeland Security Investigations left to get a warrant.

A third agent posted up outside the townhouse, where he soon saw Bechir Delva walk out and pack three white boxes and a backpack into a smoke-colored Mercedes-Benz. Inside the white boxes were materials used to file fake tax returns—at least 100 debit cards and lots of paper with handwritten and typed names, dates of birth and 1,609 real Social Security numbers, according to prosecutors and photos entered as exhibits at the Delvas' trial. "The Internal Revenue Service has verified that many of these Social Security numbers were used to file fraudulent tax returns for tax year 2013 and that a number of these filings resulted in tax refunds being issued to the filer in 2014," court papers say, adding that agents found $30,000 in cash inside the apartment. And that AR-15 by the television wasn't the only gun—there was also a SIG 522 rifle and a .380 pistol, prosecutors in the office of Wifredo Ferrer, U.S. attorney for the Southern District of Florida, said in a press release.

When the agents arrested and questioned Bechir Delva, he admitted he bought an Electronic Filing Identification Number—which lets a user file returns electronically with the IRS—on the street for $5,000 and used it to file bogus tax returns. Asked for his confession, he wrote, "The money in the safe is from fraud, and I had conducted fraud here."

The Department of Justice website describes how criminals like the Delva brothers use stolen identities to steal taxpayer money. "Typically SIRF perpetrators file the false returns electronically, early in the tax filing season so that the IRS receives the false SIRF return before legitimate taxpayers have time to file their returns," the DOJ says. That way, the thieves can collect and cash the refunds before the IRS realizes it has two claims from the same person. This type of fraud is often committed by organized-crime groups that have people who steal Social Security numbers from sources like hospitals, nursing homes and public death lists; others who file false returns with the IRS; and still others who obtain the refunds, according to the DOJ. And the scams can sometimes turn violent. A man shot and killed a U.S. mailman in 2010 so he could steal the mailman's master key—an "arrow key"—and use it to open mailboxes so he could intercept debit cards loaded with money from fraudulent tax returns, according to South Florida prosecutors.

The IRS estimates that in 2013—the year Bechir Delva admitted to stealing refunds—more than 5 million tax returns were filed using stolen identities and $30 billion was claimed in fraudulent refunds. The IRS was able to stop or recover more than 80 percent of those claims, but that means scammers still banked about $6 billion, the DOJ website says.

The number of fake federal income tax returns filed in South Florida is 46 times the national average, the Associated Press reported last year. "Is it the weather? Is it because it's beautiful and the fraudsters want to live here? Is it because it's such a melting pot and you have organized crime from all ethnic groups?" Kelly Jackson, the top agent in the Internal Revenue Service's criminal investigative division in South Florida, told the AP. "Any fraud, it always seems to start here."

The Delva brothers were charged with a seven-count indictment and after a trial in a federal courthouse in Fort Lauderdale, Florida, that lasted five days, a jury convicted them Friday. They'll be sentenced May 11, though defense attorney Alfredo Izaguirre says Bechir Delva will appeal his conviction.