In the 2024 tax season, an ordinary citizen in Los Angeles, California, USA, under the advice of a "tax financial advisor", transferred the $12,000 tax refund he had just received to an investment platform called "SafeHarvest Returns".
The platform promised: "As long as you keep the tax refund funds in short-term custody with us for 90 days, we will return 8.8% interest based on the government green bond mechanism, and it will be completely tax-free."
Hundreds of thousands of people believed it. CFIT later found that there were as many as 42 such "tax refund custody and financial management" platforms across the country, and SafeHarvest was the "mother system" among them.
In 2024, CFIT and the IRS Criminal Investigation Division (IRS-CI) launched a joint crackdown operation called Green Ghost, which eventually uncovered this fraud empire spanning 5 countries and involving more than $430 million in funds.
[The source of the scam]
SafeHarvest claimed to be "founded by a former Treasury advisor" and was recognized by the "U.S. Green Finance Council". Its official website uses a lot of Ministry of Finance logos and terms such as "energy-saving bonds" and "climate investment incentives" to create a strong impression of a "government cooperation project".
The platform focuses on three financial management plans:
GreenTax Pro: escrow tax refund amount ≥ $5,000, promises 8.8% interest, and repayment within 90 days;
EcoFlex: provides two "green financial management double opportunities" within 365 days;
IRS Secure Bundle: only open to "government employees", with an annual interest rate of up to 11%.
All this attracted a large number of people, especially low-income groups and federal employees to participate, and many of them also received the so-called "tax anti-interest dividends" of the platform because of "joining early".
However, CFIT discovered through anonymous reporting that the platform had never reported its business structure to any registered securities system or financial regulatory database, and its so-called "interest repayment" came from the new user fund pool.
[CFIT takes over the investigation]
In mid-March 2024, CFIT received an internal report from the California Tax Lawyers Association: 6 customers reported that their "tax refund funds disappeared in SafeHarvest" and the customer service refused to refund.
CFIT opened the "IRS docking channel" and requested the IRS to cooperate in verifying the following aspects:
Is there an official green finance plan associated with SafeHarvest;
Is the company registered as a compliant financial management platform;
Is there a record of the platform supporting tax filing or form filling services.
IRS responded: No company named "SafeHarvest" or its subsidiaries are involved in federal tax refunds or green bond projects.
CFIT decided to file a case and sent a virtual undercover team (Digital Decoy) to register a platform account to observe its fund flow and customer service behavior.
[Tracking the capital chain]
The CFIT technical team found that the SafeHarvest account uses a "three-stage custody":
First, the user's transferred funds are transferred to a sub-account of a trust bank in Delaware;
Then the AI automatically "combines them into investment packages" and splits the large amount of funds into three offshore accounts;
Finally, the funds flow to a private wealth management institution in the Bahamas and a registered shell company in Cyprus.
CFIT contacted Angela Rosario, a member of the IRS-CI International Finance Group, and she retrieved the capital flow of these offshore companies for the past 12 months.
Angela found that these companies were not used to purchase any bond products, but to convert funds on multiple virtual encryption platforms as "currency exchange service companies", and then "withdraw cash" with affiliated companies through false invoices.
The so-called "interest return" is nothing more than using new users' funds to pay old customers in the form of "bonus money" until the capital chain breaks.
【Ponzi scheme covered by fake "green"】
CFIT's analysis report pointed out that this "green investment" scam is extremely deceptive, and the key fraud features include:
Falsifying government certification: using Photoshop to tamper with the PDF documents of the Ministry of Finance;
Under the guise of environmental protection: confusing policy terms such as green bonds and carbon neutral funds;
"Tax refund trust" packaging: making victims mistakenly believe that they are just "delaying the use of tax refunds";
Multi-channel psychological induction: customer service will deliberately ask users about their family burdens, and focus on the "green investment = safer children in the future" rhetoric.
A victim from Texas said: "They told me that if I am willing to contribute to future environmental protection, the government will reward me in taxes. How could I doubt them?"
【Comprehensive joint crackdown】
CFIT submitted a case to the IRS and requested the launch of the "Anti-Tax Refund Fraud Special Tracking Program" (ATRF). IRS-CI applied for and was approved by the federal court for authorization to retrieve SafeHarvest server data.
On June 12, 2024, the joint team simultaneously executed search warrants in Los Angeles, Houston and Chicago, seized the servers of the companies involved, and froze the balance of their main accounts (about 82 million US dollars).
The main operators include:
Jonathan Phelps: a former bank loan officer with a background in marketing psychology;
Melissa Choi: a former public relations expert who has written government advocacy copy for environmental organizations;
The two partners held a "Green Finance" themed salon at Columbia University and forged photos of being invited by the government.
[Education and Early Warning System Upgrade]
After the incident was exposed, CFIT and the IRS issued a joint statement, emphasizing:
"The IRS has never authorized any third-party institution to carry out tax refund investment services in the name of "green bonds". Any company that claims to be able to "custody tax refund funds and earn interest" is highly suspicious. "
CFIT simultaneously launched the "Tax Refund Fraud Identification Guide" and opened an online verification platform shared with the IRS. Users can enter the name of any tax investment platform to verify its legitimacy.
Lisa Montgomery, deputy director of CFIT, said at a congressional hearing:
"These cases tell us that fraudsters are increasingly using people's trust in government projects to design scams. Only through in-depth cooperation between governments can we truly prevent these wolves in sheep's clothing."
This collaboration between CFIT and the IRS also became the first large-scale tax refund financial fraud case in the history of the United States to be filed in the name of "green investment."