Social Security Fraud Victims : When Their Number Is Up, the Nightmare Begins

Carlos Valadez felt out of place walking into the office of the agricultural conglomerate Tenneco West in Bakersfield. He was supposed to have worked for the company for two years. But he had to ask directions just to find Bakersfield.

His mission was to prove he was not Carlos Valadez, at least not the Carlos Valadez who had picked produce in nearby fields in the early 1980s. He explained his plight to a sympathetic employee, who agreed to have each of the company’s eight foremen meet him. If none knew him, he reasoned, that would be proof that he was, after all, just a carpet factory worker from Los Angeles.

“It was like a line-up policemen have,” he said. “I felt as if I were a criminal. If just one of those eight men had recognized me, I would be guilty. And I would owe $16,000 to the government of the United States.”

Valadez is one of what may be thousands of men and women throughout the country whose identities have been assumed by immigrant workers who buy, copy, borrow, rent, and sometimes steal, their Social Security cards.

When the immigrants fail to pay taxes on their earnings, the Internal Revenue Service and state taxation agencies seek recourse from the cardholders of record--people such as Valadez.

The IRS and the Social Security Administration keep statistics on just how many such cases there are. Both agencies assert that, given the size of the American work force, the number is low.

A Social Security spokesman, Phil Gambino, said the number of cases that need to be “descrambled” because one or more people are assigned to the same number is growing annually, and will rise to about 13,000 or 14,000 this year.

However, he said, there is no way to estimate how many are mere paper work errors and how many involve people deliberately using another’s card. He said it is unlikely a legitimate cardholder would receive someone else’s benefits upon retirement because “IRS would come after (them) for taxes first.”

Using Same Number

In California, a spokesman for the state Franchise Tax Board said about 3,000 of the 12 million taxpayer accounts in 1987 appeared to be cases in which two or more people were using the same Social Security number.

“We have no way of knowing how many are illegal aliens . . . ,” the board’s spokesman, Jim Reber, said. “Most of the cases seem to be low income. Mostly, a lot of money is not involved.”

A Times survey of 18 public-interest attorneys and other sources throughout the country indicates that many of these victims, Valadez included, are themselves immigrants, men and women with foreign surnames that can be appropriated by newer immigrants. Though people of all economic levels lose their cards, many victims have only one foot up on the economic ladder of America, and find themselves being used by those just a step behind.

Often, the victims speak little English, and spend frustrating months--even years--trying to officially separate themselves from their shadow selves. They wander from one government office to another. They send in letters in oddly formal, but broken English. They make sojourns to factories and fields where their alter-egos labored.

Tracked Down Doubles

At least two Los Angeles residents went so far as to track down their doubles. One Salvadoran woman even succeeded in retrieving her original Social Security card, which had been stolen years before when she set her purse down while weighing vegetables at the Grand Central Market in downtown Los Angeles in 1977.

“I didn’t know anything was wrong until I was receiving unemployment in 1981 and they told me I had to pay them back money because I had been working,” said Teresa Pineda, 48, a legal resident who came here from El Salvador 15 years ago.

She was told that she had worked at three Los Angeles-area knitting mills. So Pineda went to each factory, asking for herself. On the third try, she found herself face to face with a nervous young Mexican woman who introduced herself as Teresa Pineda.

“No,” she told her. “It is I who am Teresa Pineda, and you are using my card.”

“It’s my card now,” the young woman told her. “I paid good money for that card.”

Situation Resolved

Pineda said the woman apologized for causing her problems and grew so scared that Pineda hesitated before demanding her card back. Finally, however, Pineda did get back the card she had lost years before. After several years of disputes with government agencies, she said, her situation is now resolved.

“What amazes me is the tremendous resourcefulness of these people,” said Los Angeles attorney Matthew Richardson, who is representing both Valadez and Pineda through the Public Counsel program of the Los Angeles and Beverly Hills Bar associations, which provides free legal services to poor people.

“Both Mrs. Pineda and Mr. Valadez had done a fair amount on their own, or had tried to. But even for somebody that knows the system, straightening this out can be a nightmare.”

Valadez’s problems were compounded by his inability to read English and, consequently, his failure to respond to the notices he began receiving in 1983 asking for taxes on unreported income.

Explained to IRS

“I could not read the letters,” Valadez, 38, said in a recent interview in Spanish. “And I did not think I needed to because I knew I had filed all my taxes and nothing was wrong. Besides, it was obvious I could not be having two jobs in two different cities at the same time. I thought they must realize that.”

He explained to the IRS in 1984 that he had never worked in Bakersfield, but received a letter back saying the information he had provided “does not justify a change in our proposed adjustment,” Richardson said.

Valadez’s double had earned $25,000 in two years, nearly twice Valadez’s own wages. By 1986, his tax liability in back taxes, interest and penalties was deemed to be about $7,000, Richardson said, and his 1985 return was withheld.

In early 1986, a notice of garnishee arrived at the carpet factory where he still works. By May, $500 of his $800 monthly paycheck was being taken out.

In June, practically unable to feed his family, he sought a loan from his employer, and tried again, unsuccessfully, to explain his situation to the IRS. Finally, he signed an agreement that reduced his monthly cut to $300, but committed him to paying a total of $16,000 over many years for back taxes, penalties and interest.

That was when he headed for Bakersfield. Armed with a letter from the company saying no one there recognized him, he began his sojourn from one IRS office to another. Eventually, he came to know all five local offices.

“One office sent me to another office, and they sent me to another,” Valadez said. “I didn’t see any hope this would ever be arranged. Finally, one young woman got so mad when she heard my story that she told me to sit down and not move until she talked to her boss about me.”

He does not know who the woman was, or how she did it, but he left that office with an official notice halting the garnishee. Not until he sought a lawyer did he finally settle the case and get all his money back--with interest--from both the IRS and the State Franchise Tax Board, which had withheld his 1986 return.

“It was a miracle,” he said.

Rose Castaneda, an administrative aide in the office of Rep. Howard Berman (D-Los Angeles), said she has handled four such cases for constituents in the last two years. One man, she said, had lost his wallet in the 1940s and had problems four decades later. By that time, the man using his card owed hundreds of thousands of dollars in back taxes.

Six-Year Problem

“He was retired by then,” she said. “And some of the employers were no longer in business, or had retired. Some were deceased. But finally we got it straightened out.”

It has taken Jose Rivera, 26, of Brooklyn, N.Y., six years to resolve problems caused by a man who somehow acquired a copy of his Social Security card from the Social Security Administration itself. He still does not know how that happened.

A Social Security Administration spokesman said privacy regulations make it impossible for him to discuss individual cases, but acknowledged that such mistakes have occurred. He said about 100 new Social Security numbers are given out each year because of such confusion.

This case appears to be one of them.

Jose A. Rivera, as he now signs his name, works in a print shop and is a first-generation American born to Puerto Rican parents. He speaks better English than Spanish, is unmarried, has no children and is of strong Catholic upbringing. And all that, he said, made his problems all the harder to bear.

‘Defamation of Character’

His namesake turned out to be a Spanish-speaking man who fathered two children by two separate women and then failed to support them, a man who ran up bills he never paid, who worked but never paid income tax, who had been in prison. He does not know if that man is here illegally or not.

“I tried to explain all this to people, and they just didn’t believe me,” he said, hesitant at first to be interviewed for fear a newspaper story would renew the controversy. “I can make it sound funny now. But it’s not. It was defamation of character. This guy made me look like a bum.”

His legal problems, which are intricate, started when a welfare office began garnisheeing his wages for child support. For six years, every year, he had to prove he was not that other Jose Rivera.

He offered to appear before the mothers so they could testify that they did not know him, but could not get their names. He tracked down the other man’s former employers, even found out his real name and an address in New Jersey, which he turned over to officials. He was told by officials not to approach the man or he could be sued.

Denied New Number

He tried to get a new Social Security number, only to be denied one because, he was pleasantly reassured, he was the legitimate holder of the card. Once, he was told, he missed meeting his double by a single day when that other Rivera had gone to the Social Security office for a new card. He was later told that the other man was given a new number.

Meanwhile, his personal troubles were almost as trying.

He became the butt of locker room-style jokes by men he worked with. He lost his credit cards. His mother sat him down for a heart-to-heart talk beginning with, “You’d come to me if you were in trouble, wouldn’t you?”

He had a fight with his girlfriend and ultimately they separated. When he met his current girlfriend, whom he plans to marry next year, she begged him not to mention the matter to her mother, who works in the criminal court system.

‘Unbelievable Case’

“This is an unbelievable case,” said attorney Elizabeth Imholz of the South Brooklyn Legal Services. “We ended up getting his money back. But this thing has never been fully resolved.”

Interviews with 18 immigration and public-interest attorneys throughout the country indicated that such cases, though hardly a new phenomenon, are surfacing more frequently now as immigrants assemble documents to back up their petitions for amnesty under the Immigration Reform and Control Act of 1986.

Some of those who have been victimized, they say, are themselves illegal immigrants who have somehow established themselves with government agencies as the legitimate holders of Social Security cards.

“When I came from Mexico in 1976, I bought a Social Security card from a little old drunk on the street for $10,” said Rafael Cabello, 33, of Long Beach, who was referred to a reporter through the International Ladies Garment Workers’ Union.

‘They’re Real’

“He held all these cards out like (a deck of) playing cards and said, ‘Here, take your choice, they’re real.’ ”

The one Cabello picked said Jaime Naranjo. And, he said, he has been working under that name, and has been called “Jimmy” by his boss, ever since. He has also filed taxes under that name and number--and gotten returns.

Not until 1985 did he get a notice from the IRS charging him about $5,000 on unreported income from a mattress factory in Compton. He went to the factory, but the other Jimmy Naranjo, whom he was chagrined to learn earned $15,000 a year--three times his own income--had long departed. He suspects that employee may have been one of several young men who copied his American name and number when they were all living together when he first arrived from Mexico.

Now, Cabello said, he has applied for amnesty and a new Social Security card in his own name. But he is still trying to sort things out with the IRS, which he said has kept his last two refund checks.

Just who the original Jaime Naranjo was, or how the old drunk obtained his card, remains a mystery. A state tax official said he could release no information except to say the Naranjo interviewed by a reporter is listed as the legitimate holder of that number.

“There are probably many more cases out there like this than we’ll ever know,” said Renato Bringas, a staff attorney with Legal Services of Greater Miami Inc.

“Many people sympathize with the person using their card because they may even have been in the same boat once. Sometimes, when a brother or a cousin comes, they will loan their cards out. Then they will do anything, even pay the taxes, rather than admit their error to the government.”

Ellen Sam, a staff attorney with the Asian Pacific American Legal Center in Los Angeles, said such arrangements are common among close-knit extended Asian families who often live at the same address. But, she said, she knows of no cases in which the IRS has become involved.

“Mostly they will share their cards with relatives, then pay the tax on it so IRS would never know,” she said. “Then the relative using the card will pay them back under the table.”

Trying Cases

Resolving the cases, particularly if early notices have gone unanswered, can be trying even for tax attorneys.

Tim O’Brien, a Los Angeles attorney representing a Mexican-born shoe salesman named Armando Moreno, said he has spent more than 30 hours on the case. Were he charging his client, he said, his fees would exceed the initial $1,046.20 the IRS claimed Moreno owed.

Among the problems he has confronted: Several different IRS offices are working on the case; Moreno’s purported employers have been identified by the IRS only by their computer numbers, not their names, and the amount he purportedly owes keeps changing.

“In the first week of May, 1987, I got two phone calls from the IRS,” he said. “One saying the 1981 problem was resolved, and the other saying pay up now.”

As Moreno’s case stands now, O’Brien said, he has been cleared for 1981, but his 1982 debt is still under discussion.

Response Important

Responding immediately to the very first notice sent out by the IRS is all-important, Marty Gomez, an IRS spokesman in the regional headquarters in Fresno, stressed in an interview. Those notices, sent out when taxpayers’ statements fail to declare income reported by employers, give taxpayers 30 days to respond. A second notice gives 90 days.

The notices are sent only in English, he said, adding that the IRS has Spanish-speaking employees to answer questions.

“If after those two notices, they don’t respond, they are considered to be in default and . . . their cases go to collection,” he said. By the time IRS collectors get around to actually garnisheeing wages or levying liens against property, he said, it may be a year later.

There is no single department in either the IRS or the Social Security Administration or the State Franchise Tax Board that handles these cases alone.

Consequently, spokesmen said, there is no single standard of what is deemed to be sufficient proof for a taxpayer to use in separating himself from this shadow. That problem is exacerbated when other agencies, such as welfare, unemployment and legal agencies, become involved.

Reber, the State Franchise Tax Board spokesman, said such proof might include a copy of a lost or stolen Social Security card report, a sworn statement by the taxpayer and perhaps a letter from the purported employer.

“It’s pretty easy to walk in, flash your driver’s license, and say, ‘Hey, I’m so and so, I never worked here, did I?’ ”