For victims of financial scams, losing their life savings can be devastating enough.
But what happens when the money is gone and the tax bill remains?
A Kane In Your Corner investigation has found that some scam victims who lost substantial amounts of money can also find themselves facing thousands, or even hundreds of thousands, of dollars in taxes connected to funds they no longer have.
For victims already struggling to recover financially, the tax burden can turn a devastating scam into a long-term financial crisis.
Madhu Anat knows that pain firsthand.
In April, Kane In Your Corner spoke with Anat, who lost more than $1 million as a result of a scam.
“I feel terrible in terms of having lost everything that I had earned and saved for my old age,” Anat said.
Her husband, Mark Urso, says the couple is now facing a financial burden they never expected to carry into retirement.
“It might be that we may never end up paying this off before our time is done on this earth,” Urso said.
The Money Was Stolen. The Tax Bill Wasn’t.
Anat’s situation became even more complicated because she withdrew money from her retirement savings to pay the scammers.
Those withdrawals were considered taxable income.
That means the couple now owes hundreds of thousands of dollars in taxes on money that was ultimately lost to criminals.
For the Ursos, the devastating reality is that the money is gone—but the tax obligation remains.
And they are not alone.
A Change in Federal Tax Law
The problem stems, in part, from changes to federal tax law.
In the past, victims of theft could generally claim deductions for certain theft-related losses. But that changed following tax legislation passed by Congress in 2017.
The law eliminated the federal deduction for many personal theft losses, leaving some victims with limited tax relief when they were defrauded.
That can create a painful financial paradox.
A victim may withdraw retirement funds, pay those funds to a scammer, lose the money permanently—and still face taxes associated with the withdrawal.
For someone who has lost their retirement savings, an unexpected tax bill can be financially overwhelming.
Lawmakers Push for Relief
Now, some lawmakers are trying to change the rules.
Several local members of Congress are working on legislation that would restore tax relief for victims of theft and financial scams.
Rep. John Riley (D–New York) says victims should not be punished for being targeted by criminals.
“Those sorts of crimes are despicable and should be stopped,” Riley said. “And for the victims of those crimes, we shouldn’t be punishing them by taxing them for their losses.”
The proposed changes could provide a lifeline for people who have already suffered devastating financial losses.
But for the Ursos, relief cannot come soon enough.
Fighting on Two Fronts
The couple says they cannot simply wait for Congress to change the law.
They are currently negotiating with both the Internal Revenue Service and the New Jersey Division of Taxation, hoping the agencies will forgive or otherwise reduce the taxes they owe.
Their situation illustrates a growing concern surrounding financial scams: the consequences can continue long after the criminal has disappeared with the money.
For victims, recovering stolen funds can be difficult or impossible.
But recovering from the financial consequences may be even harder when the government continues to treat some of the money as taxable income.
The Ursos say they spent their lives working and saving for their future.
They never imagined that losing their savings to scammers could leave them facing another financial crisis.
First, the scammers took their money. Now, they are fighting to keep the tax bill from taking what they have left.
And for victims across the country, the question remains:
Should someone who has already been robbed by a scammer really have to pay taxes on the money they lost?
Explore in-depth coverage of education, politics, and public safety. Our reporting digs deep into local issues that matter to New Yorkers.
New York City’s public school system is facing a troubling picture of alleged fraud, misconduct and financial abuse, according to a newly released report from the Special Commissioner of Investigation for the New York City School District.
The 2025 annual report shows that the school system’s watchdog received 11,775 complaints involving allegations of fraud, criminal activity, financial misconduct and abuse during the year.
The findings were first reported by amNewYork in an article published March 19, 2026.
Read the original amNewYork report
The Special Commissioner of Investigation, commonly known as SCI, opened 471 investigations in 2025 and closed 393. Investigators ultimately substantiated wrongdoing in 156 cases involving 202 individuals or entities, according to the agency’s annual report.
Perhaps most striking is the financial impact.
SCI identified nearly $2 million in financial losses involving the Department of Education and New York City’s retirement systems—approximately twice the amount identified the previous year.
Misconduct Involving School Employees
The report also examined allegations involving DOE employees and their interactions with students.
SCI investigated 157 cases involving allegations of inappropriate or sexual misconduct and substantiated allegations in 62 cases, according to the report.
The agency also identified 23 cases involving DOE personnel who allegedly initiated or maintained inappropriate relationships with students through personal cellphones or social media.
Those findings raise continuing questions about how schools monitor employee-student interactions, particularly when communication takes place outside official DOE systems.
In response to the report, the DOE told amNewYork that allegations of misconduct are taken seriously and that the department takes disciplinary action when wrongdoing is substantiated.
The department also said it had updated its guidance concerning employee-student interactions involving personal cellphone numbers.
When Taxpayer Money Is Misused
Some of the cases detailed in the report involved significant amounts of taxpayer money.
One investigation involved a community associate at East-West High School of International Studies in Flushing who investigators said submitted fraudulent invoices connected to a personal cheerleading business.
According to the investigation, more than $415,000 was stolen from the DOE.
The employee later resigned and was indicted on charges including grand larceny and identity theft, according to the report as described by amNewYork.
Another case involved $477,685 allegedly taken from the retirement accounts of a deceased member of the New York City Teachers’ Retirement System.
Investigators said the defendant diverted pension and annuity payments into accounts he controlled and impersonated the deceased account holder when communicating with the retirement system.
He later pleaded guilty to grand larceny and identity theft.
A Watchdog With Thousands of Complaints
The numbers also highlight the enormous responsibility placed on SCI, which operates as an independent watchdog for the nation’s largest school system.
Anyone with information about potential wrongdoing—including parents, students, school employees, administrators and whistleblowers—can submit complaints to SCI.
Special Commissioner Anastasia Coleman said the agency’s mission is to protect students and safeguard taxpayer money while holding individuals accountable when wrongdoing occurs.
The agency’s work comes at a time when concerns about accountability within the city’s public schools continue to draw public attention.
What Happens After a Complaint?
The annual report illustrates an important distinction: a complaint is not the same thing as a substantiated case.
SCI received nearly 12,000 complaints, but opened 471 investigations and substantiated wrongdoing in 156 cases.
That means the figures should not be interpreted as nearly 12,000 confirmed incidents of corruption or misconduct. Rather, they represent allegations reported to the school system’s independent investigative watchdog, with a smaller number ultimately investigated and substantiated.
Still, the volume of complaints and the nearly $2 million in identified losses underscore the scale of the oversight challenge facing New York City’s public schools.
For parents, teachers, school employees and taxpayers, the report raises a fundamental question:
How effectively is New York City protecting its students and safeguarding the billions of dollars entrusted to its public school system?
And as the SCI continues investigating allegations of fraud, misconduct and abuse, the answer may depend not only on how many complaints are received—but on what happens after those complaints are made.
Source: The findings above are based on the 2025 Annual Report of the Special Commissioner of Investigation for the New York City School District and reporting by amNewYork. The official SCI report is available through the agency.
Breaking News Updates
Local Insights & Analysis
The Scam Was Only the Beginning: Victims Face Tax Bills on Stolen Money
By Candice Smith
Connect with Your Community
Inside NYC Public Schools: Thousands of Complaints, Millions in Losses and Troubling Misconduct By Matt Levy
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