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PHOENIX -- A California man who admitted receiving $1.9 million in fraudulent electronic tax returns from a sophisticated scheme that federal authorities found difficult to crack was soon expected to walk out of jail after being sentenced Monday in a federal court in Phoenix to the five years he's spent in custody.

Daniel David Rigmaiden, 34, of Santa Clara, Calif., who was sporting a long beard, shaggy hair and an orange prison suit in court, pleaded guilty to one count of conspiracy, two counts of wire fraud and one count of mail fraud. He has been in jail since his August 2008 arrest in California.

He initially pleaded not guilty to 74 counts, and prosecutors dismissed the remaining 70 charges under a plea agreement.

"I want to apologize to everyone I have impacted in a negative way," Rigmaiden said.

Authorities say Rigmaiden ran a fraud scheme that used the identities of people living and dead to file more than 2,400 tax returns seeking $5 million.

Rigmaiden proved elusive to authorities, who dubbed him "the Hacker" before his true identity emerged. He went to great lengths to conceal his part in the scheme by sending encrypted emails to conspirators. In one, he gave detailed instructions on mailing $68,000, saying to dip the money in oil to hide its smell, put it into a stuffed animal and include a note to a dying child. He was finally arrested after investigators used emerging surveillance technology that he called unconstitutional.

Prosecutors say the case was unusual because, unlike most people who commit white-collar crimes, he lived frugally and invested in gold and silver. Rigmaiden, who has a high school education, also fired five attorneys and represented himself in court for more than four years.

He admitted receiving $1.9 million in the scheme. But he only pocketed $400,000, which he has already repaid. The federal government controlled the remaining $1.5 million as part of its investigation.

U.S. District Judge David Campbell, who called it an "extraordinary fraud," could have sentenced him to 10 to 12 years in prison but gave him time served, plus three years of supervised release and 100 hours of community service.

"You have tremendous abilities and if you put them to good use, it can benefit society," the judge said.

Federal prosecutor Frederick Battista said he believes Rigmaiden has decided to become a law-abiding citizen.

Years ago, investigators struggling to find the scheme's leader tried to track an Internet air card used to make the fraudulent tax filings. They turned to a suitcase-size device known as a Stingray that pretends it's a cell tower. Authorities say the device helped them identify and arrest Rigmaiden at an apartment complex in Santa Clara.

Rigmaiden had questioned the government's use of the device and asked that evidence gathered from it be thrown out, saying he had an expectation of privacy. The American Civil Liberties Union has argued that the Stringray sweeps up data of people who happen to be nearby.

The technology didn't come up in the hearing on Monday.

Campbell previously ruled that Rigmaiden didn't have an expectation of privacy because he used fraudulent information to rent an apartment and get the computer and air card used to carry out the crimes.

The case was handled by a federal court in Arizona because investigators had originally tied the scheme's proceeds to a Phoenix bank account set up by another man who pleaded guilty more than two years ago.

Authorities focused on trying to find the air card enlisted the assistance of a participant in the scheme who became a confidential informant. The informant had received emails from an unknown leader in the fraud with instructions on delivering $68,000, court records said.

The instructions said to wash the cash in lantern oil to mask it from drug-sniffing dogs, double vacuum-seal the money, put the packaged cash inside a stuffed animal and send it in a box to a mail store in Palo Alto with a birthday card addressed to a dying child.

Rigmaiden went to pick up the package but managed to escape federal surveillance, court records said.

Investigators used records from a phone company to narrow the location of the air card within the Santa Clara apartment complex. After getting a court order to use a tracking device, investigators pinpointed the apartment.

Eventually, authorities spotted Rigmaiden at the complex and arrested him after a foot chase.

Associated Press,

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