A scientist who was cheated out of her pension fund by cybercriminals felt “shot in the head” when she learned that the federal government was also making a fortune from the victims of the booming industry.
Frances Sharples lost $665,000 to scammers who broke into her computer with a pop-up message while she was playing Spelling Bee.
She has now been hit with a $100,000 tax bill because Congress in 2018 repealed a law designed to protect fraud victims.
“It goes against a person’s conscience,” former IRS investigator Ismael Guerra told the Washington Post.
“The fraudsters get away, the government gets its share, and it gets nothing.”
Frances Sharples, 73, lost more than $650,000 from her retirement fund to a cyber fraud before being handed a $10,000 tax bill for the stolen money
The scientist, pictured with former Vice President Al Gore, became one of the White House's most trusted scientific advisers over the course of her illustrious career
But a change in the law in 2018 removed tax protections for fraud victims, leaving the federal government free to profit from the booming cybercrime industry
Sharples, 73, rose to power from humble beginnings as the daughter of a New York plumber and became one of the White House's most trusted science advisers.
She served on the board of the National Academy of Sciences and helped lead the country's response to biosecurity threats after 9/11.
But in February last year, she fell victim to a routine “tech support” scam that bankrupts thousands of Americans every year.
She was at her home in Silver Springs, Maryland, when her computer screen suddenly froze and a pop-up message appeared saying her identity had been stolen.
She was told to call “Microsoft” at 800 and the man who answered said her bank account had been hacked and she needed to transfer the money.
“The whole premise behind it was: You need our help to protect your money,” she said.
The man told her to call the number on the back of her bank card, but the fraudsters had installed a diversion on her phone that forwarded the call to a man who recommended a new “protected account.”
He set up an account with cryptocurrency exchange Binance.US and asked them to transfer the $25,000 to their savings account.
She agreed to drive to her credit union with a script he had prepared and instruct them to transfer the money to a list of account names and numbers.
Back at home, she received an email with a password and a receipt for the money from Binance.us.
However, since the scammers had control of their computer, they intercepted another message from the crypto company informing them that the funds had been immediately removed.
After the $25,000 disappeared, the fraudsters now targeted the $630,000 in her pension fund.
Sharples' handwritten script dictated by the fraudsters to allay her bank's concerns as she prepared to transfer their money
Their money was transferred to a cryptocurrency account, making it easier for the scammers to cover their tracks
She spoke to TIAA fund managers using the same script the scammers had given her for her conversation with her credit union.
“I couldn’t think clearly,” she said, “they had overwhelmed me.”
“Is anyone else telling you to do this?” a fund official asked her.
“No, that’s my idea,” she replied from the script, “I decided I wanted to invest in a different way.”
The transfer was made and again the money was immediately stolen, but then the cybercriminals began to overplay their cards.
They knew she had $1 million left in a separate retirement account, with stricter withdrawal limits.
When the scammer urged her to transfer the money to her credit union account, she decided to contact TIAA for advice.
They told her it sounded like a scam, and Sharples called the scammer and asked to speak to his manager.
The scammers became abusive, insulted her and asked her to transfer the money.
“It was like being told, 'Well, you're an idiot!' We try to help you!' She said.
She declined and when the scammers realized it was game over, they deleted the phone number within minutes.
If Sharples thought her losses were over, she would be in for a rude shock when she prepared her next tax return.
Withdrawing money from her tax-deferred retirement fund gave the IRS the impression that she was swimming in cash and liable for a six-figure tax liability.
“I thought to myself, there has to be a way for someone who was victimized like me to get a pass, right?” she said.
But Congress removed protections for fraud victims from the tax code in 2018 as part of an overhaul intended to make the tax system “simpler and fairer for all families and individuals.”
An IRS agent commiserated with her and offered to set up a payment plan for her.
“He was very nice. “It didn’t help one bit,” she said.
“If there are unintended consequences of adopting the law beyond the flexibility granted to the Treasury Secretary, the IRS does not have the authority to resolve them,” an IRS spokesperson said.
FBI investigators found that the same fraudsters stole at least $5.6 million in just a few months, including $370,000 from an elderly couple in Kentucky.
Only $340,000 was recovered, none of which belonged to Sharples.
Americans lost $10 billion to cybercrime in 2022, up from $6.9 billion the year before, and losses to “tech support” scams rose from $15 million in 2017 increased over $800 million last year.
Experts warn that fraudsters now have access to an entire industry of support services, including help desks, call volume management software and lead-generating specialists.
“There should be no shame in being a victim of this because it is organized crime,” said Amy Hogan-Burney, a former FBI lawyer and now Microsoft’s cybersecurity chief.
The rise of cryptocurrencies has made it easier for fraudsters to cover their tracks, and Binance founder Changpeng Zhao pleaded guilty last month to violating anti-money laundering regulations and agreed to pay more than $4 billion .
Sharples, meanwhile, says she oscillates between depressed and obsessed and tries not to constantly think about how she managed to become a victim.
“Everyone said, 'You shouldn't think like that.' At the end of the day I do. “I feel that way,” she said.
Binance founder Changpeng Zhao pleaded guilty last month to violating anti-money laundering regulations and agreed to pay more than $4 billion
“I will never stop feeling like it was my fault because I made a stupid mistake and already paid a terrible price.”
And she urged people not to lie to banks when asking security questions, particularly: “Is anyone else telling you to do this?”
“I have a damn PhD, I'm not a stupid person!” she said.
'I should have known better.'