Krystle Reyes, 25, during a July 13 court appearance. She pleaded guilty Tuesday to tax evasion and theft.SALEM -- The woman who received a fraudulent $2.1 million tax refund from the state of Oregon and nearly got away with it was sentenced to 5 1/2 years in prison Tuesday.
Krystle Marie Reyes stood behind a secure glass screen, her hands crossed and cuffed in front of her as she quietly answered "guilty" to filing a false $3.5 million income tax return and taking her $2.1 million refund on a debit card spending spree.
Nearly two months after Reyes' arrest, the Oregon Department of Revenue has yet to provide the public with details of just how the 25-year-old woman was able to pull off the biggest tax fraud in state history.
A Revenue Department spokesman promised Tuesday that the findings of an internal agency audit would be released today (Wednesday).
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Meanwhile, a 24-page search warrant affidavit released to The Oregonian on Tuesday raises the question of whether Reyes would have ever been caught -- if not for two reported lost debit cards.
On Jan. 31, according to the affidavit, Reyes filed a tax return via the Internet using Turbo Tax software. A state computer flagged the refund because it was more than $50,000.
The return was set aside for review by processing staff and managers for potential fraud. But "some time later," the affidavit says, a Revenue employee "overrode" the flagged payment and the refund issued.
By policy, three agency employees are required to verify the override. But, according to the affidavit, no one responsible for reviewing the return opened the file to look at it or looked at the W-2 form Reyes filed.
Records show she'd previously worked at retirement facilities or senior care homes and reported income of less than $15,000 per year in 2009 and 2010.
Without the review, Reyes received the $2.1 million refund on a Visa debit card in February.
By April, Reyes reported the debit card as "lost or stolen" and received a replacement before the month ended. She reported the second card lost, prompting Intuit, the company that owns Turbo Tax, to alert Oregon officials about the suspicious return.
Reyes had spent about $150,000, putting down $1,800 in cash to buy a 1999 light green Dodge Caravan and spending $851 on tires and wheels.
Before the authorities deactivated her card, the affidavit chronicles a flurry of shopping. She bought a queen-sized air mattress, a deep fryer, an air conditioner and a cream and gray floral rug. She bought a sofa and recliner with brown leather trim and even racked up reward points on her Fred Meyer rewards card.
Facing eight felony charges and potentially seven years in prison, Reyes agreed to plead guilty to one felony count of tax evasion and three counts of felony theft.
Her court-appointed attorney, Gale Rieder, explained that the evidence against Reyes was "overwhelming" and "she wanted to take responsibility for what she'd done."
"She's remorseful and saddened by the impact on her family," Rieder said. "She has no criminal history."
No one else has been charged in the matter, though the affidavit frequently notes that Reyes shopped with friends and relatives. For example, the affidavit reports she and friends bought a pistol in March at a pawn shop in Hermiston.
Andrew Campbell, a senior assistant attorney general at the Oregon Department of Justice, declined to comment on Tuesday's plea deal. In his written offer to Reyes' lawyer, Campbell noted that "the state has a compelling interest in the deterrence of tax fraud."
Reyes' lawyer told reporters outside the courtroom Tuesday that her client was caught in an "impulsive act."
"I think," she said, "things just got out of hand."
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