In the scheme, people use a form called 1099-OID to claim a tax deduction for interest they supposedly earned on investments. Scammers also take deductions on most debt they have (home mortgages, car loans, etc.) in order to get rebates. Of course, this is illegal. The couple committed the fraud with their 2006 and 2007 taxes. (Read the IRS's explanation of the delusional reasoning behind the scheme. It's fascinating.)
According to a press release from the U.S. Attorney's Office, the Simonsons cashed in big time. "As a result of their fraudulent claims, the Simonsons received three refund checks totaling $810,218. Kristen Simonson received a $582,277 refund check and a $4,215 refund check. Joshua Simonson received a $223,726 refund check," the release says. The U.S. Attorney's Office also says that when the IRS told the pair that they had to give the ill-gotten cash back, they sent the government bad checks. The jury deliberated in the case for just two hours.
It could get some serious time in the big house for the spouses. Joshua Simonson is subject to a sentence of up to 95 years in federal prison without parole, and Kristen Simonson is subject to a sentence of up to 60 years in federal prison without parole.
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