Fraudulently Obtaining Tax Refunds With Identification of Dead People; It Does Not Matter If They’re Dead In Order to Get Higher Sentence

United States v. Alland Philidor, Willman Philidor, Nos. 12-13679, 12-13724 Appeals from the United States District Court for the Southern District of Florida (May 29, 2013) Panel: Tjoflat, Wilson and Anderson, Circuit Judges. Per Curiam: Affirmed In these consolidated appeals, the Eleventh Circuit reaches the rather startling conclusion that district courts can infer, based on common sense and ordinary human experience, that the Internal Revenue Service verifies identifying information, like Social Security numbers, before issuing a tax refund. The Court also holds – in the context of the §2B1.1(b)(2)(C) enhancement for number of victims, in which the definition of “victim” includes a person whose means of identification was used unlawfully – that “person” means an actual individual, i.e., not fictitious, regardless of whether the individual is alive or deceased. Alland Philidor and his brother Willman Philidor pleaded guilty to conspiracy to steal government funds and to theft of government funds for their participation in a scheme that involved submitting fraudulent tax returns to the Internal Revenue Service using stolen Social Security numbers, receiving refund checks from the federal government, and depositing these proceeds in various bank accounts of corporate entities controlled by them. The PSI indicated that there were thousands of victims whose Social Security numbers were fraudulently used by the Philidors. Accordingly, the PSI recommended that the six-level enhancement under USSG §2B1.1(b)(2)(C) be applied to their base offense level because the offense involved 250 or more victims. The PSI also noted, however, that the government had only positively identified twenty-six of the taxpayer victims. The Philidors objected to the statements in the PSI concerning the number of victims and the six-level enhancement. Although they conceded that the government’s discovery materials identified more than 250 Social Security numbers that were used to file over 250 fraudulent tax returns for which they received proceeds, the Philidors argued that the government failed to meet its burden to show that the offense involved 250 actual, living victims. The district court overruled the objection. On appeal, the Eleventh Circuit held that the district court did not clearly err in finding that there were 250 or more victims affected by the Philidors’ crime. The Court wrote that the undisputed portions of the PSI indicated that the Philidors’ bank statements listed over 250 Social Security numbers and that these numbers correspond to tax refunds issued based on fraudulently submitted tax returns. The Court found that, based on the fact that the Internal Revenue Service issued refunds for tax returns listing those numbers, the district court made the legitimate inference that the Social Security numbers corresponded to actual persons. The Eleventh Circuit noted that it had previously said, in the context of government-issued identification, that it is not necessary to present proof that the government verifies an individual’s identity before it issues a driver’s license or passport, because it is reasonable to conclude, “based on ordinary human experience,” that the government “routinely obtains an applicant’s identity to verify the authenticity of that identity.” In the Phildors case, the Court found, the district court could infer, based on common sense and ordinary human experience, that the Internal Revenue Service verifies identifying information, like Social Security numbers, before issuing a tax refund. The Court thus concluded that the fact that the Internal Revenue Service paid the refunds to the Philidors indicated that the Social Security numbers used to procure those refunds were associated with real people, and thus the district court’s conclusion was therefore not clearly erroneous. Finally, the Eleventh Circuit held that the district court did not err in applying the § 2B1.1(b)(2)(C) enhancement without first finding that the victims were living. A victim in this context is a person whose means of identification was used unlawfully, and a “means of identification” is limited to “an actual (i.e., not fictitious) individual.” USSG §2B1.1 comment. (n.1). The Court reasoned that “because ‘i.e.’ is an abbreviation for ‘that is,’ the plain meaning of the language used by Congress [sic] was that ‘not fictitious’ was the exclusive definition for ‘actual.’” Accordingly, the Court concluded, the plain meaning of the phrase “actual” does not distinguish between living and deceased persons. The full text of the decision can be found here: