NEWARK, N.J. (CBSNewYork/AP) — Federal officials in New Jersey have arrested 14 people in what they said was a long-running and lucrative tax refund fraud scheme.

The scheme is one of the largest ever uncovered and involved more than 8,000 bogus income tax returns seeking more than $65 million in illegal refunds, said U.S. Attorney Paul Fishman.

The defendants are charged with conspiracy to defraud the U.S. and theft of government property. It’s estimated the scheme created $11 million in losses.

“First, the perpetrators get personal identifying information including Social Security numbers and dates of birth,” Fishman said. “And they make sure that those checks are mailed to locations that they control.”

WCBS 880’s Levon Putney reports

Many of the bogus tax returns were filed using identities stolen from residents of Puerto Rico.

“People who have Social Security numbers in Puerto Rico but don’t file 1040s are ripe for the picking,” Fishman said. “Those Social Security numbers are not associated with form 1040s the way the rest of ours are who are filers. So once they get those names and those numbers, the second step is the participants then complete individual 1040 forms using the stolen identities.”

The co-conspirators also allegedly bribed mail carriers who delivered the refund checks.

The defendants come from New York, New Jersey, Pennsylvania, North Carolina and Michigan.

“Some of the defendants obtained the Social Security numbers and dates of birth from people in Puerto Rico. Others filed a false return, some collected the checks, others cashed them. And still others laundered the proceeds,” Fishman said.

Fishman said it is important to safeguard personal identifying information and only give it out when absolutely necessary.

“You’ll see people with Social Security numbers on their checks. Big mistake,” Fishman said.

Fishman said Stolen Identity Refund Fraud, or S.I.R.F., is one of the fastest-growing and most pervasive criminal schemes directed at government.

(TM and Copyright 2012 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2012 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

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