Sisters’ pursuit of education in US

A family’s hopes after sending two daughters to the US for further studies, expecting them to come back with university degrees, have been dashed. Loretta Wavinya, 32, and Lillian Nzongi, 28, were on Friday sent to jail in the US for fraud.

The US law came down hard on the sisters who were convicted for multi-million-dollar fraud involving stealing identity documents of residents of a nursing home in the American heartland and making false tax returns.

They will serve a joint 20-year jail term for defrauding the tax collecting agent, the Internal Revenue Service (the equivalent to Kenya Revenue Authority) of close to Sh1 billion. Wavinya was sentenced to 14 years, while Nzongi will serve five years and 10 months.

The attorney for the western district of Missouri, Mr John Wood, said the women, who went to the US on student visas, conned the government of millions of dollars in Missouri.

“Today’s lengthy sentences send a clear message to others who may be considering cheating the tax-payers or using other people’s identities,” he said.

But Wavinya’s sentence was even lighter. Under the US law, she could have been liable to a mandatory minimum sentence of up to 27 years in prison, plus a fine of up to Sh4.88 billion ($750,000).

Ther woman who hatched the plot to rob the revenue organisation of a staggering $15 million (Sh975 million), pleaded guilty in June to having a hand in the conspiracy.

The Kansas City resident admitted the offence before US judge John Maughmer to the charges contained in a July 18, 2007, prosecution.

Wavinya was taken to a Kansas City court last year, along with four other Kenyans, to face various counts of tax fraud, money laundering, wire fraud, identity theft and conspiracy.

The prosecution described her at the time as the leader of the racket in which the more than 360 fraudulent tax refund claims were filed.

Arraigned in court together with Wavinya were Nzongi, Aaron Mutavi, 28, Moses Ndubai, 33, and 23-year-old Vincent Ogega.

Another seven Kenyans, some of whom are believed to have since returned home, were linked by investigators to the case.
Ogega was recently sentenced to 12.5 months’ imprisonment, while Mutavi was sentenced to “time served” — which means that he was released.

Mr Ndubai and Mr Kamau are awaiting sentencing.

The scheme involved stealing the identity information of hundreds of victims, primarily residents of old people’s homes, which were used to seek the more than Sh975 million in federal tax refunds.

Wavinya and her accomplices were first charged with the offence in July, last year. She later admitted to having a substantial role in the conspiracy to steal identity information, predominantly from elderly nursing home patients.

She then used the information to file at least 365 fraudulent federal tax return forms from February 2005 to July, last year. Together with fellow conspirators, she sought refunds in 27 different states.

In addition, Wavinya pleaded guilty to wire fraud and aggravated identity information theft.

She committed the offences while she worked as a tax preparer and as a certified radiology technician in Kansas City.

Through her jobs, she gained access to patients’ identity information.

Law enforcement officers, conducting a search at her home and elsewhere, discovered patient information from area health care providers, containing hundreds of patients’ data.

To conceal their true identities, Wavinya and her accomplices filed the fraudulent returns through public internet “hot spots,” such as restaurants, and through unsecured private wireless networks maintained by unwitting people.

Law enforcement agents discovered evidence that Wavinya had used her neighbour’s unsecured wireless network to connect to the internet.

The false tax information was used to generate federal refund claims in the range of between Sh260,000 ($4,000) and Sh3.1 million ($47,000) each.

The fraudsters also submitted false returns to tax authorities to generate claims in the range of Sh97,500 ($1,500) to Sh1.3 million ($20,000) a return. They often filed multiple state tax returns in conjunction with a single federal return.

Mail related to the returns and credit cards were sent to commercial mailboxes across Kansas City as a way of avoiding detection, investigators established.

Runners picked up mail

Wavinya and the others often used “runners” to pick up the mail in order to conceal their own identities.

They opened numerous bank accounts in Kansas City and elsewhere for purposes of receiving electronic transfers for tax refund payments.

Shortly afterwards, a refund payment would be wired into an account, and the fraudsters used runners to help them to withdraw the money.

They wrote cheques to the runners in amounts of less than Sh650,000 ($10,000) and drove them from bank to bank to cash the cheques until the accounts were depleted, or when banks or tax staff detected the fraud and froze them.

Some of the money obtained through the fraud was wired to banks in Kenya. Sometimes, the group routed electronic transfers of tax refunds directly to prepaid debit-like cards obtained anonymously through internet application.

Ogega’s role in the scheme was to cash the cheques and provide the proceeds to colleagues for a flat-rate fee.

On April 16, he admitted to participating in and aiding and abetting 12 fraudulent financial transactions amounting to Sh5.2 million ($81,000) from April 21 to August 11, 2006.