Tax preparation scam targeting veterans and active duty members steals $4.8 million.

A tax services company allegedly defrauded Navy veterans.

Located just outside the gates of Naval Base San Diego, Go Navy Tax Services has been reaching out to veterans over the past year with the promise of helping them with their finances and taxes. No trap… everything is free!

Many saw sailors and veterans walk into the office filled with Navy flags and memorabilia, so most would leave their suspicions at the door. They were then invited to their “free tax preparation” seminar, where they were able to meet their “chartered accountants”. Ok, so that sounds legit too, what happens is that accountants would push (mostly, forcefully) for retirees to open accounts with them. During the process, veterans were also asked to provide personal information through their forms and even asked them to sign documents (which was not fully explained to them).

This is the scam that Paul Flanagan and his associates are running in this establishment.

Participants display their patriotism during a Veterans Day ceremony in Belleville, Illinois on Nov. 11, 2012. (Credit: Defense Visual News Distribution Service/getarchive)

Nearly 5,000 applications from serving sailor and marine veterans were reported, but some of them did not open the so-called “retirement account”. Instead, they were sold life insurance policies without their knowledge. The documents also included a fine line that allowed Go Navy tax services to withdraw sailors’ bank accounts.

“The victims of this scam were Navy sailors serving our country and were tricked into signing up for something they didn’t need and couldn’t afford,” the prosecutor said. of San Diego County, Summer Stephan.

This gave Flanagan and his “co-conspirators” access to over $2 million in “commissions” over more than a decade in their scam. Overall, veterans would have lost about $4.8 million.

“The military has given so much to our country,” Xavier Becerra, then California’s attorney general, said in a statement after Flanagan and his associates were charged with 69 counts of conspiracy to commit fraud, tampering, identity theft, and grand theft, among others, in 2019. “They shouldn’t have to worry about being targeted and exploited by malicious scammers.”

Fortunately, law enforcement eventually put an end to Flanagan’s scheme, and he is now sentenced to 357 days of house arrest following his plea to the felony charges.

California Attorney General Rob Bonta said, “Our service members and their families contribute so much to our nation – yet there are people without honor who want to deceive our American heroes. We hope today’s announcement helps right the wrongs that have been done by the malicious Go Navy Tax scammers.

Vulnerability in the veteran community

According to an AARP study, veterans should be wary of fraudulent invitations, especially those that promise “tax havens,” financial management, and life insurance. There are also other types of scams like fake travel deals, sweepstakes, special discounts and more where scammers would ask for sensitive personal information which would give them access to veterans’ bank accounts.

For this reason, veterans are more likely to lose their money to scams than civilians.

“Thirty-five percent of military and veterans have lost money to a scam, compared to 25 percent of civilians surveyed. -parents, followed by tech support fraud, IRS imposters, bogus offers to fix a low credit score, credit card fraud, and research phishing emails personal information.

Veterans are said to be “easier” to target because of this innate camaraderie with fellow retirees, which makes them more vulnerable to imposters claiming to have served in the military.

Operation Protect Veterans
The United States Postal Inspection Service has partnered with AARP to create Operation Protect Veterans (Source: Defense Visual Information Distribution Service/getarchive)

“Veterans can be seen as easy targets by scammers because of veterans’ sense of giving back to other veterans,” says Troy Broussard, Desert Storm veteran and senior adviser to AARP’s Veterans & Military Families Initiative. “It led to fake charities or veteran causes [among] the highest scams reported by veteran victims.

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These crooks would have studied veterans as a whole and created characters that would easily relate to them. According to the US Postal Inspection Service, scammers also use emotional manipulation specifically aimed at veterans. Some telltale signs would be someone using military jargon (like, “Please sign this DD 214 form”) or quoting where they were stationed and in what year. They would be really specific.

“The scammers know that veterans share a special service bond,” says Daniel Brubaker, inspector in charge of the Postal Inspection Service and Marine Corps veteran. “They also know that veterans and military families get special benefits and therefore they know how to create a scam to be as effective as possible in getting veterans to let their guard down and open their wallets. “

To avoid these types of heinous scams, AARP recommends signing up for the National Do Not Call Registry and using a call blocking service. If in doubt, veterans can also contact AARP by email. [email protected]

Veterans can also read the latest AARP Watchdog Alert Manual: Veterans Edition here.

Active duty members who need tax assistance should go to the Department of Defense website with its own section on service members who pay their taxes. You can access MilitaryOneSource here.

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