EUGENE, Ore. — A 62-year-old Wisconsin man has been sentenced to four years, nine months in prison and ordered to pay more than $400,000 in restitution for his part in a Nigerian tax fraud scheme that drew attention from federal investigators after a victim in Medford reported it.
The U.S. Attorney's Office for the District of Oregon released a statement on Wednesday outlining Curtis Sherman Pethley's sentence and his involvement in an illegal enterprise that would land him behind bars.
Court documents revealed that the Internal Revenue Service (IRS) began investigating the scheme in May of 2013, when a victim in Medford notified them of suspicious activity. Someone had electronically filed false federal and Oregon state tax returns using her and her husband’s personal information — including their social security numbers and dates of birth.
That tip led the IRS to determine that the fraud scheme must have involved co-conspirators, working to gather "a large supply of stolen U.S. taxpayer identities," according to the U.S. Attorney's Office — grabbing IRS filing PINs using the victims' identities, stealing prepaid debit cards in the victims' names, using fake email addresses, filing false tax returns, and wiring the stolen funds to Nigeria.
Multiple fraudulent tax returns were filed using the identities of thousands of taxpayers in Oregon and Washington. The scheme went on for years, and brought in more than $11.6 million for the co-conspirators.
"Pethley, working along with his Nigerian contact, acquired numerous debit cards for use in the scheme including the card connected with the Medford, Oregon victim," the U.S. Attorney's Office said. "He helped his Nigerian contact by providing information about the preparation of federal income tax returns including how to calculate withholdings on a W-2 form."
Pethley then withdrew tax refunds from the prepaid debit cards and, after taking a 10-20 percent cut of the proceeds, wired the money to Nigeria. He also used those refunds to purchase merchandise and money orders and sent them to co-conspirators throughout the U.S., as instructed by the ringleaders of the scheme.
According to the U.S. Attorney's Office, IRS agents found about 150 prepaid debit cards and almost $50,000 in money orders upon searching Pethley's home.
Pethley is already in prison for distributing child pornography from a Wisconsin case. He also pleaded guilty to three counts of mail fraud, conspiracy to commit mail fraud and aggravated identity theft on August 27, 2018. The Court has ordered that 37 months of Pethley’s Oregon sentence should run consecutively to the sentence he is currently serving.