Detectives track down alleged ringleaders of elaborate tax fraud scam

West Palm Beach, Fla. - Scott Schrader manages 7 Liberty Tax Services offices around Palm Beach County.

He was one of the first to figure out fraud cases were rampant at his stores.

"Instead of having 3 or four like most offices, we put it together and noticed we had 30 that were fraud," said Schrader.

Leroy Walker, 24, and Tonia Williams, 41, faced a judge Thursday, charged with masterminding what investigators are calling "Operation Bad Refunds."

"They were buying W2's and recruiting college-aged kids and filing taxes with fake information," said Schrader.

Detectives say Walker and Williams would drive around West Palm Beach and Riviera Beach recruiting what they call "mules" to give them their personal information for a cut of the profits.

"Some of them they knew, most they picked off the street, the common line was: 'Hi do you wanna make $1,000 in an hour?' and most of the people were jumping in the car with them," said Detective Bill Griffin, with the Palm Beach County Sheriff's Office.

"This was sophisticated because they knew enough to get a smaller refund, to hit different offices instead of all the same ones," said Schrader.

In April, at the end of tax season when the numbers did not add up, Liberty Tax Service alerted investigators.

"Most of the people that come into our office are here to do the right thing, and when you see something like this, it's really costing everyone that comes in money," said Schrader.

Walker and Williams are at the Palm Beach County jail charged with racketeering and grand theft.

16 others, the so called "mules," have been released on their own recognizance.