Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, March 20, 1991                   TAG: 9103200576
SECTION: VIRGINIA                    PAGE: B3   EDITION: EVENING 
SOURCE: Associated Press
DATELINE: RICHMOND                                LENGTH: Medium

PRISON INMATES FACE CHARGES OVER TAX RETURNS

But a Department of Taxation spokeswoman says recouping its losses is not the only reason the state is pursuing charges against the prisoners.

"More importantly, by indicting them and bringing others to trial who have been involved in this kind of scheme, we're trying to send a message to those folks: You're going to get caught," Ann Meyers said Tuesday.

A Chesterfield County Circuit Court grand jury on Monday indicted William Kelly, 45; Gregory Long, 30; and Walter Jeffries, 26. Kelly was charged with one count each of grand larceny and attempted grand larceny. Long faces one count and Jeffries three counts of grand larceny.

Meyers said the Virginia inmates used bogus wage and tax statements to file fraudulent 1987 tax returns in 1988. The fake returns were discovered through the department's computer system, she said.

John McCauley, head of the department's Criminal Investigation Unit, said the computer has detected about three dozen fraudulent returns filed by inmates from 1987 through 1989. More indictments are expected, he said.

State Tax Commissioner William Forst said some people outside the prison system also may be indicted for helping inmates operate the scheme.

"It takes more than one person," Forst said. "A prisoner can't do it on his own."

Forst said the inmates gave power of attorney to individuals outside the prison system. The refunds were mailed to those individuals, who deposited them in the inmates' bank accounts, he said.

Kelly was convicted in 1985 of a similar tax fraud case involving federal income tax returns. He will begin serving an additional seven-year sentence on that conviction after completing his 36-year sentence for murder from Pittsylvania County.

Department of Corrections spokesman Wayne Farrar said Long is serving 36 years for robbery from Halifax County, and Jeffries is serving 28 years for kidnapping from Chesterfield County. Long and Jeffries are both at Mecklenburg Correctional Center. Kelly was moved recently from Mecklenburg to Powhatan Correctional Center, Farrar said.

Forst said tax fraud by inmates is a national problem.

"Prisoners found out a long time ago that the federal tax system is so big that they might be able to effectively get some money out of it," Forst said. "They're already in jail. They figure what have they got to lose?"