Former Virginia Department of Social Services Employee Sentenced for Preparing False Tax Returns and Stealing Identities

Sybil Marshall Coles, 45, of Pamplin, Virginia, was sentenced today to serve five years in prisonfor aggravated identity theft and preparing a false tax return, announced Assistant Attorney General Kathryn Keneally for the Tax Division, U.S. Attorney Dana J. Boente for the Eastern District of Virginia and Attorney General of Virginia Mark R. Herring.  On Jan. 28, 2014, Coles pleaded guilty to a two count criminal information.  Coles was also ordered to one year of supervised release and to pay $949,273 in restitution.

According to court documents and evidence from her sentencing, Coles was an employee at the Virginia Department of Social Services in Nottoway County.  From both her work and personal computers, Coles prepared and filed at least 222 false federal income tax returns claiming false refunds based on fictitious itemized deduction expenses and fictitious Schedule C businesses that reported losses, among other items, which resulted in a tax loss to the U.S. Treasury of at least $949,000.  Coles also prepared and filed false Commonwealth of Virginia tax returns. 

According to court documents, Coles used family members and friends to recruit individuals for whom she prepared tax returns.  She also prepared returns for herself, family members, friends and colleagues.  Coles used bank accounts in the name of another family member to conceal the activities and proceeds of the false return scheme.  As part of the scheme, Coles stole identities of taxpayers for whom she had prepared returns and used their information on other returns to claim fictitious childcare expenses.  In addition, after the criminal investigation began, Coles asked certain individuals to tell Internal Revenue Service (IRS) investigators that someone else prepared their tax returns.

The case was prosecuted by Tax Division Trial Attorney and Special Assistant U.S. Attorney Rebecca Perlmutter and Assistant Attorney General and Special Assistant U.S. Attorney Michael Jagels.  IRS-Criminal Investigation in Richmond, Virginia, investigated the case.