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Please someone help me. I believe I committed fraud unintentionally

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guidanceplease

Junior Member
What is the name of your state (only U.S. law)? Ohio

I have been on disability my entire adult life. I suffered from agoraphobia, crippling anxiety, panic attacks, social phobia, paranoia and depression. I lived in a retirement village from the age of 18. I am now 36.

In 2010, I played an online game with a virtual currency that you could exchange for real money. Within that virtual environment I, along with two others whom I'd never met face to face, created a virtual pet game. We agreed on a handshake just to split everything. Having been home-schooled and no experience with the outside world or business to speak of, I was really dumb and naive. I had never ever broken the law in my life. I lived in a bubble. The internet and writing stories were my only device of socialization.

The online pet game made the three of us a lot of game tokens, which we could cash out in exchange for real money on a virtual exchange, but the value fluctuated, and the TOS of the platform on which i created stated we were not allowed to define a dollar value to the tokens. I wanted to cash money out because I wanted to go to school and improve my life.

At this time my mother, who is 64, had only been married for 3 months and her new husband decided he could not deal with her and was kicking her out. She had given up everything, her home, her social security and her insurance to marry him. She was afraid of becoming homeless. She knew of my situation and told me that I needed someone to look out for me, and that whatever the tokens were worth needed to be exchanged before they were valueless and she would take care of things on my behalf if she could use it to also keep her secure by having a nestegg to get back on her feet.
So, we cashed out the money to her account which all of the family had access too, she shared a debit card with my niece and got me one in my name for expenses.

I went to the disability office to ask for help understanding what to do. The woman said I wasn't legitimately employed, and the tokens were worthless unless someone was willing to pay for them. I explained to her that I wanted to go to school and get a house for my family, and she told me she needed to see the terms of service of the game i had the tokens in and contact the state head office in columbus.

I waited to hear back after returning a week later with the printed Terms of service and all about the exchange. She said she was going to get back to me to determine what I should do. I waited four month and then went to see the Social Security lawyer who had represented me as a kid. He did not understand virtual currency and told me that asked who my employer was. I tried explaining to him that the game owners were not my employer, that i was not employed and only had cash value in tokens. Then he said he needed to determine if that qualified as an asset. He said he had to do some research and I never heard from him again.

I did go to school in another state, forcing myself out into the real world was the hardest thing i ever did. It caused me to develop alcoholism to manage the mental strain of dealing with the world and people and I created an alternate identity in my head. During this period my mother and I had a disagreement- she wanted to do things like buy my brother a car and a computer and was telling me her husband was trying to kill her and she needed to get out, so she kept on getting money out while I was away, and so did my niece and nephews, left and right and I never knew. I explained to her that we would need to pay taxes regardless and as soon as I heard from Social Security if they told me I had to pay back any amount I needed to have something left.

My mother ended up stealing everything, almost 200,000 dollars. She and he husband, and they never spoke to me again. They never showed up to meet me at the tax filing place. Pretty soon I realized I had no choice but to cash what was left out on my own so it could not be taken by unseen hands any more and there was not enough left to pay taxes with or the debts i had accrued. Soon I was penniless, home from school and still collecting disability.

I had no one who would help me, guide me or tell me what to do, but I feel like my stupidity was exploited, my niece took money with my mom and vanished, so did my nephew. None of them have ever spoken to me again. After only a year my two business partners locked me out of the business, changed my passwords and took it over because of my extended absences. I had no recourse. There were no contracts, nothing. I gave away money to friends who asked, they disappeared. I did not understand these implications. I did not ever intend to do anything wrong.

I ws left in debt and unable to pay the taxes and still collecting disability. I went to see another attorney to help me make things right. He talk me "Let sleeping dogs lie" and claimed he had made a couple of inquiries on my behalf to prosecutors who said they would prosecute me for fraud and send me to prison. He said they wouldn't care about the details, the sob stories and would treat me like a criminal. I was terrified. He told me just to let everything go, let my mom keep the money, let my business partners keep the business, shut my mouth about it all and go home.

But now I live in fear every day that I am going to jail. I miss my simple life in the retirement village. My anxieties and disabilities are worse than ever. I never leave my house. I am in a severe depression over this. I feel like it's hanging over my head. I've contemplated suicide. I have wanted to go turn myself in. I feel lost and helpless and no one has been willing to help me or guide me and I have no mother anymore to go to. I just don't want to be a criminal. I don't have a clue where to begin or how to fix anything but I know that taxes need paid on that money and my mother never paid them. I still feel like I should have had some answers from the social security adminitration about my SSI. I did not willfully commit a crime by any means but I know that is irrelevant to the law system and they will just throw me in jail for years for tax evasion and disability fraud with no questions asked. I tried to ask questions and seek guidance from people who simply turned their shoulder to me because they didn't understand and I am not satisfied with being told to let sleeping dogs lie, that is just delaying the inevitable. I want to do the right thing. Does anyone have any clue where I should start?
 


single317dad

Senior Member
I have a lot of empathy for your situation, but the reality is pretty harsh.

Let's start with the tax issue. In different cases, the IRS can audit for 3 or 6 years after the tax period. Did you ever actually file a tax return claiming (or not claiming) the income? Is there any judgment or even a court case? Yes, you could go to jail. At this point, unless the government has at least begun legal proceedings, I wouldn't think that likely.

As far as recovering any of the money, I think that's unlikely. As the attorney said, just let sleeping dogs lie. You may have defrauded the IRS and SSA, in which case your gains were ill-gotten. You'd have trouble proving standing to bring any lawsuit.

You should disown your mother, and anyone else who misused the funds you trusted them with. Probably the harshest reality of all.

You made a small online business of sorts, and you made it work once. You can do it again. Next time, do it the right way.
 

guidanceplease

Junior Member
There is no court case or government investigation that I know of. Disowning my family wasn't an option, they vanished on me and refuse to communicate. All I want to do is pay whatever is owed to the IRS and SSA so it is not hanging over my life. I have no intentions of going after my mother or business partners for anything. The money ruined my life. I don't want it. I want to be free of this burden that makes me sick every day feeling like I'm in terrible trouble. I do not want to have anything I'm not entitled to. I am not trying to get away with anything. I have been desperately looking for advice on how to obtain resolution for so long and all I keep getting is "wait until they come for you..." Then it looks like I am hiding things if I broke the law and wait to be caught, the makes me a criminal.

I want someone to trust. Can I just pay the taxes on it late and pay back the SSA for the year I had access to money? I don't understand why that can't be an option... It seems everyone has told me to keep quiet or go to prison with that being the poly way to resolve. I know that the courts do not accept ignorance as an excuse, nor do they want to hear my story, the attorney said all they will care about is that I received benefits when it was not appropriate and that I did not file taxes on income. Social security lady told me she didn't know how to define it, if it was windfall, she knew it wasn't inheritance but it was unreliable income and not long term. I went to so many sources looking for guidance, what to do, how to proceed, and no one would help me understand my situation because the didn't. Now I'm paying a devastating emotional price for it and I'm embarrassed that I am this old and in this situation like a child. I can't find any documentation of anyone who has been in my situation. I have looked exhaustively for answers only to ever be told "let sleeping dogs lie." Well if the irs or ssa wake up and come after me anyway where does that leave me? It looks like I knew I had not followed rules and hid because I didn't understand. What do I say? "My lawyer told me not to tell?"

I'm want to tell. I want them to know that I made a mistake, I didn't understand my situation and I just want to make everything right. That's all I ever wanted.
 

LdiJ

Senior Member
There is no court case or government investigation that I know of. Disowning my family wasn't an option, they vanished on me and refuse to communicate. All I want to do is pay whatever is owed to the IRS and SSA so it is not hanging over my life. I have no intentions of going after my mother or business partners for anything. The money ruined my life. I don't want it. I want to be free of this burden that makes me sick every day feeling like I'm in terrible trouble. I do not want to have anything I'm not entitled to. I am not trying to get away with anything. I have been desperately looking for advice on how to obtain resolution for so long and all I keep getting is "wait until they come for you..." Then it looks like I am hiding things if I broke the law and wait to be caught, the makes me a criminal.

I want someone to trust. Can I just pay the taxes on it late and pay back the SSA for the year I had access to money? I don't understand why that can't be an option... It seems everyone has told me to keep quiet or go to prison with that being the poly way to resolve. I know that the courts do not accept ignorance as an excuse, nor do they want to hear my story, the attorney said all they will care about is that I received benefits when it was not appropriate and that I did not file taxes on income. Social security lady told me she didn't know how to define it, if it was windfall, she knew it wasn't inheritance but it was unreliable income and not long term. I went to so many sources looking for guidance, what to do, how to proceed, and no one would help me understand my situation because the didn't. Now I'm paying a devastating emotional price for it and I'm embarrassed that I am this old and in this situation like a child. I can't find any documentation of anyone who has been in my situation. I have looked exhaustively for answers only to ever be told "let sleeping dogs lie." Well if the irs or ssa wake up and come after me anyway where does that leave me? It looks like I knew I had not followed rules and hid because I didn't understand. What do I say? "My lawyer told me not to tell?"

I'm want to tell. I want them to know that I made a mistake, I didn't understand my situation and I just want to make everything right. That's all I ever wanted.
The reason why attorneys are telling you to lay low and wait is because, unfortunately, there is no possible way that you could ever pay the taxes that would be due on that much money, nor would you ever be able to repay the SSA. On top of that, because of what you have described, you would permanently lose your disability, which would put you in a virtually homeless position with potentially no way to ever get straight again.
 

single317dad

Senior Member
The reason why attorneys are telling you to lay low and wait is because, unfortunately, there is no possible way that you could ever pay the taxes that would be due on that much money, nor would you ever be able to repay the SSA. On top of that, because of what you have described, you would permanently lose your disability, which would put you in a virtually homeless position with potentially no way to ever get straight again.
What is the IRS stance on penalties for past year returns filed voluntarily? I imagine this could add up to a significant amount for OP.

As I said before, I'm quite sympathetic here, but OP needs to go wash his soul in confessional, and leave the government out of it.
 

LdiJ

Senior Member
What is the IRS stance on penalties for past year returns filed voluntarily? I imagine this could add up to a significant amount for OP.

As I said before, I'm quite sympathetic here, but OP needs to go wash his soul in confessional, and leave the government out of it.
The penalties are the same whether you file voluntarily or whether they catch you. However in this case the taxes on 200k plus would be impossible for the OP even if no penalty were imposed.
 

Onderzoek

Member
How much money do you have right now? How would you pay the IRS or Social Security? I assume you are on SSI so this money should have been counted as either earned from your little business or unearned like gambling or gifts or whatever. I am not sure what exactly you did to MAKE this money; kinda sounds like gambling.

Are you currently over the resource limit of $2000 and ineligible for SSI?

My guess is that you didn't give your local office enough information for them to make a decision, but if they did decide to investigate, there may be an easy paper trail or a difficult paper trail.
 

guidanceplease

Junior Member
How much money do you have right now? How would you pay the IRS or Social Security? I assume you are on SSI so this money should have been counted as either earned from your little business or unearned like gambling or gifts or whatever. I am not sure what exactly you did to MAKE this money; kinda sounds like gambling.

Are you currently over the resource limit of $2000 and ineligible for SSI?

My guess is that you didn't give your local office enough information for them to make a decision, but if they did decide to investigate, there may be an easy paper trail or a difficult paper trail.
No, I currently have no money. I am unable to maintain a traditional job due to my agoraphobia. My money situation happened by mistake, my intention was to make enough to pay off a 400 credit card debt. I've never had money in my life and don't manage it well. My mother was intended to be my trustee and help me, but she took most of it and disappeared almost two years ago. It left me with nothing but a little to try to pay off some debts I had accrued. I hate to say it but the money was in my mothers care and it was picked at by a bunch of vultures. She took relatives on gambling weekends and bought expensive things while I was nearly homeless. She left me unable to pay taxes. She was to help me sort out everything with ssi also. I trusted her guidance and am now a criminal for not knowing any better. This situation has devastated me. I'm trying to create something new in hopes I can make enough to pay back the irs taxes and ssi. I understand people commit fraud. This was not ever my intention. I want to be an honest taxpayer. I benefitted from assistance my entire life and thought I was doing well enough to give back to help others in need. I am grateful it was there for me when I need it, I never thought I would be viewed as exploiting it. I wish I had the facilities to feel I can manage things without help, as relying on people to guide me has led me to this bleak place. I'm sure I'll end up in prison.
 

Onderzoek

Member
To sum up; you started an online game for 'virtual' money that somehow magically turned into real money (I sure would like to know how to do that with no risk). You made $200,000 and gave it to your mother. She is a thief and took off with most of it. The IRS found out about it which means it must have eventually been reported to SSI.

If SSI is asking you about it, get all your paperwork and bring it to them. If you decide to do this again to make more money (still seems like gambling to me), your SSI will stop while you are making the money. So you also better make enough money to pay what you owe as well as enough to support yourself. Perhaps the better idea is to just pay the taxes and overpayment out of your current SSI income. For however long it takes.
 

justalayman

Senior Member
If you don't have the money to repay anything your intentions are either fantasy or lies. It really doesn't matter since any judgment by any party will be based on actions already taken so, you really don't have a choice here since whether you really want to pay the probable debts or not, you can't

So what do you do?

Either nothing or find some legal assistance to help you sort out the issue and see if there is anything you can do to better your situation.
 

LdiJ

Senior Member
No, I currently have no money. I am unable to maintain a traditional job due to my agoraphobia. My money situation happened by mistake, my intention was to make enough to pay off a 400 credit card debt. I've never had money in my life and don't manage it well. My mother was intended to be my trustee and help me, but she took most of it and disappeared almost two years ago. It left me with nothing but a little to try to pay off some debts I had accrued. I hate to say it but the money was in my mothers care and it was picked at by a bunch of vultures. She took relatives on gambling weekends and bought expensive things while I was nearly homeless. She left me unable to pay taxes. She was to help me sort out everything with ssi also. I trusted her guidance and am now a criminal for not knowing any better. This situation has devastated me. I'm trying to create something new in hopes I can make enough to pay back the irs taxes and ssi. I understand people commit fraud. This was not ever my intention. I want to be an honest taxpayer. I benefitted from assistance my entire life and thought I was doing well enough to give back to help others in need. I am grateful it was there for me when I need it, I never thought I would be viewed as exploiting it. I wish I had the facilities to feel I can manage things without help, as relying on people to guide me has led me to this bleak place. I'm sure I'll end up in prison.
You are not going to end up in prison. That simply is not going to happen. Your situation is not the type of scenario that results in a prison sentence. Your worst case scenario is that you will be cut off from SSI, which in your case might actually be worse than prison. At least in prison you would have three hots and a cot, and access to medical care.

You really need to pay attention to the advice that you have received from attorneys...which is to lay low and keep your mouth shut.
 

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