Man Pleads Guilty to Directing Sophisticated Tax Scheme from State Prison

ABINGDON, VIRGINIA – United States Attorney John P. Fishwick Jr. announced the guilty plea of a Virginia man who, while incarcerated in Tennessee state prison, organized and participated in a scheme to defraud the Internal Revenue Service.

David Witt, 36, of Jonesville, Virginia, pled guilty yesterday in the United States District Court for the Western of Virginia in Abingdon to one count of making false, fictitious or fraudulent claims and one count of conspiring to defraud the United States Government in respect to claims.  A co-defendant in the case, William Ziehler, was sentenced to 51 months in federal prison on related charges earlier this month.

“The United States Attorney’s Office takes seriously the responsibility of ensuring the integrity of our tax paying system,” United States Attorney John P. Fishwick Jr. said today. “Prosecutions, like this one, that holds accountable those who attempt to defraud the system, should serve as an example to those looking to do harm to the system.”

According to evidence presented in District Court by Special Assistant United States Attorney Kevin Jayne, Witt, and others, participated in a sophisticated conspiracy to defraud the federal government.  The scheme began when Witt, at the time an inmate in a Tennessee state prison, gathered personally identifiable information (including birth dates and social security numbers) belonging to other inmates, which he then used that information to complete Internal Revenue Service (IRS) Form 1040s.  These Form 1040s contained false information, including false addresses outside of prison and false claims that the inmates were due a tax refund based on wages never earned by those inmates.  Subsequently, these Form 1040s were sent to persons outside of the prison who then forwarded the Form 1040s to the IRS for processing.  Based on these Form 1040s, the IRS issued tax refund checks in the names of these inmates and sent the checks to addresses associated with Witt’s accomplices in the scheme.  Many of these tax refund checks were cashed at banks throughout Southwest Virginia by persons using fraudulent power-of-attorney forms.  Return payment was made to Witt and others by use of electronic transfers, such as MoneyGram, and by other means.

The investigation of the case was conducted by the Internal Revenue Service Criminal Investigation and United States Postal Inspection Service.  Special Assistant United States Attorney Kevin Jayne prosecuted the case for the United States.