Some Other Tax Related Scams You Need to Know About
Americans with Disabilities Act (ADA)
ScamThe ADA, passed in 1990, prohibits
discrimination against persons with disabilities. One part of the ADA
requires existing business facilities to be made more accessible where it is
readily achievable, or can be done without much difficulty or expense. Whether a
business must remove barriers to access depends on the size and resources of the
business as well as the cost.
We have first hand knowledge of this scam as Steve
Kassel was approached by promoters from Denver pitching this scam several years
ago. In fact, we were some of the very first people in the country to learn of
this scam.
The scam involves selling bogus "websites" designed to help customers
claim improper tax deductions and credits. The "websites" are allegedly designed
to help customers claim to have a business with a website, and then improperly
claim tax deductions and credits for supposedly "modifying" the
website-purportedly to comply with the Americans with Disabilities Act (ADA).
The scam promoters charge customers $2,495 to make sham website modifications,
but also adds a sham $7,980 promissory note as part of the ostensible purchase
price to artificially raise the total cost to $10,475. The scam promoters tells
prospective purchasers that they can use that inflated cost to claim a $5,000
ADA income-tax credit and a $5,475 business tax deduction, thereby reducing
their taxes by more than double the $2,495 they paid for the "modifications."
National
Audit Defense Network (NADN)
National Audit Defense Network Founder Found Dead
National Audit Defense Network Permanently Shut Down
Federal
Trade Commission Press Release on NADN
Troubleshooter.com
Column on Continuing Problems with NADN
NADN Files Bankruptcy
FEDERAL BANKRUPTCY COURT PERMANENTLY BARS
TELEMARKETING FIRM “NATIONAL AUDIT DEFENSE NETWORK” FROM SELLING TAX SCAMS AND
PREPARING TAX RETURNS
Justice Department To Obtain NADN's Claimed 640,000-Person Customer List;
NADN's Tax Scams Have Allegedly Cost U.S. Treasury $324 Million
WASHINGTON, D.C. - The Department of Justice announced
today that on June 9 a federal bankruptcy court in Las Vegas entered a permanent
injunction against Las Vegas-based telemarketing firm National Audit Defense
Network, known as NADN. The injunction order, submitted jointly by NADN’s
bankruptcy trustee and by the Justice Department, prohibits NADN from selling
abusive tax schemes and from preparing federal income tax returns. The order
also gives the Justice Department “full and complete access” to NADN’s records,
including customer information.
NADN’s earlier court papers acknowledged that the company’s
database had more than 640,000 customers. Court papers filed by the United
States estimate that customers who followed NADN’s tax advice have underpaid
$324 million in federal income taxes over the past three years alone. NADN
ceased operating on May 27, 2004, and filed a petition to liquidate its
operations under Chapter 7 of the bankruptcy code.
The Justice Department, in cooperation with the bankruptcy
trustee, William Leonard, Jr., and the Internal Revenue Service, intends to
contact NADN’s customers who purchased NADN’s tax schemes or to whom NADN may
have given false tax advice. This communication will inform the customers of the
entry of the permanent injunction and provide information about amending tax
returns containing erroneous NADN-initiated credits and deductions.
“Shutting down a tax scam promotion prevents further harm
to the tax system. But it is only step one,” said Eileen J. O’Connor, Assistant
Attorney General for the Justice Department’s Tax Division. “In the next steps,
the Department of Justice and the Internal Revenue Service will seek to repair
the harm by following the scam to its users and seeking to recover the losses it
caused to the federal treasury.”
The Justice Department continues to seek permanent
injunctions against ten other defendants in this suit: Weston Coolidge, NADN’s
former president; Al Rodrigues, NADN’s former general manager; Robert
Bennington, NADN’s former owner; Adam Mangabang, a former NADN sales manager;
Christine Reid, a former NADN employee; Mary Orie, NADN’s former
return-preparation department manager; ALR, Inc., operating as Success Matrix
Group; Lee Panelli; Ric Klingenberg; and Jeff Klingenberg. The other six
defendants named in the lawsuit, Oryan Management and Financial Services, Robert
Goetsch, Daniel Porter, Joseph Prokop, Michelle Herandez, and ADA Adventure,
Inc., agreed to a permanent injunction, which was entered by a Nevada federal
court on May 7, 2004. This injunction and a related press release are available
at
http://www.usdoj.gov/tax/04_tax_309.htm.
A copy of the Justice Department’s complaint, motion for
temporary restraining order, and reply brief are posted at
http://www.usdoj.gov/tax/04_tax_233.htm.
Assistant Attorney General O’Connor thanked Department of
Justice Tax Division trial attorneys Evan J. Davis and Phyllis Jo Gervasio, who
represent the United States in this case. She also thanked the agents of the
IRS’s Small Business/Self-Employed Division who investigated it.
This case is part of the Justice Department’s strategy to
stop the promotion and use of fraudulent tax schemes. More information about the
Justice Department’s Tax Division is available at
http://www.usdoj.gov/tax/index.html.
