With $68 million in false tax refund applications filed by 18,000 U.S. prisoners in 2004, it's tough to detect the phony ones. AZ Central reports successful schemes proliferate within a cellblock, then spread to other correctional centers and are difficult to detect. Inmate tax fraud has risen 700 percent and there is little incentive to proscecute due to flaws in the system and lack of manpower.
"Profiri, the DOC investigator, said most prison-based tax fraud goes unpunished because of flaws in the system. When prison officials learn of a scam, Profiri said, they interview inmates, conduct cell searches and do other investigative work. Often, they discover photocopied tax forms, lists of Social Security numbers and large amounts of cash entering inmate accounts."