Enforcement actions focused on tax and COVID-related fraud, money laundering, cybercrimes
Over 2,500 criminal investigations, the identification of more than $10 billion from tax fraud and financial crimes, and a nearly 90% conviction rate are just a few highlights from the IRS-Criminal Investigation (IRS-CI) Fiscal Year 2021 Annual Report . The report, released details, statistics, important partnerships and significant criminal enforcement actions from IRS-CI, the criminal investigative arm of the IRS, for the past fiscal year, which began October 1, 2020 and ended September 30, 2021.
“IRS-CI agents are the only federal law enforcement officers with the authority to investigate criminal violations of the U.S. tax code. Their work reinforces the backbone of our voluntary compliance tax system – a system that funds services and benefits for our nation, including defense, infrastructure and education,” said IRS Commissioner Chuck Rettig.
In fiscal year 2021, IRS-CI built upon its existing network of U.S. field offices and international attachés to combat financial crimes across the globe. The agency’s alliance with the Joint Chiefs of Global Tax Enforcement (J5) helped strengthen public-private partnerships with financial institutions and the Fin-Tech industry to deter and identify criminal activity. Additionally, IRS-CI established its first cyber attaché in The Hague, Netherlands, to proactively support cyber investigative needs in coordination with Europol.
“IRS-CI continues to lead tax and financial investigations here in the U.S. and across the globe,” said IRS-CI Chief Jim Lee. “In fiscal year 2021, as we faced the second year of a global pandemic, our team of agents continued to overcome personal and professional challenges to target criminals who exploited the U.S. tax and financial systems for personal gain.”
While IRS-CI agents spent most of their investigative man-hours, about 72%, investigating tax-related crimes like tax evasion and tax fraud during fiscal year 2021, they also made significant contributions to money laundering, narcotics trafficking, public corruption, terrorism and COVID-19 fraud investigations.
Case examples include:
In April 2021, a dual Russian-Swedish national was arrested in Los Angeles on criminal charges related to his alleged operation of the longest-running bitcoin money laundering service on the darknet dubbed Bitcoin Fog. The bulk of cryptocurrency laundered through Bitcoin Fog came from darknet marketplaces and was tied to illegal narcotics, computer fraud and identity theft. This case marked the second U.S. prosecution of a cryptocurrency mixing service; both were investigated by IRS-CI.
The ringleader of a transnational criminal organization, with ties to the Sinaloa Cartel, operating in California and along the East Coast was sentenced to 33 years in prison in July 2021 for narcotics trafficking-related charges. The sentencing followed a multiagency operation dubbed Operation Cookout that netted 65 kilograms of illegal drugs, 24 firearms, more than $700,000 in cash and guilty pleas from 45 defendants.
Numerous IRS-CI investigations resulted in individuals being sentenced for fraudulently obtaining small business relief loans under the CARES Act. One of those cases involved a Texas businessman who was sentenced in September 2021 to 31 months confinement and 36 months of supervised release after he created a scheme to fraudulently obtain more than $3.3 million in Paycheck Protection Program loans for personal use.
The report includes additional case examples for each U.S. field office, an overview of IRS-CI’s international footprint, details about the specialized services provided by IRS-CI and investigative statistics, broken down by discipline, for fiscal year 2021.
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