Scott Howard: Inmate's history of obtaining bogus refunds tip of prison-tax-fraud iceberg

This week's cover story, "The Devil's Playground," recounts the ordeal of Scott Howard, a Colorado inmate extorted and sexually assaulted by the 211 Crew prison gang. But it's also about Howard's history of obtaining bogus tax refunds while behind bars, a talent the gang was eager to exploit. Rape is ugly, but tax fraud is a booming business in the Big House -- and a deal reached yesterday by the IRS and the federal prison system may help shut it down.

According to this report by the Associated Press, more than 44,000 fraudulent tax returns were filed by state and federal prisoners in 2009, seeking refunds of $295 million -- compared to a mere $68 million five years before. Unlike the scam the 211 Crew pressured Howard to join, which involved an audacious scheme to raise $300,000 to defend gang leaders facing indictments, most of the bogus refund requests are for a few thousand dollars.

In theory, the Internal Revenue Service has the tools to alert prison officials of suspicious claims. But efforts to share information were hindered by provisions of the tax law designed to keep taxpayers' confidential financial information from being passed around other government agencies. So lawmakers have pressed the IRS and the U.S. Bureau of Prisons to come up with a way to work around the "privacy issues." The new agreement was signed Wednesday and is expected to serve as a model for similar arrangements between the IRS and state prison agencies.

Now if officials could only crack down on the other little problem illustrated by Howard's account -- the conspiracy of silence around prison rape and the utter lack of enforcement (or interest) by prison officials regarding inmates who prey upon other inmates. It's been eight years since the passage of the Prison Rape Elimination Act, and draft guidelines have only just emerged for the enforcement standards the feds are still mulling over.

More from our Follow That Story archive: "Prison advice about snitching, shanks and pretending that man with makeup is a woman."