Feds Bust Up Tax Refund Fraud with Belarusian Phish Fry

June 23, 2011

According to federal prosecutors, from 2006 through 2007, websites falsely claimed to be authorized by the Internal Revenue Service ("IRS") to offer lower-income taxpayers free online tax return preparation and electronic tax return filing (e-filing).  Apparently, yet another variation on the growing Phishing scams that trap increasing numbers of naive Internet users.

After taxpayers input and uploaded their tax information, conspirators located in Belarus collected the data and altered the returns to increase the refund amounts and to direct the refunds to U.S. bank accounts controlled by Mikalai Mardakhayeu, 31, a Belarusian national and resident of Nantucket, Mass.  As such, the scam here benefitted from the old double-dip - not only did the scamsters misdirect the refunds from the rightful filers to Mardakhayeu's bank accounts but the con artists fraudulently increased the dollar amounts of the refunds.

Thereafter, the  conspirators caused the fraudulently altered returns to be e-filed with the IRS, which prompted the U.S. Treasury and various state treasurers to transmit more than $200,000 in refunds to the nominee bank accounts controlled by Mardakhayeu. 

On June 23, 2010, Mardakhayeu, 31, was arrested and in January 2011, he pleaded guilty to one count of conspiracy and nine counts of wire fraud. He faced a maximum sentence of 20 years in prison, to be followed by three years of supervised release, a $250,000 fine and restitution.

On June 22, 2011, Mardakhayeu was sentenced to 41 months in prision, two years of supervised release, and ordered to pay $209,000 in restitution.