Office of the State Treasurer


CONTACT: Matt Golden
February 3, 2004
(609) 984-7110
Prison Inmates Charged in Tax Refund Scheme
 TRENTON - State Treasurer John E. McCormac announced today that two Texas prison inmates have been indicted by a federal grand jury for attempting to defraud New Jersey and several other states. The prisoners were found to have submitted falsified income tax refund claims and now face charges of conspiracy and mail fraud.

 Gary Dewayne Dennington and Vaughn Duwayne Harman III, while incarcerated in Beaumont, Tex., prepared counterfeit W-2 forms that reported both men had earned wages and had state income tax withheld during 2002. Dennington and Harman then filed state income tax returns using the fictitious wage and withholding figures on the W-2 forms they previously created. Their filings claimed refunds to which the individuals were not entitled and caused those refunds to be mailed through the United States Postal Service.

 Texas prison authorities, after noticing that refund checks had been issued to the inmates, became suspicious and alerted New Jersey Treasury officials. The Division of Taxation's Office of Criminal Investigation then proceeded, in conjunction with the Federal Bureau of Investigation (FBI), to uncover the scheme and prosecute the crime.

 "The New Jersey Division of Taxation worked with the FBI to develop this case and notify our counterparts in other states about the scam," Treasurer McCormac explained. "They determined that Missouri and Connecticut had also been victims of the Texas inmates' fraudulent refund claims."

 "These criminals conspired to steal from the citizens of New Jersey when they used the tax system to obtain refunds under false pretenses," added State Taxation Director Robert K. Thompson. "Schemes like this cannot succeed if federal and state law enforcement authorities share information, as they did in this instance. Our division will continue to work cooperatively with law enforcement agencies throughout the country to investigate and prosecute anyone who commits a crime of this nature."

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