Seattle diocese data breach creates tax fraud

Seattle diocese data breach creates tax fraud

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by JOHN LANGELER / KING 5 News

kgw.com

Posted on March 14, 2014 at 8:31 AM

SEATTLE -- Though the exact scale is unclear, the data breach and subsequent tax refund fraud impacting employees and volunteers with Seattle's Archdiocese is forcing at least two schools to change their schedules Friday.

Bishop Blanchet High announced it will dismiss students early, while at the same time reporting at least 30 "cases" of fraud have been confirmed at the Seattle school.

O'Dea High stated on its website it was canceling all classes so staff "will have adequate time to complete the steps necessary to move toward resolving the fraud."

The Archdiocese of Seattle did not return a request for comment Thursday.

Church members first heard about the fraud situation over the weekend, when the Chancery sent a letter to parishes to report instances of tax refund fraud.  In most cases, people tried to file tax returns only to find they had already been submitted illegally.

It is unclear how widespread the fraud is. In a letter posted online, the Archdiocese indicated it was a victim of "national tax refund fraud."

The letter also indicated investigators were trying to determine if the data breach started at the Archdiocese itself or with an outside vendor.

All employees and volunteers must undergo a background check, which may have been the source of the lost information.

The FBI and IRS are investigating the case as well. Neither could provide details on the matter, but Special Agent Kenneth Hines from IRS Criminal Investigations said this kind of fraud has increased 66 percent since 2011.

"Our system has gotten better to contain this," said Hines, "Also, the access to the information has gotten easier for some people.

"When you try to make things more accessible to people," he added, referring to online tax filings, "You do open up some vulnerabilities.  But you do put things in place too.  Safeguards."

Joe Panesko, who volunteers at St. Michael Parish and School in Olympia, questions those safeguards.  He found out Tuesday his IRS filings had been breached, and was troubled to learn just a name and a Social Security number can compromise the system.

"The thing that troubles me the most is really the ease by which whomever accesses this info was able to scam the IRS," said Panesko.

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