by Diane Kelly
While waiting for Eddie to join me, I found the phone number of Winning Tickets Corporation’s chief financial officer in the file and dialed it. When she answered, I identified myself. “Hello, this is Special Agent Tara Holloway with Dallas IRS Criminal Investigations. I understand you spoke with an auditor previously about erroneous 1099s purportedly issued by Winning Tickets. The situation has been escalated to our department and my boss told me to make it a priority.” Along with the other fifteen investigations I’m working on. “I have some follow-up questions.”
“Shoot.”
I liked this woman. She got right down to business and didn’t waste my time or her own. “What kind of internal investigation did your company perform to ensure the reports weren’t issued by an employee? It’s possible a staff member made an error, or maybe issued the false reports intentionally.”
The woman’s tone was slightly annoyed when she responded. “I went through the files myself with the help of our IT specialist. We even checked the computer backup to see if one of the employees had screwed up and deleted the forms to cover it up. We found nothing.”
In other words, I could cross internal error and inside job off my list. “Who processes your tax reports? Do you take care of them in-house, or do you have a CPA firm or outside service file for you?”
“We do it here in the office,” she said.
That ruled out an error by a contractor.
“What about your accounting and tax software? Any glitches?”
“Nope. The software works like a charm.”
Hmm … “Have any of the alleged winners contacted you?”
“Several,” she said. “They wanted to know why they’d never been notified they’d won a prize and what happened to their winnings. I explained that our company only prints lottery tickets and doesn’t award prizes, and that we had no idea who issued the 1099s. One woman threatened to sue us for fraud if we didn’t pay her the hundred grand that was reported to her.”
“Did she follow through with her threat?”
“She went so far as to have an attorney send a demand letter offering to settle for 10 percent of the alleged winnings. Our lawyers wrote back and questioned whether the woman and her attorney were attempting some type of extortion scheme. Our lawyers also threatened to countersue on our company’s behalf if they went through with litigation.”
“And?”
“And that seemed to shut ’em up.”
I pondered the information for a moment. “Do you think that could be true? That the woman was trying to scam your company?” Maybe the woman hoped the lawyers for Winning Tickets would offer a small settlement simply to dispense with the matter quickly and cheaply. She wouldn’t be the first person trying to make a living from bogus threats of legal action.
“Who knows?” the CFO said on a sigh. “I just want this to stop. I’ve got enough on my plate without something like this to deal with.”
You and me both, sister. “Will you send me copies of the correspondence between you and the woman who threatened to sue?”
“Sure. Anything that will put an end to this nuisance.”
I rattled off my e-mail address and we ended the call. As the correspondence traveled through cyberspace between Kalamazoo and Dallas, I mulled things over. Was this a case of attempted fraud/threat of a nuisance suit, or could this situation involve a more sinister plot in which someone was using the IRS as a means to harass others? The agency sometimes found itself used as an unwitting pawn in someone else’s dispute. Couples getting divorced routinely reported their ex’s suspected financial indiscretions, sometimes without bothering to get their facts straight first. Often, these reports came back to bite the whistleblower on the butt given that those who filed joint returns during their marriage were generally on the hook for any unpaid taxes, interest, and penalties brought to light.
I quickly looked over the returns for the victims, hoping something might provide a clue, maybe indicate a pattern. While most of the victims were female, there were three males in the bunch. Most of the victims were single, though a small number filed married joint or married separate returns. Their incomes varied drastically, from the low twenty thousands to the high three hundred thousands earned by Thomas Hoffmeyer and his wife. Their addresses were spread all over the Dallas area.
I eyed the paid preparer section of each return. After all, some unscrupulous tax preparers had been known to use their clients’ personal information in illegal refund ploys, or had included false information on their clients’ returns in the hope of gaining a reputation as the person to hire if you wanted a big refund. But no. Such was clearly not the case here. Some of the returns had been prepared by H&R Block, others by Jackson Hewitt. A few of the returns had been prepared and filed by the taxpayers themselves using tax software. The Hoffmeyers’ married joint return had been prepared at a CPA office. Hmm. There appeared to be no link between the preparers.
As I stared at my computer screen, the CFO’s e-mail popped up with two documents attached. The first was the letter from a local law firm written on behalf of a woman named Bethany Flagler. The letter noted the erroneous 1099 for $100,000, described the audit and “severe emotional distress” that resulted, and demanded ten grand in compensatory damages. The response letter, written by an attorney from a firm in Kalamazoo, was scathing. Not only did it threaten a counterclaim for fraud and the referral of the matter to law enforcement as attempted extortion, it suggested that, at the very least, Ms. Flagler had failed to properly safeguard her social security number. Both sides were pointing more fingers than John Travolta in Saturday Night Fever.
A quick search told me that no other 1099s had been filed in Bethany Flagler’s name. If she were running an extortion scheme, Winning Tickets appeared to be her only target. Or at least the only target in which a fraudulent 1099 was involved.
Next, I ran a criminal background search on Bethany Flagler. Aha! She’d been charged two years ago with three counts of theft by check. Though the charges had later been dismissed, the dismissal didn’t necessarily mean exonerating evidence had been provided. She might have paid the victims or worked out some type of settlement with them or the district attorney’s office in return for them dropping the charges.
Hmm …
I wasn’t sure what to think. Given that Bethany wasn’t the only one named on the false 1099s, my gut told me she wasn’t trying to pull a fast one. On the other hand, she’d faced bad check charges. Apparently, she wasn’t a saint, either.
While I could phone Bethany, in my experience in-person interviews yielded more and better information. Even if the person said no more than he or she might have over the phone, speaking with a person face-to-face allowed me to evaluate the demeanor and body language, those subtle signs that might tell me whether the interviewee was telling me the truth or whether he or she was lying or holding something back. Avoiding my eyes. A nervous nose twitch. A defensive posture. A handwritten confession wadded up in their wastepaper basket.
The W-2 filings for the preceding year told me Bethany Flagler had been employed by Sweet Melody Music Company in Hurst. I found the company’s number online and dialed it from my office phone.
“Sweet Melody Music,” said the male voice that answered. “How can I help you?”
“Is Bethany Flagler in?”
“Just a moment,” he said, “I’ll transfer you.”
When the line went to waiting music, I hung up. The fact that the man attempted to transfer the call told me Bethany was still employed there.
I moved on to map out a route for the day. I’d just finished when Eddie appeared in my doorway, gun on his hip and briefcase in hand, the odd mix of weaponry that exemplified the unusual skill set of an IRS special agent. “Let’s rock and roll.”
I grabbed my things and out the door we went.
chapter seven
Hitting a Sour Note
Given the stops we planned to make, it seemed to make the most sense to start to t
he west and then head back east. Our first stop would be Sweet Melody Music. Well, make that our second stop. Our first stop was at Smashburger where I picked up two orders of sweet potato fries and Eddie got a burger and onion rings to go. It was lunchtime now, and we special agents needed sustenance in order to fight tax crime. Besides, I’d kind of become addicted to sweet potato fries and boy did I need a fix.
As we waited for our order, I filled Eddie in on the details of both cases and showed him the photos of the three girls.
He groaned. “You didn’t tell me there was more than money or our safety at stake.”
“It wouldn’t have changed your mind. You still would’ve agreed to help me.”
“That’s true.” He sighed and scrubbed a hand over his pained face. “We live in a messed-up world, don’t we?”
I was forced to agree. “But at least you and I are doing something about it.”
“But what if—” He stopped himself, as if afraid to complete the sentence and thought.
I finished for him. “What if we can’t help find these girls in time?”
“Yeah,” he said softly.
“The answer is simple,” I told him. “That’s not an option.”
We ate our lunch on the road, Eddie filling me in on his twin girls’ latest shenanigans as we rode along. “They keep dropping hints that they want to take a beach vacation. I took them to our neighborhood pool the other day, and they said the cement hurt their feet and that they wished they could swim somewhere where the ground was softer, like sand.” He chuckled. “They’re so obvious.”
They might be obvious, but they also had their dad wrapped around their adorable little fingers. “So which beach are you going to and when?”
He scoffed. “They’re not the boss of me.”
I cut a look his way. “Yes, they are. So which beach and when?”
He turned to look out the window and put a hand over his mouth, mumbling, “Galveston. End of July.”
I snorted. “Well, at least you’ll get to be the boss at work soon.”
I finished the last of my fries just as we pulled to a stop in the parking lot of Sweet Melody Music. The business was located in an enormous warehouse with musical notes and symbols painted on the outside. Half note. Quarter note. The notations for sharps and flats. A musical staff.
We stepped through double glass into a small customer service area. Over the speakers came the sound of a marching band playing an instrumental version of the Survivor classic “Eye of the Tiger.” A young, skinny guy sat on a stool behind the counter, eating a peanut butter and jelly sandwich and drinking a soda. Not a health nut, clearly, but lucky enough to still have a fast metabolism. He washed down his bite with a swig from the can and stood. “Hi, there. What can I do for you?”
“We’re looking for Bethany Flagler,” I said.
“Are you the one who called earlier?” he said. “The line went dead. Sorry if I accidentally disconnected you.”
While it was tempting to let him take the blame, my personal moral code wouldn’t let me do that. “It wasn’t your fault. I went into a dead zone and my cell phone dropped the call.” Okay, yeah, my moral code only went so far. I wasn’t above a little white lie when it would further my purposes. I couldn’t very well tell this guy I’d hung up on him on purpose or he’d wonder what was up. “Is she around?”
“Let me check. She might be at lunch.” He picked up a walkie-talkie. Apparently they used them to communicate inside the vast warehouse. He pressed the talk button. “Bethany, there are two people here to see you.”
When she replied, “Who?,” he eyed us and raised a brow in question.
“Tara Holloway and Eddie Bardin,” I said, purposefully neglecting to offer our titles or the fact that we were from the IRS. No sense letting her know—yet—that we were special agents here to interrogate her, to determine if she was the mastermind behind the fake prize reporting scheme. If she knew, she’d only have extra time to come up with a story and compose herself, or maybe even to flee out the back door. With my stomach full of sweet potato fries and Eddie loaded down with a burger and onion rings, we were in no mood for a foot chase.
The guy repeated our names into the radio. “Tara Holloway and Eddie Bardin.”
There was a moment of silence as Bethany tried to place our names. When her voice came back, it was tinged with irritation. “I’m on my lunch break in the kitchen. Can someone else help them?”
Again the guy looked to me for an answer. I shook my head. “It’s personal.”
He pushed the talk button again. “She says it’s personal.”
Another pause. “Okay,” came Bethany’s voice, tentative now, but still irritated. “Send them back.”
He stepped out from behind the counter and opened a door for us. “The kitchen’s at the back of the warehouse. Just follow the scent of microwave popcorn and burnt coffee.”
We walked into the long, wide, and tall warehouse. Towering metal shelves held every type of musical instrument imaginable, housed in standard black cases. Tubas. Clarinets. Saxophones. The long cases with the bowl-shaped end had to contain trombones. There might have been seventy-six trombones in the big parade, but there were thousands of them here. This place must supply instruments to most of the junior high and high school bands throughout north Texas. There were also shelves with books of sheet music, everything from Sousa marches to orchestra pieces to jazz standards.
We continued down a long aisle until we reached the back of the building. His and her restrooms flanked a door marked STORAGE. To the right of the storage closet was an open kitchen. The smells of various microwaved cuisine wafted out, as did rapid-fire Spanish that sounded as if it were coming from a television.
We stepped to the door to find a thirtyish woman with dark blond hair pulled up in a ponytail. Fortunately, Bethany was the only person in the room. We’d be able to speak privately. Her attention was glued to a TV mounted on a bracket in the back corner of the room. A telenovela played on the screen, the actors engaging in emphatic español, while subtitles in inglés played across the bottom of the screen.
The camera zoomed in on a woman who, judging from her glamorous dress and perfectly coiffed black locks, must be the female lead. The woman had many things going for her. Long lashes. Smooth, café au lait skin. Full ruby-red lips and a thousand-megawatt smile that lit things up like a neon light. Beautiful actresses were a dime a dozen, but an exceptional smile like that? Rare. Surely that dazzling smile is what landed the actress the part.
A handsome man in a business suit took the woman’s hand, tipped with blood-red nails. He gently kissed the back of it and asked, “¿Ahora? Por favor, dime sí.” This appeared in the subtitles as Now? Please say “yes.”
“Hello, Miss Flag—”
“Shush!” She shrieked, raising a hand as well to silence me. “Ah ee vay is on!”
Eddie and I exchanged glances. Ah ee vay? What the heck was she talking about?
On the TV screen, the woman withdrew her hand from the man’s grasp and clapped it to her heart, plastering the back of the other hand to her forehead. She looked directly into the camera, her smile disappearing, her brown eyes burning bronze with fire. “¡Nunca!” she cried. Never! echoed the translated subtitle below.
Jeez. Talk about melodrama.
The show broke for a commercial, a logo of a red heart with a knife in it popping up on the screen, the words Amor y Vengaza appearing below it. The announcer said something that translated as Stay tuned for more Love and Vengeance after these words from our sponsors.
Okay, now I got it. Ah ee vay was Spanish for A y V, a shortened term for the show.
Bethany turned to me, standing from her seat, her tight face and rigid posture revealing her impatience. Clearly she wasn’t happy about us interrupting her lunch hour or the show.
I held out a hand. “I’m Special Agent Tara Holloway from the IRS.” I angled my head to indicate Eddie. “This is Senior Special Agent Eddie Bardin.”<
br />
She cautiously took my hand. “Okaaaay,” she said, the elongated word telling me she was questioning why Eddie and I were here.
“We’re investigating the false 1099s that were purportedly issued by Winning Tickets Corporation.”
“I thought the IRS closed the case.”
Is that what she’d been hoping for? That the investigation had been terminated? “The audit department went as far as it could.” I watched closely to gauge her reaction. “They turned it over to Criminal Investigations. That’s our department.”
“Good. I hope you can make some headway.”
Instead of looking concerned or guilty, she appeared relieved, her face and shoulders relaxing. Huh. Of course, it could be an act.
“We’ll try our best,” I said. “Why don’t you give us your take on things.” I’d learned from experience that open-ended questions could yield juicy tidbits of information that more direct questions would not.
“My take?” She rolled her eyes. “It’s been an absolute mess. When I got the notice from the IRS telling me I owed money on prize winnings, I got all excited. I thought I’d won something. Then I come to find out it was someone’s idea of a joke.”
“You were disappointed?”
“Who wouldn’t be?” she replied. “I figured whoever played the joke had to work for Winning Tickets. How else would they know the company’s name and address and tax ID number to put on the tax form?”
I knew it was not an employee who had issued the reports. Besides, it was common knowledge among those in financial professions that tax ID numbers for businesses could easily be found online. Corporations were required to register with the secretary of state in their state of incorporation. The tax ID number would be in the public files along with information about the officers and directors. Once the culprit decided to run a phony prize scam, all the person had to do was search the state databases for companies that sounded like the type of business that would award prizes, maybe try keywords like winner, prize, or award. Winning Tickets Corporation would clearly fit the bill.
