It was a great scheme -- preparing fake tax returns and collecting refunds.
Bruce E. White, 42, of Salisbury made phony W-2 forms, claiming wages and withholding sums for unemployed friends. He prepared tax returns in their names and got refunds -- $63,000 worth from Maryland in three years. Then he split the proceeds with the friends and spent most of his share on drugs, he told police.
Last week, he pleaded guilty in Anne Arundel County Circuit Court to preparing false returns and theft in exchange for a prison term that will be capped at seven years.
On Monday, White is to be arraigned in U.S. District Court on charges of carrying out an identical scheme with the IRS, netting $30,000 in two years, federal prosecutors said.
He is under investigation in Delaware, that state's attorney general's office confirmed.
White is accused of using a typewriter in the Wicomico County Detention Center's law library -- he was incarcerated on unrelated forgery convictions -- to prepare fake Delaware and federal returns in 1997, according to the Maryland attorney general's office statement of facts.
"This was a very clever crime," said Carolyn Henneman, chief of criminal investigations and assistant attorney general.
About 100 of the 300 fake returns he prepared in Maryland won refunds from the comptroller's office. From 1993 to 1996, a decreasing number sailed through as an employee there began noticing returns from Salisbury with handwritten W-2's and suspiciously similar spelling errors in the same handwriting.
White's lawyer on the Maryland charges, Anne Arundel County public defender Alan Friedman, said officials should not be so triumphant about catching White: The state paid on one-third of White's returns, and White told investigators that he trained other people how to do it.
"I feel fairly confident that if he had been a little less greedy and a little neater, this probably could have gone on indefinitely. For all we know, it is going on right now. For all the comptroller's office knows, it is going on right now, and they have no system to tell them it is happening," Friedman said. "It's turning a blind eye to a huge hole in their system."
Computer programs and workers flag questionable returns, but comptroller's office spokesman Michael Golden would not say if state tax computers have the kind of matching capabilities that could snag bogus employee returns to prevent payment.
"If your point is he didn't get caught immediately, no, he didn't," Golden said. "But we do have a system in place and it worked."
"A blind squirrel finds an acorn once in a while," Friedman countered.
Golden said that while the office can't guarantee someone couldn't run a similar scheme, Golden said the office is confident it eventually roots out fraud.
In one of his confessions to investigators, White said he stopped doing Maryland returns after 1995 because the state stopped paying. By then, the comptroller's office had flagged the ones he and his friends did.
Finding an increasing number of suspicious-looking returns from Salisbury between 1993 and 1995, a comptroller's office employee investigated and found that returns were coming from people who didn't work for the companies.
Salisbury police in June 1996 raided White's home on a narcotics warrant, according to the attorney general statement of facts last week. White told police he was supporting a $500- to $1,000-a-day cocaine habit. The scheme was continued from the Wicomico County jail, where he was incarcerated on unrelated forgery charges. In 1997, his intercepted mail showed he was preparing fake tax returns. The typewriter ribbon he was using revealed tax information that matched tax returns he sent, and a search of his cell turned up tax documents. He was charged later that year in the Maryland scheme.
Pub Date: 3/11/99