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Financial Crimes
11/13/2008

2 Kenyan sisters sentenced to 14 years and 5 years in prison for $15 million tax fraud conspiracy

KANSAS CITY, Mo. - Two sisters from Kenya were sentenced in federal court Thursday for their roles in a multi-million dollar conspiracy to defraud the Internal Revenue Service. John F. Wood, U.S. Attorney, Western District of Missouri, announced the sentences. The case was investigated by: U.S. Immigration and Customs Enforcement (ICE), the U.S. Postal Inspection Service, IRS's Criminal Investigations, and the U.S. Secret Service.

The wire fraud scheme involved stealing the identities of hundreds of victims, primarily nursing home residents, which were used to seek more than $15 million in fraudulent federal tax refunds.

Loretta Wavinya, 32, and her sister, Lillian Nzongi, 28, both citizens of Kenya residing in Kansas City, Mo., were sentenced in separate hearings before U.S. District Judge Nanette K. Laughrey. Wavinya was sentenced to 14 years in federal prison without parole. Nzongi was sentenced to five years and 10 months in federal prison without parole.

"These two defendants came to the United States on student visas, and instead of building a life here, they exploited our online tax refund system to the tune of millions of dollars," Wood said. "Today's lengthy sentences send a clear message to others who may be considering cheating the tax payers or using other people's identities."

On June 25, 2008, Wavinya pleaded guilty to leading the conspiracy to steal identity information (including Social Security numbers), predominantly from elderly nursing home patients, and use it to file more than 540 fraudulent federal tax returns using the names of more than 500 identity-theft victims. Conspirators filed up to six state tax returns simultaneously with each federal return, causing a loss to at least 27 states. In addition to the conspiracy, Wavinya pleaded guilty to wire fraud and aggravated identity theft.

In total, conspirators claimed over $15 million in tax refunds in the names of identity theft victims, and they actually received at least $2.3 million in fraudulent refunds.

Wavinya worked as a tax preparer and as a certified radiology technician for a company that visited patients on-site at multiple nursing homes in the Kansas City area. In the course of her employment, she had access to patient identity information that was later used in the conspiracy. She also recruited other employees of health care facilities to steal identity information from patients. While executing search warrants at Wavinya's residence and a storage unit, law enforcement officers discovered patient information from area health care providers containing hundreds of patients' names and identity information. Wavinya possessed dozens of identity documents (including several notebooks filed with page after page of names, Social Security numbers, and dates of birth), hundreds of medical records with identity theft victims' personal information, and information concerning dozens of financial accounts. In Wavinya's purse at the time of her arrest, she had 23 debit, credit and cash storage cards in other people's names; she had 75 more cards in her car.

Wavinya was the largest single filer and received the largest share of the proceeds, much of which was invested in assets outside the United States. In total, the IRS believes that Wavinya was directly responsible for at least $9.6 million in fraudulent filings. Wavinya sent her proceeds overseas and maintained passports and thousands of dollars in a bank box. Wavinya, who created the scheme, also taught other conspirators how to file fraudulent tax returns.

To conceal their true identities, Wavinya and other conspirators filed these fraudulent tax returns electronically through public Internet "hot spots," such as coffee shops or restaurants, and through unsecured private wireless networks maintained by unwitting individuals with no connection to the conspiracy. Law enforcement officers discovered evidence that Wavinya used her neighbor's unsecured wireless network to connect to the Internet.

The false tax information was used to generate federal refund claims from $4,000 to $47,000 each. Conspirators also submitted false returns to state taxing agencies, typically in conjunction with federal returns, to generate claims from $1,500 to $20,000 per return. Conspirators often filed multiple state tax returns in conjunction with a single federal tax return.

Mail related to the returns and credit cards was sent to commercial mailboxes across Kansas City, and Wavinya and other conspirators often used "runners" to pick up this mail to conceal their own identities. Nzongi pleaded guilty July 23, admitting to her role as one of those runners.

Wavinya and other conspirators caused numerous bank accounts in Kansas City and elsewhere to be opened specifically to receive electronic fund transfers of tax refund payments. Shortly after a refund payment was wired into an account, conspirators used runners to help them withdraw the money. Conspirators wrote checks to the runners in amounts less than $10,000 and drove the runners from bank to bank to cash the checks until the accounts were depleted, or the bank or the IRS detected the fraud and froze the account. The runners provided the withdrawn funds back to Wavinya and others and received a small payment for their services.

Some of the money obtained by the conspiracy was wired to banks in Kenya, where refund money was sometimes withdrawn directly from accounts through automated teller machine (ATM) withdrawals occurring in Kenya. On some occasions the conspirators routed electronic transfers of tax refunds directly to prepaid debit-like cards obtained anonymously through an Internet application process. Nzongi also admitted that she conducted a series of financial transfers using a stolen identity, resulting in a wire transfer of funds to Nairobi, Kenya.

Vincent Niagwara Ogega, 24, a citizen of Kenya residing in Independence, Mo., pleaded guilty and was sentenced to 12½ months of incarceration and ordered to pay $69,300 in restitution. Aaron Mutavi, 30, a citizen of Kenya residing in Overland Park, Kan., pleaded guilty and was sentenced to time served and ordered to pay $36,650 in restitution. Rashira Lewis, 21, of Kansas City, Mo., pleaded guilty and was sentenced to five years of probation and ordered to pay $53,773 in restitution.

Moses Ndubai, 34, and Karingithi Gotonga Kamau, age unknown, both of whom are citizens of Kenya, and Jeanette Alexander, 40, Michael Anderson, 50, both of Kansas City, Mo., have pleaded guilty and await sentencing.

This case is being prosecuted by Executive Assistant U.S. Attorneys Daniel M. Nelson and Curt Bohling, Western District of Missouri. It was investigated by the U.S. Postal Inspection Service, IRS's Criminal Investigations, U.S. Immigration and Customs Enforcement and the U.S. Secret Service.