United States Attorney
Southern District of New York
U.S. ATTORNEY’S OFFICE
DECEMBER 17, 2010 ELLEN DAVIS,
PREET BHARARA, the United States Attorney for the
Southern District of New York, and KEVIN J. MCGLYNN, the Special
Agent-in-Charge of the Treasury Inspector General for the Tax
Administration in New York (“TIGTA”), announced today the
unsealing of an indictment charging FERN STEPHENS, a revenue
officer at the Internal Revenue Service (“IRS”), on charges of
mail fraud, theft of government funds, and unlawful access of a
government computer, relating to STEPHENS’s theft of more than
$160,000 in unclaimed tax refunds. STEPHENS was arrested early
this morning, and is expected to be presented this afternoon in
Manhattan federal court. The case has been assigned to U.S.
District Judge SHIRA A. SCHEINDLIN.
According to the Indictment unsealed today in Manhattan
federal court:
STEPHENS has been an employee of the IRS from January
1984 through December 2010. Since at least the early 1990s,
STEPHENS has served as an Revenue Officer. In that capacity, she
is responsible for the collection of taxes from both individuals
and corporations.
From March 2003 through November 2010, STEPHENS used
her position as a Revenue Officer to steal taxpayer funds held by
the IRS. She accomplished this by, among other things, making
false entries in an IRS system known as the Integrated Collection
System (“ICS”). In these entries, she falsely documented
purported requests to transfer corporate or business entity tax
refunds or payments. STEPHENS then caused the IRS to issue
checks, wires and credits to her relatives and close associates.
Because STEPHENS was responsible for collecting tax
debts, she was in a position to know when an owner of a small
business did not know the IRS owed it money. For example, in
2003, STEPHENS stole $3,340.20 from a bankrupt company that had
been based in Manhattan. STEPHENS did so by claiming that the
principal of the business contacted the IRS and asked for the
refund to be issued in the principal’s name. In fact, the
“principal” to whom STEPHENS had the refund check issued was her
niece, who, according to the true owner of the business, had no
claim to this money whatsoever.
STEPHENS’s scheme began in March 2003 and continued
through November 2010. In total, STEPHENS stole over $160,000
belonging to twelve taxpayers, which she sent to eight family
members and associates.
* * *
If convicted of all counts contained in the indictment,
STEPHENS faces a maximum sentence of 35 years in prison.
Mr. BHARARA praised the investigative work of TIGTA.
He also thanked the U.S. Postal Inspection Service, U.S. Veterans
Administration Office of the Inspector General in West Palm
Beach, and the U.S. Postal Service Office of the Inspector
General, for their assistance in the investigation.
The case is being prosecuted by the Office’s Public
Corruption Unit. Assistant U.S. Attorney WILLIAM J. HARRINGTON
is in charge of the prosecution.
The charges and allegations contained in the Indictment
are merely accusations, and the defendant is presumed innocent
unless and until proven guilty.
10-405 ###
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MANHATTAN U.S. ATTORNEY CHARGES IRS EMPLOYEE WITH STEALING UNCLAIMED TAX REFUNDS
