A scientist who was scammed out of her pension fund by cybercriminals felt “shot in the head” after learning the federal government is also making a fortune from victims of the booming industry.
Frances Sharples lost $665,000 to fraudsters who hacked into her computer with a pop-up message while she was playing Spelling Bee.
She has now faced an additional $100,000 tax bill because Congress in 2018 repealed a law intended to protect fraud victims.
“It goes against anyone's conscience,” former IRS investigator Ismael Guerra told the newspaper Washingtonpost.
“The scammers go away, the government gets its share, and she gets nothing.”
Frances Sharples, 73, lost more than $650,000 from her retirement fund in a cyber scam before receiving a $10,000 tax bill on the stolen money
The scientist, pictured with former Vice President Al Gore, became one of the White House's most trusted scientific advisors during her illustrious career
But a change in the law in 2018 stripped tax protections for fraud victims, freeing the federal government to cash in on the booming cybercrime industry
Sharples, 73, went from humble beginnings as the daughter of a New York plumber to the corridors of power as she became one of the White House's most trusted scientific advisers.
She served on the board of the National Academy of Sciences and helped lead the nation's response to biosecurity threats in the aftermath of 9/11.
But in February last year, she fell victim to a routine “tech support” scam that ruins 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 claiming her identity had been stolen.
She was told to call “Microsoft” on an 800 number and the man who answered said her bank account had been hacked and she needed to transfer the money.
“The whole premise of this was: You need our help to protect your money,” she told the Post.
The man told her to call the number on the back of her bank card, but the scammers had installed a diversion on her phone that routed the call to a man who recommended a new “protected account.”
He set up an account with the cryptocurrency exchange Binance.US and told her to transfer the $25,000 to her savings account.
She agreed to drive to her credit union with a script he had set up and instruct them to transfer the money to a list of account names and numbers.
At home, she received an email with a password and proof of payment from Binance.us.
But because the scammers had control over her computer, they intercepted another message from the crypto company informing her that the funds had been immediately deleted.
With the $25,000 gone, the scammers now targeted the $630,000 from her retirement fund.
Sharples' handwritten script, dictated by the scammers to allay her bank's concerns as she prepared to transfer her money
Her money was transferred to a cryptocurrency account, making it easier for the scammers to cover their tracks
She spoke to TIAA fund managers and used the same script the fraudsters gave her for her interview with her credit union.
“I wasn't thinking straight,” she said, “they overwhelmed me.”
“Someone else tell you to do this?” an official at the fund asked her.
“No, it's my idea,” she replied from the script, “I decided I want to invest in a different way.”
The transfer went through and again the money was stolen immediately, but then the cyber criminals started to overplay their hand.
They knew she had $1 million left in a separate retirement account with stricter limits on what could be withdrawn.
When the scammer urged her to transfer the money to her credit union account, she decided to call TIAA for advice.
They told her it looked like a scam and Sharples called the scammer and asked to speak to his supervisor.
The scammers became abusive, swore at her and ordered her to transfer the money.
'It was as if you were saying to me, “Well, you're a fool! We're trying to help you!'” she told the Post.
She refused and when they realized the game was up, the scammers deleted their phone number within minutes.
If Sharples thought her losses were over, she was in for a nasty shock when she prepared her next tax return.
Binance founder Changpeng Zhao pleaded guilty last month to anti-money laundering regulations and agreed to pay more than $4 billion
By withdrawing money from her deferred retirement fund, the IRS was led to believe she was swimming in cash and liable for a six-figure tax bill.
“I thought, there has to be a way for someone who has been victimized, like me, to get a license, right?” she said.
But Congress removed protections for fraud victims from the tax code in 2018 in an overhaul intended to make the tax system “simpler and fairer for all families and individuals.”
An IRS agent told her he sympathized 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 legislation passed into law, beyond the flexibility provided to the Treasury Secretary, the IRS does not have the authority to resolve them,” an IRS spokesperson said.
FBI investigators discovered that the same scammers had taken at least $5.6 million in just a few months, including $370,000 from an elderly couple in Kentucky.
Only $340,000 was recovered, and none of it belonged to Sharples.
Americans lost $10 billion to cybercrime in 2022, up from $6.9 billion the year before, and lRevenues from “tech support” scams have risen from $15 million in 2017 to more than $800 million last year.
Experts warn that the scammers can now rely on a whole sector of support services, including helpdesks, software to manage call volumes and lead generation specialists.
“There should be no shame in being a victim of this because this 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 scammers to cover their tracks, and Binance founder Changpeng Zhao pleaded guilty to anti-money laundering rules last month and agreed to pay more than $4 billion.
Sharples, meanwhile, says she goes back and forth between depressed and obsessed, trying not to constantly think about how she managed to become a victim.
“Everyone has said, 'You shouldn't feel this way.' At the end of the day, I do. I feel that way too,” she told the Post.
“I will never stop feeling like it was my fault, because I made a stupid mistake and have already paid a terrible price for it.”
And she urged people not to lie to banks when they ask security questions, especially “is someone else telling you to do this?”
“I got a damn PhD, I'm not a stupid person!” she said.
“I should have known better.”