SALEM, Ore. (CN) – A woman used TurboTax software to get a fraudulent $2.1 million state tax return, spent more than $150,000 from a prepaid debit card, and was arrested after asking for a new card because she lost her first one, a spokesman for Oregon’s tax department said.
A spokesman for the Oregon Department of Revenue told Courthouse News that the fraud was caused by an employee’s failure to follow up on the flagged return.
Krystle Marie Reyes, 25, filed a tax return that falsely claimed she earned $3 million in 2011, and received a $2.1 million prepaid debit card from TurboTax, Oregon Department of Revenue spokesman Derrick Gasperini said.
According to a probable cause affidavit, Reyes spent more than $150,000 from the card between February and May.
Reyes was arrested in Salem on Wednesday.
The fraud was discovered after Reyes reported her card as “lost/stolen,” according to the affidavit.
TurboTax contacted the Department of Revenue before issuing Reyes another card, Gasperini told Courthouse News.
“That’s when we said, ‘Hey, do you really have a $2 million refund you want issued on a prepaid debit card?'” Gasperini said.
Then the Department of Revenue contacted law enforcement.
Gasperini said Reyes’ tax return was flagged when it was submitted, but someone at the department approved it anyway.
“Our manual review process failed; the people involved in manually reviewing the return approved it as it was submitted,” he said.
Gasperini said TurboTax has returned $1.9 million to the Department of Revenue, which has checked for other signs of fraud.
“We have to do everything we can to make sure this is an isolated incident,” he said.
The tax department reviewed 108 state returns of more than $150,000, and did not find any other inappropriately issued refunds, Gasperini said.
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