Found the following article today while researching ProAdvocate.org
after somebody posted an inquiry on Rob Lambert's board. Seems like
ProAdvocate's offices are a $65 per month rent-an-office deal in
Dallas, http://www.abcn.com/us/texas/executive-suites-dallas2591/ and
they are pitching several scams, including a "1st and 14th Amendment
Association" and a structured involving a Nevada corporation and a
Texas Joint Stock Company.

Anyhow, here's what I found on the latter at
http://www.quatloos.com/texas_joint_stock_co.htm
___________________

Texas Joint Stock Company Scam

The Texas Joint Stock Company scam is an form of asset protection
scam that these days seems to be run mostly from the Dallas area by a
bunch of con artists who got into trouble a few years ago selling
bogus Pure Trusts. Having been whacked by the IRS, yet desiring
something to sell to suckers, these con artists have come up with yet
another mythical asset protection device in the form of the Texas
Joint Stock Company.

So what is a Texas Joint Stock Company? It is an unincorporated
entity, much like a general partnership. Section 31.10 of the Texas
Business and Commerce Code requires that any person conducting
business as a Texas Joint Stock Company must file in each county in
which the entity is doing business a statement setting forth that a
fictitious business name will be used (not to exceed 10 years). The
Texas Joint Stock Company can be sued in its own name, and in many
ways is treated like a general partnership – including for many
debtor-creditor issues.

What the Texas Joint Stock Company amounts to is an entity that is
treated like a general partnership, which is very unfortunate
considering that general partnerships provide very little in the way
of asset protection. Now, if the Texas Joint Stock Company was
similar to a Limited Partnership, it might be more interesting – but
it isn't.

The Texas statutes make clear that stock in a Texas Joint Stock
Company may be executed upon and sold by creditors of a shareholder.
This is crystal clear in Section 34.044 of the Texas Civil Practice &
Remedies Code

§ 34.044. STOCK SHARES SUBJECT TO SALE. Shares of stock in a
corporation or joint-stock company that are owned by a defendant in
execution may be sold on execution.

While the promoters who try to sell Texas Joint Stock Companies often
(falsely) claim that these entities are "better than limited
partnerships and LLCs" this is shown to be patently false by the
above paragraph. With a limited partnership or LLC, a creditor is
stuck with a "charging order" against the membership interest, but
with a Texas Joint Stock Company a creditor of a shareholder can
seize and sell the debtor's shares.

Even a general partnership has charging order protection, but as
shown the Texas Joint Stock Company doesn't. If you said that Texas
Joint Stock Companies have all the most debtor-unfriendly features of
both general partnerships and corporations, you wouldn't be far off.
No asset protection planner while sober would consider using such an
entity if potential future liability from within the entity or to a
shareholder was possible. But probably even a drunk planner could
presumably read the plain text of Article 6137 from Vernon's Texas
Civil Statutes and know exactly why Texas Joint Stock Companies
provide no meaningful asset protection:

In a suit against such company or association, in addition to service
on the president, secretary, treasurer or general agent of such
companies or association, service of citation may also be had on any
and all of the stockholders or members of such companies or
associations; and, in the event judgment shall be against such
unincorporated company or association, it shall be equally binding
upon the individual property of the stockholders or members so
served, and executions may issue against the property of the
individual stockholders or members, as well as against the joint
property; but executions shall not issue against the individual
property of the stockholders or members until execution against the
joint property has been returned without satisfaction.

In other words, so long as a creditor is smart enough to sue the
individual members of a Texas Joint Stock Company in addition to the
organization itself, no asset protection is afforded. The creditor
might be slowed down a bit having to chew on "joint" property first,
but eventually the shareholder's assets will be attacked too.

The concept of using Texas Joint Stock Companies as an asset
protection device was not thought up by licensed attorneys after deep
research into the law. Rather, just a bunch of former Pure Trust
salesmen stumbled upon the term and figured that they had found
something that could be marketed to suckers. Bundled for sale with
Nevada corporations (which have no significant asset protection
advantages over the corporations of other states, but are also
shamelessly marketed), and the Texas Joint Stock Company promoters
offer packages that promise absolute asset protection, but in the
reality of the courtroom will offer all the resistance of wet toilet
paper.

If asset protection is a concern, just say "No" to Texas Joint Stock
Companies, and run like hell from whoever it is that is trying to
sell you one.

By the way, for a couple of good cases describing the Pure Trust
scam, see http://www.assetprotectioncorp.com/dahlstm1.html and
http://www.assetprotectioncorp.com/dahlstm2.html

The scammers at ProAdvocate.org have stepped up their scamming, and
have published a research report that tries to show why you should
buy into their "Texas Joint Stock Company" scam.

My comments below in [[[ ]]]

****************************

The Uniform Fraudulent Transfer Act basically provides that, as a
general rule, a creditor can file an action in court and ask a judge
to set aside or void a transfer of assets to a third-party legal
entity if the sole purpose of that transfer can be proven to be the
intent to defraud the creditor. One exception to this general rule is
when a transfer to a third-party legal entity is made by private
contract.

[[[ Huh? Exactly where is that exception in UFTA? Truth: There is no
such exception. ]]]

The U.S. Constitution and the State Constitutions have provisions
that basically say, "no state (or state legislature) can pass any law
impairing the obligation of a (private) contract." Since the
Constitution is a higher legal authority or rule of law, and it was
adopted before any state passed its Fraudulent Transfer Act, the
Constitution preempts and overrules any Fraudulent Transfer Act
applicable to private contracts.

[[[ This is the same totally asinine *logic* that the scam artists
who sell constitutional equity pure trusts use on their marks. To
illustrate it's absurdity: If two people enter into a private
contract to commit murder, they couldn't be prosecuted under state
law because the U.S. Constitution would be supreme to the contrary
state law. But since those behind ProAdvocate.org used to run the
pure trust scam -- before spending some time in prison -- this should
come as no particular surprise to readers. ]]]

There is only one (1) legally recognized, separate, third-party,
legal entity in the world that is formed by private contract. That is
the Texas Joint-Stock Company, which requires a transfer of property
for stock in order to be deemed a private contract. In comparison, a
corporation, LLC, LLP or FLP—neither of which is formed by private
contract—is each in and of itself a privilege offered by the State.
Subsequently, a corporation, LLC, LLP or FLP (or even a trust) cannot
legally avoid the application of the Fraudulent Transfer Act when any
of these vehicles are used for asset protection. However, there are
several court decisions upholding and verifying the legal fact that
the Texas Joint-Stock Company is formed by private contract and as
such, no State Statute can interfere or impair a legal private
contract involved with setting up a Texas Joint-Stock Company into
which you can transfer your valuable property to achieve asset
protection. Do you still think that a Texas Joint Stock Company is a
Scam? Read on....

[[[ Except that a Texas Joint Stock Company is basically treated the
same as a general partnership, meaning that all members are liable
for all the debts and liabilities of the company. Incredibily stupid
idea, which as related above, falsely relies on the fantasy
protection of the contracts clause of the U.S. Constitution. ]]]

[[[ The rest of their scam solicitation at
http://www.proadvocate.org/Texas_Joint_Stock_Company.htm then goes on
to blatantly misrepresent how real world LPs and LLCs work to protect
assets. But what is stated above is enough to demonstrate that
ProAdvocate.org's claims regarding the Texas Joint Stock Company are
founded on the same fantasy "contracts clause" argument that has been
repeatedly rejected by the courts. ]]]

Atlantan pleads guilty to tax evasion conspiracy

By MIKE MORRIS
The Atlanta Journal-Constitution
Published on: 10/07/04

An Atlanta businessman who authorities said conspired with a Nevada
author to defraud the Internal Revenue Service by transferring
business income to offshore corporations pleaded guilty Wednesday to
a federal conspiracy charge.

Robert F. Holliday, 61, faces up to five years in prison and a
$250,000 fine when he is sentenced in January.

Holliday admitted in his plea agreement that he sought assistance
from Reno, Nev., author and financial consultant Lawrence Turpen to
illegally evade income taxes, according to a statement released by
the U.S. Department of Justice.

According to the statement, Holliday and Turpen conducted "sham
transactions" to move income to an untaxed offshore corporation on
the Isle of Man, a small island in the Irish Sea.

Turpen, a former dentist and author of the 1990 book, "Offshore
Options for Small Business," pleaded guilty in July to conspiring to
defraud the IRS, and is scheduled to be sentenced later this month.

DOJ - COURT FREEZES $500 MILLION THAT JUSTICE DEPARTMENT ALLEGES WAS
PAID TO FIRMS RUNNING FRAUDULENT INSURANCE AND CHARITY SCHEMES



FOR IMMEDIATE RELEASE

THURSDAY, NOVEMBER 4, 2004



COURT FREEZES $500 MILLION THAT JUSTICE DEPARTMENT ALLEGES WAS PAID
TO FIRMS RUNNING FRAUDULENT INSURANCE AND CHARITY SCHEMES



Court Papers Allege More Than 3,500 Doctors and Dentists Participated
in Program Run by San Diego-based xélan Firm



WASHINGTON, D.C. - Eileen J. O'Connor, Assistant Attorney General for
the Tax Division of the Department of Justice, and Carol C. Lam,
United States Attorney for the Southern District of California,
announced today that a federal court in San Diego, California, has
issued a temporary restraining order to California-based xélan, Inc.,
and a number of related entities and persons affiliated with the
xélan family of companies.



According to court papers unsealed today, persons and entities
affiliated with xélan have advised thousands of medical professionals
primarily doctors to place income in various fraudulent tax avoidance
schemes employing purported supplemental insurance products or
improper charitable deductions.



The individual defendants named in the suit are L. Donald Guess and
Monte T. Mellon of California, Leslie S. Buck of Maryland, David
Jacquot now living in Idaho, G. Thomas Roberts of Pennsylvania, and
Chris G. Evans and Nigel Bailey of Barbados.



The order freezes over $500 million in bank and investment accounts.
The court also appointed a temporary receiver to preserve assets for
the payment of taxes or other claims by defrauded parties.  The court
also ordered Guess, Mellon, Buck, Jacquot and Roberts to surrender
their passports to the
United States Marshal and not to leave the United States.

http://xelanvictims.com run by attorney Mike Johnston has a great
free collection of important documents relating to various xelan
litigations as well as a copy of the recent DOJ complaint that was
successful in obtaining the injunction and surrender of passports by
Guess, et al.

List members may find this article -
<http://www.nytimes.com/2004/11/18/business/18tax.html> discussing an
interview with Jerome Schneider, under the supervision of IRS CID
agents, to be of interest.

--
Greg Broiles, JD, EA
gbroiles@... (Lists only. Not for confidential communications.)
Law Office of Gregory A. Broiles
San Jose, CA

US - California - US Attorney -
6 December 2004 - LAWFUEL - First for law news - The United States
Attorney's Office for the Northern District of California announced
that Jerome Schneider, a resident of Vancouver, B.C. Canada, was
sentenced to six months in prison today by Judge Susan Illston in San
Francisco for his role in a conspiracy to defraud the Internal
Revenue Service. He was ordered to pay a fine of $4,000 and a $100
special assessment. He previously paid $100,000 in restitution.

On February 11, 2004, Mr. Schneider, 53, pled guilty to the
conspiracy charge. As part of his plea agreement, Mr. Schneider
agreed to cooperate with the government in its continuing
investigation of the taxpayers who purchased offshore entities as
well as others who might have advised those taxpayers. Schneider
cooperated and appeared before the national media to discuss the
illegal nature of tax shelters and offshore entities. At sentencing
today, Judge Susan Illston said that the wrong message would be sent
if Schneider received no jail time.

Jerome Schneider and his co-defendant Eric Witmeyer were indicted by
a federal grand jury in San Francisco on December 19, 2002. They were
charged with one count of conspiracy and 22 counts of mail and wire
fraud in connection with the marketing and sales to U.S. taxpayers of
offshore banks and/or corporations. The defendants then caused those
entities to be decontrolled, which was a process used by the
defendants to attempt to conceal the U.S. taxpayer's ownership in the
offshore bank or corporation. This was done in order to evade IRS
reporting requirements for taxpayers having an interest in foreign
accounts and to evade the payment of tax on income transferred to
and/or earned by the offshore bank accounts. Eric Witmeyer, an
attorney, pled guilty to the conspiracy count on January 23, 2003,
and agreed to cooperate with the government against Mr. Schneider.

In pleading guilty to conspiring to defraud the United States,
Schneider admitted that he and Witmeyer conspired to defeat and
obstruct the lawful functions of the Internal Revenue Service in its
ascertainment, computation, assessment and collection of income taxes
owed by U.S. taxpayers. He admitted marketing and selling to U.S.
taxpayers offshore entities such as those licensed by the South
Pacific Island of Nauru as international banks and other offshore
corporations. These entities operated in Vancouver, B.C., Canada,
under the names Premier Corporate Service, LTD; Premier Financial
Advisors, LLC; Premier Management Service LTD and Wilshire
Publishing.

Schneider represented to U.S. taxpayers that by means of their
ownership of the offshore entities, and so-called decontrol documents
to be prepared by counsel such as Witmeyer, the U.S. taxpayers could
conceal from the Internal Revenue Service, their ownership and
control of funds or assets they caused to be deposited into bank or
brokerage accounts held in the name of the offshore banks in
financial institutions located outside the United States. Witmeyer,
at Jerome Schneider's direction and request, based upon form
documents that Schneider supplied to Witmeyer, agreed to act as
counsel for the U.S. taxpayer and prepare the so-called decontrol
documents for the U.S. taxpayers who purchased an offshore entity
from Schneider. Jerome Schneider marketed and sold offshore entities
to U.S. taxpayers for approximately $15,000 to $60,000.
Witmeyer "decontrolled" the offshore entity for a fee of
approximately $15,000.

The so-called decontrol process included transferring the U.S.
taxpayer's interest in the offshore entity to a so-called Independent
Foreign Owner (IFO) in exchange for a promissory note in an amount
large enough to make it appear as if there was bona fide and
negotiated sale of the offshore entity to the IFO. The amount of the
promissory note was not the result of negotiations between the U.S.
taxpayers and the IFO. Rather, it was an arbitrary amount set by
Schneider.

Jerome Schneider selected the IFO for the U.S. taxpayers and despite
the purported decontrol of the offshore entity, Schneider understood
that the U.S. taxpayers in fact owned and controlled the offshore
entity and any accounts opened up in the name of the offshore entity
in any financial institution located outside the United States.
Jerome Schneider used financial institutions and entities located
outside the United States to conceal the activities of the offshore
entities from the Internal Revenue Service.

The prosecution is the result of an investigation by agents of IRS -
Criminal Investigation. Jay R. Weill, Chief of the Tax Division
prosecuted the case.

For Release: March 30, 2005

Debt Services Operations Settle FTC Charges

Three operations that scammed consumers out of more than one hundred
million dollars by falsely promising easy debt relief have settled
Federal Trade Commission charges that their business practices were
illegal. According to the FTC, in some cases, consumers' debt,
interest rates, and penalties increased and some consumers were forced
into bankruptcy. The companies and their principals will pay more than
$6 million combined in consumer redress and are permanently barred
from making deceptive claims about debt-related services. Two of the
operations and their principals also are barred from engaging in
abusive telemarketing practices, following FTC charges that they
repeatedly called consumers on the National Do Not Call Registry.

"Consumers who want to get out of debt are looking for services to
help relieve their financial troubles, not make them worse," said
Lydia Parnes, Acting Director of the FTC's Bureau of Consumer
Protection. "The FTC is committed to ridding the debt services
industry of companies who shatter consumer confidence and hurt
legitimate businesses' ability to help consumers."

National Consumer Council

In May 2004, the FTC filed a complaint against a group of companies
and individual defendants, fronted by "National Consumer Council"
(NCC), a purported nonprofit organization, that solicited customers
through an aggressive telemarketing and direct mail advertising
campaign that falsely promised free debt counseling. In fact, NCC's
role in the scheme was simply to generate leads for the other
defendants, who then charged consumers thousands of dollars in fees to
enroll in their debt negotiation programs. The defendants deceptively
claimed these programs were an effective way to stop creditors'
collection efforts and eliminate their debts. The FTC alleged that the
defendants failed to disclose important information to consumers
before they enrolled, including the fact that very few people were
able to reduce their debts through the debt negotiation programs;
consumers would suffer late fees, penalties, and other charges; and
that participation in the program might hurt their credit rating. A
court-appointed receiver determined that less than two percent of the
consumers who enrolled in the defendants' debt negotiation programs –
638 out of 44,844 consumers – actually completed them.

The FTC's complaint also alleged that the defendants violated the
Telemarketing Sales Rule (TSR), including the National Do Not Call
Registry provisions, by calling consumers who had placed their phone
numbers on the Registry and claiming that NCC was a nonprofit
organization exempt from the Do Not Call requirements. The complaint
further alleged that some of the defendants violated the
Gramm-Leach-Bliley (GLB) Act by failing to inform consumers how their
personal financial information would be used.

At the FTC's request, a federal district court appointed a receiver
over defendants National Consumer Council, an Arizona corporation;
National Consumer Council, a California corporation; National Consumer
Council, a Nevada corporation, London Financial Group; National
Consumer Debt Council, LLC; Solidium, LLC; J.P. Landis, LLC; Financial
Rescue Services, Inc. (FRS); Signature Equities, LLC; M&L Springfield
Trust; PC Hailey Trust; Via Lido Trust; and United Consumers Law
Group. The receiver has returned approximately $24 million in consumer
funds held in defendants' trust accounts. The receiver also is winding
down the corporations' business operations.

The FTC entered into separate settlements with the receivership
defendants and each of the individual defendants. The stipulated
settlement orders bar the defendants from making false claims for debt
negotiation services or any other product or service. The orders
require that, prior to enrolling any consumer in a debt negotiation
plan, the defendants must clearly disclose that: (1) late fees,
penalties, and interest will continue to accrue on the consumer's debt
until the consumer's creditors accept and receive a settlement; (2) a
consumer's creditors may still sue to collect on the debts and garnish
the consumer's wages; (3) interest rates applicable to the consumer's
debt may increase; (4) any money a consumer saves in negotiating a
settlement with a creditor must be treated as income for tax purposes;
and (5) a debt settled for less than the full amount owed may result
in a negative notation on the consumer's credit report. The orders
also prohibit the defendants from engaging in abusive telemarketing
practices, including violations of the National Do Not Call Registry,
and require them to comply with the GLB Act.

In addition, settlements with the corporate receivership defendants
require them to pay $1 million in consumer redress. The stipulated
orders against defendants Walter Haines, Paul Kardos, and Walter Ledda
require them to pay $605,000, $1,860,000, and $1,356,000,
respectively. The orders against each of these defendants include a
suspended judgment of $84.3 million, the amount of fees these
defendants received from consumers. If any of these defendants fail to
make their payments within the time allotted in the order, or if it is
found that they misrepresented their financial status, they will be
held liable for the entire $84.3 million. The stipulated orders
against defendants Mary Beth Harper and Martha Levitsky include a
suspended monetary judgment of $17.8 million for the fees their
company, defendant FRS, received from consumers; they will be liable
for the entire $17.8 million if it is found that they misrepresented
their financial condition to the FTC. The stipulated order against
defendant Harvey Warren includes a suspended monetary judgment of
$84.3 million for the fees received from consumers; Warren will be
liable for the entire $84.3 million if it is found that he
misrepresented his financial condition to the FTC.

Debt Management Foundation Services

In July 2004, the FTC charged Debt Management Foundation Services
(DMFS), four related corporations, and the three individuals that
control them with falsely representing that DMFS and its predecessors
provided debt management services and that DMFS is a nonprofit
corporation. The FTC alleged that DMFS and its affiliates falsely
represented that they could reduce consumers' debts by 50 percent,
reduce or eliminate interest on the debts, and provide assistance
before consumers' next credit card billing cycle. The FTC charged that
the defendants deceived consumers into paying up-front fees as high as
$1,000 and monthly fees of $20 to $49. The FTC also alleged that the
defendants violated the TSR by calling consumers whose phone numbers
were registered on the National Do Not Call Registry.

The stipulated final order provides that the court-appointed receiver
who took over DMFS and the four related corporations last summer will
liquidate the companies. The order also provides that the individuals
who operated DMFS must surrender their interest in these companies,
and that two of the individuals must make additional payments.
Defendant Dale Buird, Sr., must pay $200,000, and defendant Dale
Buird, Jr., must transfer assets in several accounts, totaling an
estimated $58,000, to the court-appointed receiver.

The order permanently prohibits the defendants from making false
claims about debt management services, including representing that
they can reduce consumers' debt or interest rates, that they provide
services before consumers' next billing cycle, or that they are a
nonprofit organization; billing customers without fully disclosing
material terms; and failing to provide required privacy notices under
the GLB Act. The order also permanently prohibits the defendants from
charging advance fees and failing to provide the written contracts and
notices of the right to cancel required by the Credit Repair
Organizations Act. In addition, the order bars the defendants from
selling consumer data and from calling consumers in violation of the
National Do Not Call Registry. If the individual defendants ever own
or manage a business that uses telemarketing, the order requires that
they monitor their telemarketers to ensure that they are not making
illegal calls.

The stipulated final order includes a suspended monetary judgment of
$11,035,065 in funds that were taken from consumers. If the defendants
fail to make the payments required by the order, or if it is found
that they misrepresented their finances, the court may enter an order
making the entire balance immediately due.

The complaint and stipulated final order name DMFS, One Star
Marketing, Inc., Debt Specialist of America, Inc. (a/k/a Debt
Management Foundation, Inc.), Ameridebt Group, Inc., Credit Counseling
Specialists of America, Inc., Dale Buird, Jr., Dale Buird, Sr., and
Shawn Buird as defendants.

Better Budget Financial Services

In November 2004, the FTC charged BBFS and its principals with falsely
claiming they could reduce consumer debt by 50 to 70 percent and
shorten the time period necessary to pay off the debt, in exchange for
a monthly fee of $29.95 to $39.95 plus 25 percent of any money a
consumer saved in a settlement with a creditor. The stipulated final
order requires Better Budget Financial Services, Inc., John Colon,
Jr., and Julie Fabrizio-Colon to turn over assets totaling
approximately $1.3 million to a court-appointed receiver. They are
barred from misrepresenting that they can reduce consumers' debts;
settle with consumers' creditors once consumers accumulate a certain
percentage of the total debt; and stop creditors from attempting to
collect on overdue payments. Each of the individual defendants also is
barred from marketing debt
management services without first obtaining a $2 million performance
bond, and from selling customer data. If it is found that the
defendants misrepresented their financial situation, they will be held
liable for $11,978,249, the estimated amount they took from consumers.

According to the FTC's complaint, the defendants advised consumers to
stop paying their creditors and save their money in an ordinary bank
account from which the defendants withdrew their monthly fee. The
defendants promised to settle consumers' debts with their creditors
once the consumers accrued a certain amount, such as one-half the
debt, in their BBFS account. The defendants further claimed that they
would contact consumers' creditors and get them to stop collection
attempts. The FTC charged that few consumers had all of their debts
settled by the defendants. In fact, consumers' debts increased due to
the imposition of late fees and penalties onto their accounts. Many
consumers were sued by their creditors and many were forced to file
for bankruptcy. Despite the defendants' promises, collection efforts
continued for consumers who followed BBFS's instructions and stopped
communicating with their creditors.

All the stipulated final orders announced today also contain standard
recordkeeping and reporting requirements to assist the FTC in
monitoring the defendants' compliance.

The FTC also recently announced a settlement with AmeriDebt, Inc., a
Maryland-based credit counseling firm that collected nearly $200
million in hidden fees from consumers across the country. AmeriDebt
will shut down its operation and transfer all existing accounts to a
reputable third party. For more information on the AmeriDebt case, see
the press release dated March 21, 2005.

The Commission vote to authorize staff to file the settlement
agreements was 5-0. All of the settlement agreements for NCC were
filed in the U.S. District Court for the Central District of
California on March 29, 2005. The order for DMFS was filed in the U.S.
District Court for the Middle District of Florida, Tampa Division, on
March 29, 2005. The order for BBFS was filed in the U.S. District
Court for the District of Massachusetts on March 10, 2005.

Consumer Education

The FTC offers numerous consumer education materials to help consumers
in debt learn about their options and help them decide which option is
right for them, including information on developing a budget, dealing
with creditors and debt collectors, and choosing the right debt
counselor or debt management plan (DMP). When choosing a credit
counselor or DMP, the FTC recommends that consumers:

     * Look for an organization that offers a range of services,
including budget counseling, and savings and debt management classes.
Avoid organizations that push a DMP as your only option before they
spend a significant amount of time analyzing your financial situation.
     * Get a written agreement and read it carefully. Make sure it
includes a price quote, the services to be performed, how long it will
take for you to complete the plan, and the organization's business
name and address.
     * Beware of high fees or "voluntary contributions" that can cause
you to fall deeper into debt.
     * Make sure your creditors will work with the credit counseling
organization you choose.
     * Confirm that your creditors have accepted the plan before making
payments to the credit counseling organization.

To make a DMP effective, the FTC recommends that consumers:

     * Pay your bills until your creditors approve the plan.
     * Call your creditors to make sure your credit counseling
organization is paying them on time.
     * Read your monthly statements when they arrive. Report errors to
your creditors immediately.

The FTC cautions consumers to steer clear of any "debt negotiation"
organizations that:

     * Guarantee they will remove your unsecured debt;
     * Insist you pay high monthly service fees;
     * Want you to pay them every month, not your creditors; or
     * Say they can get accurate negative information taken off your
credit report.

Note: Stipulated final orders are for settlement purposes only and do
not constitute an admission by the defendant of a law violation. A
stipulated final order requires approval by the court and has the
force of law when signed by the judge.

Copies of the orders are available from the FTC's Web site at
http://www.ftc.gov and also from the FTC's Consumer Response Center,
Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The
FTC works for the consumer to prevent fraudulent, deceptive, and
unfair business practices in the marketplace and to provide
information to help consumers spot, stop, and avoid them. To file a
complaint in English or Spanish (bilingual counselors are available to
take complaints), or to get free information on any of 150 consumer
topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the
complaint form at http://www.ftc.gov. The FTC enters Internet,
telemarketing, identity theft, and other fraud-related complaints into
Consumer Sentinel, a secure, online database available to hundreds of
civil and criminal law enforcement agencies in the U.S. and abroad.

MEDIA CONTACT:

     Jen Schwartzman
     Office of Public Affairs
     202-326-2674

STAFF CONTACTS:

     National Consumer Council:
     Jennifer Larabee or Faye Chen Barnouw
     FTC Western Region, Los Angeles
     310-824-4343

     Debt Management Foundation Services:
     Daniel Salsburg
     Bureau of Consumer Protection
     202-326-3402

     Better Budget Financial Services:
     Barbara Anthony or Carole A. Paynter
     FTC Northeast Region
     212-607-2829

NCC:
(FTC File No. 032-3185) (Civ. No. SACV04-0474CJC(JWJX))

DMFS:
(FTC File No. 042-3029) (Civ. No. 8:04-cv-01674-EAK-MSS)

BBFS:
(FTC File No. 041-2326) (Civ. No. 04-12326 (WGY))

(http://www.ftc.gov/opa/2005/03/creditcouncel.htm)

Yet another major Las Vegas corporation services provider is caught
up in a scam.

/////////////////////////////////

Trustee targets tax firm founder

By Kevin Rademacher / Staff Writer

The trustee in charge of liquidating the controversial Las Vegas-
based tax service company National Audit Defense Network has filed a
new round of complaints seeking to recover funds on behalf of the
estate.

In the latest round of complaints, Trustee William Leonard is going
after NADN founder Cort Christie for allegedly receiving millions of
dollars in transfers from NADN as the company was in failing
financial health.

Also named in the complaint were two other companies allegedly
controlled by Christie -- Nevada Corporate Headquarters Inc. and
American Binder Co.

"Millions of dollars in fee income passed through the NADN's coffers
prior to and during its Chapter 11 case before the doors of the
business were closed," the complaint said. "Much of the money
collected by the debtor is no longer in its control because such
funds were fraudulently transferred to third parties, including but
not limited to Christie, NCH and Binder."

Leonard also alleges that "Christie committed two or more acts
constituting a pattern of racketeering activity."

Christie could not be reached for comment.

In a separate complaint Leonard is seeking more than $1 million --
also for allegedly fraudulent transfers -- to Keyword Gold Inc. and
its principals, Dorian Reed and Joseph Prokop.

The complaint also names Keyword Gold's alleged successor company,
Pacifica Labs Inc., its parent company, American Management Group
Inc., and Donald D. Merritt.

Leonard did not, however, allege racketeering in the Keyword Gold
complaint.

The liquidation of National Audit Defense Network, which began in May
2004, followed a series of problems involving the company. In 2002
both the Federal Trade Commission and the Nevada attorney general's
office sued NADN, alleging it failed to honor money-back guarantees.

In the summer of 2003, NADN's troubles mounted when it filed for
bankruptcy protection. The largest creditor in the filing was the
Internal Revenue Service, which had a $1.3 million claim against the
company.

At that time, Weston Coolidge, the company's president and owner,
blamed the bankruptcy filing not on the IRS claim but on a $1 million
claim against the company by the Securities and Exchange Commission.
He said the SEC's action was based on an investment NADN executives
made in a company that later turned out to be running a Ponzi scheme.

The IRS took on the tax firm with an April 2004 court filing that
sought a temporary restraining order against the company. Attorneys
for the Department of Justice said NADN was engaged in running a tax
scam and filing false federal income tax returns for customers,
costing the government an estimated $324 million.

Since Leonard took over as trustee, he has claimed that NADN paid
more than $12 million to companies controlled by top executives and
managers in the months before it sought bankruptcy protection and,
ultimately, liquidation.

Coolidge bought the company in 2002 from Christie and co-founder
Robert Bennington, who committed suicide in June 2004.

In other recent legal filings in the case, Leonard charges that a
series of banks have failed to turn over more than $1 million in
reserve funds held for credit card processing services. Leonard
alleges that HSBC Bank USA and North American Bancard Inc. are
holding $212,382 belonging to NADN's estate.

Optimal Payments Ltd., Leonard also alleges, is holding $957,984 in a
reserve account that belongs to the estate.

He also is taking exception to fines that Optimal has assessed
against NADN that were not authorized by the original service
agreement.

Kevin Rademacher covers utilities and finance for In Business Las
Vegas and its sister publication, the Las Vegas Sun. He can be
reached at (702) 259-4069 or by e-mail at kevinr@....

FOR IMMEDIATE RELEASE
THURSDAY, APRIL 28, 2005
WWW.USDOJ.GOV
TAX
(202) 514-2007
TDD (202) 514-1888


JURY CONVICTS TWO COLORADO TAX FRAUD PROMOTERS


Scheme Used Offshore Bank Accounts, Phony Loans and Debit Cards To
Hide Income and Assets from IRS


WASHINGTON, D.C. - Eileen J. O'Connor, Assistant Attorney General for
the Justice Department's Tax Division; William J. Leone, U.S.
Attorney for the District of Colorado; and Nancy Jardini, Chief,
Internal Revenue Service (IRS) Criminal Investigation Division, today
announced that following a nine-week trial, a federal jury in Denver,
Colorado convicted Paul D. Harris and Lester R. Rutherford on charges
of conspiracy and willfully aiding and assisting in the preparation
of fraudulent tax returns. The jury did not reach a unanimous verdict
as to the third defendant, Robert N. Bedford.

"This is one of many pending criminal prosecutions involving the use
of foreign bank accounts, trusts and other schemes to hide income
from the IRS," said Assistant Attorney General O'Connor. "Promoting
fraudulent tax schemes is a ticket to federal prison."

"Individuals who promote and participate in abusive trust schemes in
order to hide the true ownership of assets and income will be held
accountable and punished for their crimes," said Nancy Jardini,
Chief, IRS Criminal Investigation Division. "The IRS is committed to
maintaining public confidence in the fairness of tax laws."

In November, 2002, Harris and Retherford, residents of Colorado,
together with Bedford, a resident of Florida, were charged with
conspiring to defraud the United States. In addition, Harris and
Retherford were charged with 26 counts of aiding and assisting the
filing of false income tax returns for the years 1996 through 1999.
According to the indictment, Harris, Retherford, and Bedford set up
shell corporations for small business owners that were used to
conceal nearly $9 million in taxable income in secret accounts in the
Turks and Caicos Islands and other foreign countries from 1992
through 1999. The indictment also alleged that although the
defendants made it appear as though the offshore transfers were
payments for consulting services, most Tower members used debit cards
and loans to spend the money they had concealed offshore. To make use
of this service, many members allegedly paid an initiation fee of
$50,000, according to the indictment.

On June 28, 2002, in Massachusetts, John Mikutowicz, a Tower member,
was convicted on charges of conspiracy, tax evasion and filing false
corporate tax returns and was sentenced to a term of imprisonment.

Assistant Attorney General O'Connor and U.S. Attorney Leone thanked
Assistant U.S. Attorney Thomas O'Rourke and Tax Division Trial
Attorney Robert J. Livermore, who prosecuted the case. They also
thanked the special agents of the IRS whose assistance was essential
to the successful investigation and prosecution of the case.

Additional information about the Justice Department's Tax Division
and its enforcement efforts may be found at http://www.usdoj.gov/tax.

UNITED STATES, PLAINTIFF v. Anthony L. HARGIS, individually and d/b/a
Anthony L. Hargis & Co., DEFENDANT. U.S. District Court, Central
Dist. of California, No. SACV04-273-DOC, Opinion dated 12/06/2004.

Darwin Thomas, USLA--Ofc of US Atty, Los Angeles, CA, Michael R Pahl,
US Department of Justice, Washington, DC, for Plaintiff.

Anthony L Hargis, Santa Ana, CA, for Defendant.

United States District Court, C.D. California,

ORDER GRANTING SUMMARY JUDGMENT AND DENYING MOTION FOR CONTINUANCE
Judge: CARTER, J.

Before the Court is a motion by the United States for summary
judgment on the grounds that this Court has already granted a
preliminary injunction and that no material facts are in dispute.
Defendant, Anthony L. Hargis, opposes the motion for summary judgment
and moves pursuant to Federal Rule of Civil Procedure 56(f) for a
continuance of the consideration of the motion for summary judgment
on the grounds that Defendant has not had sufficient opportunity to
conduct discovery in this matter. After considering the moving,
opposing, and replying papers, and for the reasons set forth below,
the Court GRANTS the motion for summary judgment and DENIES the
motion to continue the matter.

I. BACKGROUND
The United States brought this action under 26 U.S.C. § 7408 to
enjoin Mr. Hargis from engaging in activity subject to penalty under
26 U.S.C. § 6700, such as organizing or selling a plan or arrangement
and making a statement regarding the tax benefits of participating in
the plan or arrangement which Mr. Hargis knows to be false or
fraudulent. Compl. p 2. Mr. Hargis operates a private bank as Anthony
L. Hargis & Co. ("ALH & Co."). Plaintiff's Statement of
Uncontroverted Material Facts [hereinafter UF], Ex. 9, 037. Mr.
Hargis promotes his private banking services through the use of a
website, http://www.anthonyhargis.com, which offers customers a
purportedly private banking system as an alternative to the federal
reserve system and also offers "legal arguments to demonstrate the
unconstitutionality of the Internal Revenue Code." UF, Ex. 1.

Mr. Hargis offers his private banking services as a way for his
customers to have "just a little bit more privacy." UF, Ex. 9, 039.
When asked to identify from what his customers have privacy, he
responded:

I woke up one day about 30–35 years ago and decided that this country
is occupied by thieves, said we've got a nation out there that is
cannibalizing our children. If you measure the amount of the
cannibalization by the national debt. The national debt is a process
by which one generation cannibalizes the next generations. We've got
enough national debt out there to cannibalize the next 20 generations
of Americans. A prime instrument that is used to cannibalize our
children is the Federal Reserve System.
UF, Ex. 9, 040. But Mr. Hargis acknowledges that his customers use
his services to obtain privacy for various reasons by stating that
some of his customers "want to hide money from their wives, some
their creditors, some the tax collector." Id. Additionally, Mr.
Hargis' website promotes his private banking services as
follows: "The most comprehensive and subtle means by which people are
enslaved is effected by central banking. As long as we continue using
Federal Reserve notes and Federal Reserve bank accounts, we continue
to feed the bandits of mankind." UF, Ex. 2, 004. The website also
states that the Federal Income Tax "enriches domestic robbers at the
expense of everyone else." UF, Ex. 4, 010.

Mr. Hargis described the way in which his private banking system
works in an interview with Internal Revenue Agent Shereen Hawkins.
UF, Ex. 9, 040. Customers make deposits with ALH & Co. by either
depositing their own funds or requesting that payments intended for
them be made directly to "Anthony L. Hargis" or "A.L.H.," or Mr.
Hargis' affiliate "Leon Steinhardt" or "L.R.S." UF, p 11. The
customer receives a receipt for his or her deposits. UF, Ex. 9, 042.
The checks used to deposit funds into ALH & Co. for any particular
customer do not generally bear that customer's name. Instead, the
checks bear a handwritten number in the upper right-hand corner, and
that number identifies the customer. UF, Ex. 9, 043. Of the funds
deposited by customers, ALH & Co. deposits ten to twenty percent of
the funds into banks participating in the federal reserve system and
invests the remainder in gold and other types of investments. UF, Ex.
9, 040. The customer can withdraw funds from ALH & Co. upon paying a
fee and providing one or two days notice. UF, Ex. 9, 042. Also, ALH &
Co. directly pays its customers' monthly bills based on information
provided to ALH & Co. by the customer. UF, Ex. 9, 044.

The IRS has identified 257 customers of ALH & Co., including Mr.
Hargis and his affiliate Mr. Steinhardt, based on the identification
numbers placed on the checks. The government has specifically named
twenty-seven customers of ALH & Co. who have outstanding federal tax
debts, have failed to file federal tax returns, or are currently
under audit. UF pp 19–129. The IRS's investigation reveals that ALH
customers have incurred federal tax debts ranging from $1,291 to
$430,388, for a total tax debt of $2,041,697. UF p 130.

The government filed this action on March 9, 2004, seeking an
injunction against Mr. Hargis pursuant to 26 U.S.C. s 7408 for
alleged violation of 26 U.S.C. § 6700. On July 23, 2004, Mr. Shawn R.
Perez was substituted as counsel in the place of Mr. Hargis who had
previously been representing himself. On August 9, 2004, this Court
granted a preliminary injunction against Mr. Hargis, specifically
finding that Mr. Hargis promoted and sold participation in ALH & Co.;
that ALH & Co. constitutes a plan or arrangement under 26 U.S.C. §
6700; that Mr. Hargis has not made a direct statement concerning the
tax benefits of participation in ALH & Co., but that Mr. Hargis
directly promotes privacy as an advantage of ALH & Co. and implicitly
links privacy to privacy from the United States government and the
Internal Revenue Service, as well as the non-payment of taxes, in a
number of ways; that the promotion of the ability to conceal funds
from the United States government and the Internal Revenue Service in
order to facilitate non-payment of taxes constitutes promotion of a
tax benefit under 26 U.S.C. § 6700; that Hargis knew or had reason to
know that concealment of funds from the United States government and
the Internal Revenue Service does not provide a legitimate tax
benefit to his customers; that statements concerning the concealment
of funds were material; and that a preliminary injunction was
necessary to prevent further recurrence of the conduct described. On
September 10, 2004, counsel for the United States met with counsel
for Mr. Hargis to discuss the instant motion for summary judgment. On
November 3, 2004, the United States filed the instant motion for
summary judgment.

II. SUMMARY JUDGMENT STANDARD
Summary judgment is proper if "the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as a
matter of law." Fed.R.Civ.P. 56(c).

The Court must view the facts and draw inferences in the manner most
favorable to the non-moving party. United States v. Diebold, Inc.,
369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962). However,
the existence of some alleged factual dispute between the parties
will not defeat an otherwise properly supported motion for summary
judgment; to defeat the motion, the non-moving party must
affirmatively set forth facts showing there is a genuine issue for
trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248–49, 106
S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The moving party bears the
initial burden of demonstrating the absence of a genuine issue of
material fact for trial. Id. at 256, 106 S.Ct. at 2514. When the non-
moving party bears the burden of proving the claim [pg. 2004-7277] or
defense, the moving party can meet its burden by pointing out the
absence of evidence of a genuine issue of material fact from the non-
moving party. Musick v. Burke, 913 F.2d 1390, 1394 (9th Cir.1990).
The moving party need not disprove the other party's case. Celotex
Corp. v. Catrett, 477 U.S. 317, 323–25, 106 S.Ct. 2548, 2553–54, 91
L.Ed.2d 265 (1986).

When the moving party meets its burden, the "adverse party may not
rest upon the mere allegations or denials of the adverse party's
pleading, but the adverse party's response, by affidavits or as
otherwise provided in this rule, must set forth specific facts
showing that there is a genuine issue for trial. If the adverse party
does not so respond, summary judgment, if appropriate, shall be
entered against the adverse party." Fed.R.Civ.P. 56(e). "The mere
existence of a scintilla of evidence ... will be insufficient; there
must be evidence on which the jury could reasonably find for [the
opposing party]." Anderson, 477 U.S. at 252, 106 S.Ct. at 2512.

Rule 56(e)'s requirement that the nonmoving party set forth specific
facts showing that there is a genuine issue for trial is qualified by
Rule 56(f)'s provision that "summary judgment be refused where the
nonmoving party has not had the opportunity to discover information
that is essential to his opposition." Anderson, 477 U.S. at 250 n. 5,
106 S.Ct. at 2511 n. 5. Rule 56(f) states:

Should it appear from the affidavits of a party opposing the motion
that the party cannot for reasons stated present by affidavit facts
essential to justify the party's opposition, the court may refuse the
application for judgment or may order a continuance to permit
affidavits to be obtained or depositions to be taken or discovery to
be had or may make such other order as is just.
Fed.R.Civ.P. 56(e).

In order to obtain a continuance under 56(f), the party seeking
additional discovery must "proffer sufficient facts to show that the
evidence sought exists ... and that it would prevent summary
judgment." Nidds v. Schindler Elevator Corp., 113 F.3d 912, 921 (9th
Cir.1996). Further, the Court may deny further discovery if the
movant has failed diligently to pursue discovery in the past. Id.

III. ANALYSIS

In order to obtain a permanent injunction against Mr. Hargis under 26
U.S.C. § 7408, the government must show that Mr. Hargis engaged in
conduct that violates 26 U.S.C. § 6700 and that injunctive relief is
appropriate to prevent recurrence of such conduct. In order to
establish a violation of 26 U.S.C. § 6700, the government must show
that Mr. Hargis (1) organized or sold or participated in the
organization or sale of an entity, plan, or arrangement; (2) made or
caused to be made false or fraudulent statements concerning "the
allowability of any deduction or credit, the excludability of any
income, or the securing of any other tax benefit" to be derived from
participating in the entity, plan, or arrangement; (3) knew or had
reason to know that the statements made were false or fraudulent as
to any material matter. 26 U.S.C. § 6700.

In support of its motion for summary judgment, the United States has
submitted the same exhibits submitted in support of its motion for a
preliminary injunction. Compare UF, Exs. 1–26 with Decl. of Shereen
Hawkins, Exs. 1–26. Under Rule 65, "any evidence received upon an
application for a preliminary injunction which would be admissible
upon the trial on the merits becomes part of the record on the trial
and need not be repeated upon the trial." Fed.R.Civ.P. 65(a)(2).
Although courts generally hold an evidentiary hearing before
converting a preliminary injunction into a permanent
injunction, "such a hearing is not necessary where no triable issues
of fact are involved." United States v. McGee, 714 F.2d 607, 613 (6th
Cir.1983). On the basis of those exhibits submitted in support of the
motion for a preliminary injunction as well as the instant motion,
this Court granted a preliminary injunction in favor of the United
States. In granting the preliminary injunction, the Court
specifically found that on the basis of the evidence presented by the
United States it was more likely than not that Mr. Hargis had
violated 26 U.S.C. § 6700 and that preliminary injunction was proper.

On the motion for summary judgment, the evidence submitted by the
government meets the government's initial burden of demonstrating the
absence of a genuine dispute of material fact. With respect to the
first element of a violation of § 6700, Mr. Hargis admits that he is
operating a private bank, ALH & Co., and has promoted and sold
participation in that private bank to investors and shareholders. See
UF, Ex. 9, 037-038. With respect to the second element of a violation
of § 6700, the government has demonstrated that although Mr. Hargis
has not made any direct statement concerning the tax benefits of
participating in ALH & Co., Mr. Hargis has touted privacy as the main
benefit of participating in ALH & Co. and he implicitly links that
privacy as privacy from the United States government and the Internal
Revenue Service. See UF, Ex. 9, 040. Mr. Hargis has acknowledged that
some of his customers use his services to conceal money from tax
authorities:

We're not, we do not apply these assets to the destruction of this
country. That what I'd like to think. That is the reason that I
started this company. That's the reason that I would like all my
customers to patronize the company for, but they all have their
different reasons. Some want to hide money from their wives, some the
creditors, some the tax collector.
Id. Mr. Hargis stated that he does not believe that failing to file a
tax return or pay taxes is unlawful or unethical and he indicated
that he would not assist law enforcement authorities in enforcing
federal tax laws. Id. at Ex. 9, 044. 1 Mr. Hargis' website,
http://www.anthonyhargis.com, which is used to promote his private
banking service, prominently argues that the federal income tax is
unconstitutional. UF, Ex. 3, 006. The same website describes ALH &
Co.'s private banking services as such: "The most comprehensive and
subtle means by which people are enslaved is effected by central
banking. As long as we continue using Federal Reserve notes and
Federal Reserve bank accounts, we continue to feed the bandits of
mankind." UF, Ex. 2, 004. Mr. Hargis' website also states that the
Federal Income Tax "enriches domestic robbers at the expense of
everyone else." UF, Ex. 4, 010. These facts, taken together, are
sufficient to establish that Mr. Hargis has represented to his
customers that they could secure a tax benefit by reason of their
participation in ALH & Co. See Nat'l Commodity & Barter Assoc. /
Nat'l Commodity Exch. v. United States, 843 F.Supp. 655, 664–65 [73
AFTR 2d 94-1388] (D.Colo.1993), aff'd, 42 F.3d 1406 [74 AFTR 2d 94-
7385] (10th Cir.1994), cert. denied, 516 U.S. 807, 116 S.Ct. 52, 133
L.Ed.2d 17 (1995). Finally, with respect to the third element of a
violation of s 6700, the government has established that Mr. Hargis
knew that his private banking system could not afford investors or
customers privacy or protection from the I.R.S.: "Generally, I regard
it as impossible to cheat at [taxes]." UF, Ex. 9, 041. Thus, the
United States has met its initial burden of demonstrating that no
genuine dispute of material fact exists for trial.

Mr. Hargis has not affirmatively set forth any facts that demonstrate
that a genuine dispute of fact exists. But Mr. Hargis has attempted
to show that the Court should deny summary judgment at this time and
permit Mr. Hargis to conduct discovery prior to ruling on the
government's motion for summary judgment. Thus, the issue before the
Court is whether Mr. Har [pg. 2004-7279] gis is unable to present by
affidavit facts essential to justify his opposition, and whether Mr.
Hargis has proffered sufficient facts to show that Mr. Hargis seeks
existing evidence that would prevent summary judgment. Additionally,
Mr. Hargis' prior diligence in attempting to obtain the evidence
sought is relevant to the Court's analysis.

A. Evidence Sought Would Not Prevent Summary Judgment

Mr. Hargis seeks "the deposition testimony of District Counsel
Attorney Kevin Coy, District Counsel Attorney Nicholas Richards,
Internal Revenue Service Group Manager Dianne Kisselberg and Revenue
Agent Shereen Hawkins." Def. Opp. Brief, 8–9. These are all
government representatives who were present at the interview with Mr.
Hargis on March 5, 2003. UF, Ex. 9, 034.

The first stated goal of the discovery sought is to demonstrate that
the exhibits submitted by the government do not contain any statement
by Mr. Hargis that was known to him to be false or fraudulent with
respect to the "excludability of income." But the discovery Mr.
Hargis seeks is not germane to achieving this goal. The determination
of whether the government's exhibits prove that Mr. Hargis is
violating s 6700 is a legal conclusion, which is properly made by the
Court, not by witnesses.

Mr. Hargis also hopes that deposing the witnesses named above will
show that the government "will be unable to identify any other
extrinsic third party statements, documents, or other memorabilia
they considered which would have allowed them to conclude that
Anthony L. Hargis' [sic] lied in his statements in plaintiff's
Exhibit 9 at pages 038, 039 and 040." Def. Opp. Brief at 9. Although
it is not immediately clear to the Court which particular statements
Mr. Hargis is referring to, Mr. Hargis would not be able to defeat
the motion for summary judgment simply by indicating a lack of
further evidence favorable to the government beyond what the
government has already submitted. The government has met its initial
burden and need not produce any further evidence until Mr. Hargis
affirmatively puts forth evidence demonstrating the existence of a
genuine dispute of material fact.

Mr. Hargis also seeks additional time to complete discovery in order
to show that "the 23 separately named individuals and cancelled
checks, Exhibits 10–26, ... do not reveal any specific identifier
proving that these were deposits into these individuals' accounts
maintained by ALH," Def. Opp. Brief, 10, and that the government's
claim that the named individuals failed to file federal tax returns
and owe federal taxes is unsubstantiated and lacking the requisite
notices. Id. Here, Mr. Hargis has failed to demonstrate how deposing
Internal Revenue Service Agents and District Counsel Attorneys is
necessary to prove that the deposits at issue were not deposits into
the accounts of the named individuals or that the individuals named
have not actually failed to file tax returns or pay taxes. Mr. Hargis
has apparently made no effort to depose a single ALH & Co. customer
of those named by the government as failing to file tax returns and
incurring federal tax debts. Further, Mr. Hargis himself has not
offered any affirmative proof with respect to the checks addressed
to "ALH" despite the fact that he owns and operates ALH & Co. In
other words, because Mr. Hargis has failed to provide the Court with
the evidence relating to ALH & Co. customers to which Mr. Hargis
personally has access, he cannot now escape summary judgment by
arguing that he has not been able to obtain evidence from government
witnesses.

B. Lack of Diligence

Although the reasons cited above are sufficient to defeat Mr. Hargis'
motion for a continuance under Rule 56(f), the Court also notes the
lack of diligence Mr. Hargis has exercised in preparing to oppose the
government's motion for summary judgment. Mr. Hargis and his counsel
knew that the government intended to file this motion as of the
conference of the parties on September 10, 2004. Although the Local
Rules require that the conference occur only twenty days prior to the
filing of the motion, the government waited almost two months to file
the instant motion. See L.R. 7-3. Further, Mr. Hargis did not notify
the Court that he had not yet accomplished the discovery sought until
well over two months after learning of the government's intention to
move for summary judgment. Between September 10, when Mr. Hargis
learned of the government's intention to move for summary judgment,
and November 23, when Mr. Hargis filed his request for a continuance,
Mr. Hargis apparently made no effort to conduct formal or informal
discovery and made no effort to obtain this Court's assistance with
respect to obtaining the discovery desired. This lack of diligence
further indicates that Mr. Hargis is not entitled to the continuance
sought. See Nidds, 113 F.3d at 921.

IV. DISPOSITION
For the foregoing reasons, the government's motion for summary
judgment is GRANTED and Mr. Hargis' motion for a continuance is
DENIED.

IT IS SO ORDERED.


----------------------------------------------------------------------
----------
1

The government's Exhibit 9 is a transcript of a taped interview with
Mr. Hargis that occurred on March 5, 2003. During that interview, Mr.
Hargis indicated that if any of his customers were engaged in
criminal activity or wrongdoing he would assist law enforcement
authorities in stopping the criminal activity, but he expressly
excluded failing to file tax returns:

Mr. Hargis: ... If you can demonstrate to me that any of my customers
are engaged in criminal activity or conducting any scam, I will
cooperate with you 110%. I will do everything, I want to put these
people down....
Mr. Hargis: If they were engaged in criminal activity or anything
that's unethical ...

Shereen Hawkins: And that doesn't include not filing tax returns?

Mr. Hargis: Right, I regard income tax as a declaration of war
against the American people. But you'll hear about that.
UF, Ex. 9, 044.

Just stumbled across this press release from last year. Note
particularly the comments relating to Nevis American Trust Company.
_______________________


http://www.usdoj.gov/usao/ct/Press2004/20041101-1.html

November 1, 2004

WILTON MAN SENTENCED FOR FILING FALSE TAX RETURN

Kevin J. O'Connor, United States Attorney for the District of
Connecticut, today announced that BRIAN M. O'CONNELL, age 50, of
Wilton, Connecticut, has been sentenced to four years of probation,
the first six months of which must be served in home confinement, for
willfully aiding and assisting in the filing of a false 1999 tax
return for his corporation, the O'Connell Group, Inc. During
sentencing proceedings on Friday, October 29, in New Haven federal
court, Senior United States District Judge Peter C. Dorsey furthered
ordered O'CONNELL to pay a fine in the amount of $7,500, and to
perform 300 hours of community service during the first two years of
his probation. In addition, O'CONNELL was ordered to file all tax
returns and resolve all tax arrearage and penalties. On April 19,
2004, O'CONNELL pleaded guilty to the charge.

According to documents filed with the Court and to statements made in
court, O'CONNELL is the operator of The O'Connell Group, Inc., which
is an executive recruiting business. In 1999, after reading the
book "The Offshore Advantage" by Terry Neal, O'CONNELL contacted
Offshore Corporate Services and Terry Neal for advice regarding
protection of personal assets. With the assistance of Neal and
others, and through the Nevis American Trust Company, O'CONNELL set
up three international business corporations (International
Recruiters Cooperative, Leading Edge Recruiting Network and Eagle
Capital Finance Corporation) and one corporation in Nevada (Private
Source Lending). O'CONNELL then used these corporations to divert
corporate funds offshore and to bring funds back into the United
States as fictitious loans.

Nevis American Trust Company of Nevis, West Indies, establishes
offshore bank accounts in Nevis and other foreign countries in order
for its clients to conduct financial transactions in secret, and to
hide income and assets from the Internal Revenue Service.

In order to move money offshore, O'CONNELL created false invoices
from International Recruiters Cooperative to The O'Connell Group to
justify the payments that were made to the offshore corporation.
Amounts sent offshore were then taken as false deductions on The
O'Connell Group's Corporate Tax Return. International Recruiters
Cooperative then transferred most of its money to Leading Edge
Recruiting Network for fictitious business expenses. Leading Edge
Recruiting Network then loaned money to Eagle Capital Finance
Corporation, which loaned money to Private Source Lending. O'CONNELL
then loaned himself money from Private Source Lending in the form of
a mortgage that was secured by his personal residence. O'CONNELL also
took false deductions on his personal income tax return for interest
paid on that fictitious mortgage loan.

Through this scheme, the tax loss to the Government was $143,718.

Due to O'CONNELL's cooperation with the Government in its
investigation and prosecution of the promoters of this tax evasion
scheme, Judge Dorsey departed downward from the Sentencing Guideline
range of 15 to 21 months of imprisonment.

On April 13, 2004, Neal pleaded guilty to conspiracy to defraud the
United States by impeding the Internal Revenue Service.

This case was investigated by special agents of the Internal Revenue
Service - Criminal Investigation.



CONTACT:


U.S. ATTORNEY'S OFFICE
Tom Carson
(203) 821-3722
thomas.carson@...

FOR IMMEDIATE RELEASE
WEDNESDAY, JULY 1, 2005
WWW.USDOJ.GOV
TAX
(202) 514-2007
TDD (202) 514-1888


SHELBY COUNTY, ILLINOIS INSURANCE SALESMAN CONVICTED OF TAX EVASION,
WIRE FRAUD AND MONEY LAUNDERING


Defendant Ordered to Pay Restitution of Over $1.1 Million


URBANA, IL - Denny R. Patridge of Shelby County, Illinois was
convicted today of tax evasion, wire fraud, and money laundering
today in a U.S. District Court. Eileen O'Connor, Assistant Attorney
General for the Justice Department's Tax Division; Jan Paul Miller,
United States Attorney for the Central District of Illinois, and
Nancy Jardini, Chief of the Internal Revenue Service (IRS) Criminal
Investigation Division.

After almost 13 days of evidence and approximately five and a half
hours of deliberation, the jury convicted Denny R. Patridge, age 56,
of evading the payment of his 1996 and 1997 personal income taxes;
evading the assessment of his 1999 personal income taxes, two counts
of wire fraud and two counts of money laundering. Patridge was
acquitted on one charge of willfully filing a false tax return for
1998.

"People who develop and use schemes to hide income and assets from
the IRS and who evade their tax obligations should expect to be
prosecuted and convicted, and to serve time in federal prison," said
Assistant Attorney General O'Connor.

U.S. Attorney Miller stated, "Today's jury verdict makes it clear
that those who engage in "shell-games" to avoid paying their fair
share in taxes will be held accountable."

"This conviction confirms that the IRS is determined to stop abusive
tax schemes. Promoters as well as those who knowingly invest in the
use of abusive trust schemes for the purpose of evading taxes will be
pursued by the IRS," stated Nancy Jardini, Chief of the IRS Criminal
Investigation Division. "We will continue to investigate and
recommend for prosecution those individuals who willfully disobey the
tax laws."

Denny Patridge operated an insurance business known as Patridge
Insurance Services, Inc. from an office in his Strasburg home. The
evidence presented at trial established that Patridge
established "trusts" which he used to conceal his earnings, hide the
origin of his income, deceive the Internal Revenue Service, and
circumvent personal income taxes. Patridge placed funds in bank
accounts which bore the names of his "trusts" and claimed on trust
tax returns that the funds had been distributed to an offshore trust.
At all times, however, Patridge retained full control over funds in
the trust bank accounts and enjoyed the beneficial use of those
funds, which made the income taxable to him personally.

The trial evidence also established that Patridge did not report a
substantial amount of his income on returns he filed for 1996 and
1997. In 2000, after the IRS notified Patridge that it had made a
formal assessment of the 1996 and 1997 back taxes he owed, Patridge
liquidated his investment accounts, set up an "offshore" account, and
placed approximately $200,000 in the offshore account. Patridge also
evaded approximately $19,523 in taxes for calendar year 1999 on
taxable income of approximately $76,796. He evaded those taxes by,
among other things, transferring money he earned as income to a
foreign account, concealing that money from the IRS, using the money
to pay personal expenses, and failing to file an individual income
tax return.

According to the evidence presented at trial, shortly after the IRS
informed Patridge that a lien could be placed on his property if he
failed to pay his 1996 and 1997 income taxes, Patridge set up a
system to hide his assets from the IRS. He began to move his money
offshore to an account that was under his control but not under his
name. He established a new account at Edgar County Bank and Trust in
Paris, Illinois, in his own name, through which funds could be
directed offshore. In October, 2000, he wired approximately $200,000
in funds from the account at Edgar County Bank to an account at a
bank in St. Kitts held in the name of Nevis American Trust Company,
an entity which maintained the funds on behalf of Sultan Services,
Ltd. Sultan was under Patridge's direction.

After he transferred $200,000 to St. Kitts, Patridge then took steps
to prevent the IRS from obtaining a first lien on his real estate. He
caused the mortgage on his home in Strasburg to be recorded with the
clerk of Shelby County, Illinois, with a $100,000 "loan" from a
corporation controlled by Patridge. In October 2000, Patridge wired
$100,000 from an offshore location to a corporation he controlled in
the U.S. The purpose of the transfer was to provide the corporation
with sufficient funds to "loan" Patridge $100,000, using his home in
Strasburg as security for the loan. Then, after Patridge transferred
$100,000 from offshore to the U.S. and established a false mortgage,
he transferred the money back offshore and was able to use the money
as he personally desired.

The evidence also showed that Patridge had obtained the sham trusts
that he used to conceal assets and evade taxes from an entity known
as Aegis, located in Palos Hills, Illinois, and that Patridge
assisted in the sale of at least one Aegis trust package. Eight
individuals associated with Aegis are currently under indictment in
the Northern District of Illinois for various offenses related to the
sale and promotion of these trusts. Three tax preparers associated
with Aegis have also been indicted in the Northern District of
Illinois, and two of those preparers have pleaded guilty.

Patridge also utilized a business, known occasionally as Offshore
Consulting Services (OCS) and Laughlin, Inc., run by Terry Neal out
of Portland, Oregon to set up a nominee company in St. Kitts, and
Nevis and one in Reno, Nevada. At least three individuals associated
with OCS and Laughlin, Inc., have been indicted in the District of
Oregon.

Sentencing is set for Monday, November 21, 2005 before U.S. District
Judge Michael P. McCuskey in Urbana, Illinois.

Patridge faces maximum statutory penalties of up to three and five
years imprisonment respectively and fine of up to $250,000 for each
count of tax evasion. The maximum statutory penalty for the offenses
of wire fraud and money laundering is up to 20 years in prison and
fines of $250,000 to $500,000.

The charges were the result of an investigation by the Criminal
Investigation Division of the Internal Revenue Service. The case was
prosecuted by Hilary W. Frooman, Assistant U.S. Attorney in the
Urbana Division, and Lea A. Carlisle, Trial Attorney, of the Justice
Department's Tax Division.

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MISSOURI

FEDERAL TRADE COMMISSION,
Plaintiff,

v.

RICHARD C. NEISWONGER
500 Shetland Road
Las Vegas, Nevada 89107
individually, d/b/a
"MARKETING SYSTEMS"
and as an officer of each corporate defendant

-and-

S&K GROUP, INC.
55 Westport Plaza, Suite 555
St. Louis, Missouri 63146

-and-

SHAPIRO, KOSSMEYER & FLOM PC
and d/b/a
S&K GROUP, INC. and S&K PC
12161 Lackland Road
St. Louis, Missouri 63146

-and-

CARL F. KOSSMEYER
12161 Lackland Road
St. Louis, Missouri 63146
individually and as an officer of
S&K Group, Inc., and
Shapiro, Kossmeyer & Flom PC

-and-

MEDICAL RECOVERY SERVICE, INC.
233 Springfield Avenue
Joliet, Illinois 60435

-and-

MEDICAL RECOVERY SERVICE, INC.
1701 West Charleston Boulevard
Suite 110
Las Vegas, Nevada 89102

-and-

NANCY FREEMAN
411 Westridge Road
Joliet, Illinois 60431
individually and as an officer of
Medical Recovery Service, Inc.,

-and-

MARC FREEMAN
411 Westridge Road
Joliet, Illinois 60431
individually and as an officer of
Medical Recovery Service, Inc.,

Defendants.
    Case No. 4:96CV02225 SNL
Complaint for Injunctive
and Other Relief


COMPLAINT FOR INJUNCTIVE
AND OTHER RELIEF

Plaintiff, the Federal Trade Commission ("FTC or "the Commission"),
for its complaint alleges:

The Commission brings this action under Section 13(b) of the Federal
Trade Commission Act ("FTC Act"), 15 U.S.C. § 53(b), to obtain
preliminary and permanent injunctive relief, rescission of contracts,
restitution, disgorgement, and other equitable relief to redress
consumers for the injury resulting from defendants' deceptive acts or
practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45
(a).
JURISDICTION AND VENUE

This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§
1331, 1337(a) and 1345, and 15 U.S.C. § 53(b).
Venue in this district is proper under 28 U.S.C. §§ 1391(b) and (c),
and 15 U.S.C. § 53(b).
PLAINTIFF

Plaintiff, the Federal Trade Commission, is an independent agency of
the United States Government created by statute. 15 U.S.C. §§ 41 et
seq. The Commission is charged, inter alia, with enforcement of
Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), which prohibits
unfair or deceptive acts or practices in or affecting commerce. The
Commission is authorized to initiate federal district court
proceedings in order to secure such equitable relief as may be
appropriate in each case, and to obtain consumer redress. 15 U.S.C. §
53(b).
DEFENDANTS

Defendant S&K Group, Inc. ("S&K") is a Missouri corporation with its
principal office at 55 Westport Plaza, Suite 555, St. Louis, Missouri
63146. Defendant S&K incorporated in Missouri on August 22, 1994.
Defendant S&K is a subsidiary of Shapiro, Kossmeyer & Flom PC, an
accounting firm. Defendant S&K operates or has operated a branch
office in Las Vegas, Nevada. At all relevant times, defendant S&K has
transacted business in this district.
Defendant Shapiro, Kossmeyer & Flom PC ("S&K PC") is a Missouri
professional corporation with its principal office at 12161 Lackland
Road, St. Louis, Missouri 63146. Defendant S&K PC is an accounting
firm formed in 1994. Defendant S&K PC owns 100 percent of the capital
stock of defendant S&K. In advertisements, promotional literature and
person-to-person sales pitches, defendants S&K and S&K PC represent
that they are one and the same entity. Defendants S&K and S&K PC
share a principal officer, Carl F. Kossmeyer. At all relevant times,
defendant S&K PC has transacted business in this district.
Defendant Carl F. Kossmeyer ("Kossmeyer") is president of both
defendant S&K and defendant S&K PC. Kossmeyer resides and transacts
business in this district. Kossmeyer conducts S&K training sessions
and takes overall responsibility for the operations of S&K. Kossmeyer
has conducted the business of both S&K and S&K PC from his office at
12161 Lackland Road, St. Louis, Missouri.
Defendant Medical Recovery Service, Inc. ("MRS") is an Illinois
corporation with its principal offices at 233 Springfield Avenue,
Joliet, Illinois 60435, and 1701 West Charleston Boulevard, Suite
110, Las Vegas, Nevada 89102. Defendant MRS incorporated on November
30, 1995. Defendant MRS sometimes does business under the
name "Medical Recovery Service Marketing." At all relevant times,
defendant MRS has transacted business in this district.
Defendant Nancy Freeman is president of defendant MRS. She resides at
411 Westridge Road, Joliet, Illinois 60431. She conducts MRS training
sessions and takes overall responsibility for the operations of MRS.
At all relevant times, she has transacted business in this district.
Defendant Marc Freeman is the sole shareholder and director of
defendant MRS and serves as its secretary and treasurer. He resides
at 411 Westridge Road, Joliet Illinois 60431. At all relevant times,
he has transacted business in this district. Nancy and Marc Freeman
are husband and wife.
Defendant Richard C. Neiswonger ("Neiswonger") is a principal
officer, executive vice president and/or general partner of defendant
MRS. Neiswonger is or has been a principal officer, executive vice
president and/or general partner of S&K. Neiswonger wholly owns, and
sometimes does business under, the Missouri fictitious registration
Marketing Systems, 111 Westport Plaza, Suite 1021, St. Louis,
Missouri 63146. Neiswonger founded S&K with Kossmeyer in 1994.
Neiswonger founded MRS with Nancy Freeman in 1995. Upon information
and belief, Neiswonger continues to derive income from S&K. At all
relevant times, Neiswonger has transacted business in this district.
COMMERCE

At all times relevant to this complaint, defendants have maintained a
substantial course of trade in the offering for sale and sale of
business training, training materials and support, in or affecting
commerce, as "commerce" is defined in Section 4 of the FTC Act, 15
U.S.C. § 44.
DEFENDANTS' COURSE OF CONDUCT

Since at least 1993, defendants have marketed and sold business
training courses and affiliations to consumers throughout the United
States. Defendants S&K, S&K PC, Neiswonger and Kossmeyer (the "S&K
defendants") sell a course and affiliation they market as "S&K
Group." Defendants MRS, Neiswonger, Nancy Freeman and Marc Freeman
(the "MRS defendants") sell a course and affiliation they market
as "Medical Recovery Service." The courses and affiliations consist
of a two-day training session, class manuals, computer software, a
newsletter, a six-month (S&K) or one-year (MRS) period of support,
and a national network of independent business consultants.
The S&K defendants offer consumers the opportunity to become business
consultants, called "S&K associates," in two fields. The first field
is capital acquisition, where the consultant applies for bank loans
on behalf of clients and keeps a percentage of each loan as a fee.
The second field is expense reduction, where the consultant helps
clients identify areas where money could be saved and keeps a
percentage of the savings as a fee. The S&K defendants represent to
prospective purchasers that S&K associates earn client consulting
fees from operating such a business, full-time or part-time,
resulting in a six-figure income and/or a $150,000 income from one or
two projects per month. The price of the S&K training and association
is $12,900 payable by certified check at the beginning of the
training session. S&K's president Carl F. Kossmeyer teaches the
capital acquisition portion of the program.
The S&K defendants represent to consumers that S&K loses money on the
$12,900 fees it collects, but that it makes its profit participating
with associates on joint ventures, described as larger consulting
projects on which S&K and an associate work together and split a
large consulting fee. The S&K defendants represent to consumers that
S&K associates easily attract clients.
The MRS defendants offer consumers the opportunity to become business
consultants, called "MRS affiliates," in the field of medical bill
auditing. Consumers who purchase the MRS program attend a two-day
training session in Joliet, Illinois, taught in whole or part by
defendant Nancy Freeman, at the beginning of which they pay $9,900.
The MRS defendants represent to consumers that MRS affiliates earn a
doctor's income or a surgeon's income.
The MRS defendants represent to consumers that MRS works with
affiliates on joint ventures, large projects on which MRS and an
affiliate work together and split a large consulting fee. The MRS
defendants represent to consumers that they need no business,
medical, or other specialized background or experience in order to
succeed as an MRS affiliate and that MRS affiliates easily attract
clients.
Both MRS and S&K provide prospective purchasers with promotional
literature, a videotape and a reference list. Defendants encourage
consumers to telephone and speak with the references before making a
purchase decision. Defendants represent to consumers that the persons
in the literature, on the videotapes and on the reference lists are
actual, typical MRS affiliates or S&K associates who paid for and
attended the training session, are operating their own consulting
businesses, are earning high incomes from consulting fees and are
willing to share their success stories with prospective purchasers
without compensation.
VIOLATIONS OF SECTION 5 OF THE FTC ACT

Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits unfair or
deceptive acts or practices in or affecting commerce.
COUNT ONE

Plaintiff realleges and incorporates the preceding paragraphs as if
fully rewritten herein.
In numerous instances in connection with the advertising, promotion,
marketing, offering for sale, or sale of business consultant training
and affiliation, defendants have represented, directly or by
implication, that consumers will earn a six-figure income, $150,000
income, doctor's income or surgeon's income from client fees
generated using defendants' programs.
In truth and in fact, in numerous instances MRS and S&K affiliates do
not earn a six-figure income, a $150,000 income, a doctor's income or
a surgeon's income from client fees generated using defendants'
programs, and in numerous instances do not recoup the $9,900 or
$12,900 fee or generate any revenue.
Therefore, defendants' representations regarding affiliate income
estimates as set forth in paragraph 21, above, were and are false and
misleading and constitute deceptive acts or practices in violation of
Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).
COUNT TWO

Plaintiff realleges and incorporates the preceding paragraphs as if
fully rewritten herein.
In numerous instances in connection with the advertising, promotion,
marketing, offering for sale, or sale of business consultant training
and affiliation, defendants have represented, directly or by
implication, that defendants work with consumers on joint ventures
and split large consulting fees on joint ventures with consumers.
In truth and in fact, defendants do not work with consumers on joint
ventures or split large consulting fees on joint ventures with
consumers.
Therefore, defendants' representations regarding joint ventures, as
set forth in paragraph 25 above, were and are, false and misleading
and constitute deceptive acts or practices in violation of Section 5
(a) of the FTC Act, 15 U.S.C. § 45(a).
COUNT THREE

Plaintiff realleges and incorporates the preceding paragraphs as if
fully rewritten herein.
In numerous instances in connection with the advertising, promotion,
marketing, offering for sale, or sale of business consultant training
and affiliation, defendants have represented, directly or by
implication, that defendants' references have purchased one of the
defendants' business ventures, or will provide reliable descriptions
of the references' experiences with defendants' business ventures.
In truth and in fact, in numerous instances, the defendants'
references have not purchased one of the defendants' business
ventures, and will not provide reliable descriptions of the
references' experiences with defendants' business ventures.
Therefore, defendants' representations regarding joint ventures, as
set forth in paragraph 29 above, were and are, false and misleading
and constitute deceptive acts or practices in violation of Section 5
(a) of the FTC Act, 15 U.S.C. § 45(a).
CONSUMER INJURY

Consumers in many areas of the United States have suffered
substantial monetary loss as a result of defendants' unlawful acts or
practices. Absent injunctive relief by this Court, defendants are
likely to continue to injure consumers and harm the public interest.
THIS COURT'S POWER TO GRANT RELIEF

Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers this Court
to grant injunctive and other ancillary relief, including consumer
redress, disgorgement and restitution, to prevent and remedy any
violations of any provision of law enforced by the Federal Trade
Commission.
This Court, in the exercise of its equitable jurisdiction, may award
other ancillary relief to remedy injury caused by defendants' law
violations.
PRAYER FOR RELIEF

WHEREFORE, plaintiff requests that this Court, as authorized by
Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), and pursuant to its
own equitable powers:

(1) award plaintiff such preliminary injunctive and ancillary relief
as may be necessary to avert the likelihood of consumer injury during
the pendency of this action and to preserve the possibility of
effective final relief;

(2) permanently enjoin defendants from violating the FTC Act;

(3) award such relief as this Court finds necessary to redress injury
to consumers resulting from defendants' violations of the FTC Act,
including, but not limited to, rescission of contracts, the refund of
monies paid, and the disgorgement of ill-gotten monies; and

(4) award plaintiff the costs of bringing this action, as well as
such other and additional relief as this Court may determine to be
just and proper.

STEPHEN CALKINS
General Counsel

Virginia A. Davidson (0025773)
Gerald C. Zeman (0055386)
Larissa L. Bungo (0066148)
Federal Trade Commission
Cleveland Regional Office
668 Euclid Avenue, Suite 520-A
Cleveland, Ohio 44114-3006
(216) 522-4210

Attorneys for Plaintiff

U.S. District Court
Eastern District of Missouri (LIVE) (St. Louis)
CIVIL DOCKET FOR CASE #: 4:96-cv-02225-SNL

FTC v. Neiswonger, et al
Assigned to: Honorable Stephen N. Limbaugh
Demand: $0
Cause: 15:0053 Federal Trade Commission Act
Date Filed: 11/13/1996
Jury Demand: None
Nature of Suit: 890 Other Statutory Actions
Jurisdiction: U.S. Government Plaintiff
Plaintiff
Federal Trade Commission  represented by Gerald C. Zeman
FEDERAL TRADE COMMISSION
Cleveland Regional Office
1111 Superior Avenue, East
Suite 200, Eaton Center
Cleveland, OH 44114-3006
216-522-4210
LEAD ATTORNEY
ATTORNEY TO BE NOTICED

Larissa L. Bungo
FEDERAL TRADE COMMISSION
Cleveland Regional Office
1111 Superior Avenue, East
Suite 200, Eaton Center
Cleveland, OH 44114-3006
216-522-4210
LEAD ATTORNEY
ATTORNEY TO BE NOTICED

Virginia A. Davidson
FEDERAL TRADE COMMISSION
Cleveland Regional Office
1111 Superior Avenue, East
Suite 200, Eaton Center
Cleveland, OH 44114-3006
216-522-4210
LEAD ATTORNEY
ATTORNEY TO BE NOTICED


V.

Defendant
Richard C. Neiswonger
individually and as an officer of each corporate defendant
doing business as
Marketing Systems

Defendant
S&K Group, Inc.

Defendant
Shapiro, Kossmeyer & Flom PC
doing business as
S&K Group, Inc.
doing business as
S&K PC

Defendant
Carl F. Kossmeyer
individually and as an officer of
- -
S&K Group, Inc.
- -
Shapiro, Kossmeyer & Flom PC

Defendant
Medical Recovery Service, Inc.

Defendant
Medical Recovery Service, Inc.

Defendant
Nancy Freeman
individually and as an officer of
- -
Medical Recovery Service, Inc.

Defendant
Marc Freeman
individually and as an officer of
- -
Medical Recovery Service, Inc.


Date Filed # Docket Text
11/13/1996 1 COMPLAINT; # Waivers of Service Issued: 8 # Counts: 2
(KLK) (Entered: 12/04/1996)
11/13/1996 2 TRACK INFORMATION STATEMENT filed by plaintiff
FTC ;track 1 preferred (KLK) (Entered: 12/04/1996)
12/03/1996 3 WAIVER OF SERVICE executed upon defendant Carl F.
Kossmeyer on 11/13/96 by serving Alan Steinberg as agent for this
deft. (BDC) (Entered: 12/04/1996)
12/03/1996 4 WAIVER OF SERVICE executed upon defendant S&K Group,
Inc. on 11/13/96 by serving Alan Steinberg as agent for this deft.
(BDC) (Entered: 12/04/1996)
01/15/1997 5 WAIVER OF SERVICE executed upon defendant Nancy Freeman
on 11/13/96 by serving Nancy Freeman, officially (BDC) (Entered:
01/17/1997)
01/15/1997 6 WAIVER OF SERVICE executed upon defendant Nancy Freeman
on 11/13/96 by serving Nancy Freeman, individually (BDC) (Entered:
01/17/1997)
01/15/1997 7 WAIVER OF SERVICE executed upon defendant Marc Freeman
on 11/13/96 by serving Marc Freeman (BDC) (Entered: 01/17/1997)
01/15/1997 8 WAIVER OF SERVICE executed upon defendant Carl F.
Kossmeyer on 11/13/96 by serving Alan Steinberg as his agent (BDC)
(Entered: 01/17/1997)
01/15/1997 9 WAIVER OF SERVICE executed upon defendant S&K Group,
Inc. on 11/13/96 by serving Alan J. Steinberg, as agent (BDC)
(Entered: 01/17/1997)
01/16/1997 10 WAIVER OF SERVICE executed upon defendant Shapiro,
Kossmeyer on 1/4/97 by serving Frank Gundlach as their attorney.
(BDC) (Entered: 01/17/1997)
01/17/1997 11 WAIVER OF SERVICE executed upon defendant Richard C.
Neiswonger on 1/15/97 by serving Terry Coffing, as his attorney (BDC)
(Entered: 01/21/1997)
02/28/1997 12 STIPULATED FINAL JUDGMENTS AND ORDER FOR PERMANENT
INJUCTION AMD OTHER EQUITABLE RELIEF (TWO JUDGMENTS) with
Stipulations and orders included with attached security agreements:
by Honorable Stephen N. Limbaugh for plaintiff FTC against defendant
in the amount of $ 10,000.00 terminating case (cc: all counsel) (BDC)
(Entered: 03/05/1997)
06/02/1997 13 NOTICE by plaintiff FTC of change of address. (cc:
operations support unit). (BDC) (Entered: 06/03/1997)
06/02/1997 14 SATISFACTION OF JUDGMENT re [12-2] as to defendant
Shapiro, Kossmeyer & Flom, P.C. In the amount of $10,000.00. (BDC)
(Entered: 06/03/1997)
06/12/1997 15 SATISFACTION OF JUDGMENT re [14-1], re [12-2] as to
defendant Richard C. Neiswonger (BDC) (Entered: 06/13/1997)
04/15/1998 16 SATISFACTION OF JUDGMENT re [12-2] as to defendant
Medical Recovery, defendant Nancy Freeman, defendant Marc Freeman
(ARL) (Entered: 04/15/1998)

U.S. District Court
Eastern District of Missouri (LIVE) (St. Louis)
CRIMINAL DOCKET FOR CASE #: 4:98-cr-00364-RWS-ALL

Case title: USA v. Neiswonger
Date Filed: 09/08/1998

----------------------------------------------------------------------
----------
Assigned to: Honorable Rodney W. Sippel

Defendant
Richard C. Neiswonger (1)
TERMINATED: 12/21/1998  represented by Arthur S. Margulis, Sr.
MARGULIS AND GRANT
11 S. Meramec Avenue
Suite 1330
Clayton, MO 63105
314-721-6677
Fax: 314-721-1710
Email: artm@...
TERMINATED: 12/21/1998
LEAD ATTORNEY
ATTORNEY TO BE NOTICED
Designation: Retained

Marcia G. Shein
52 Executive Park South
Suite 5203
Atlanta, GA 30329
404-633-3797
Fax: 404-633-7980
TERMINATED: 12/21/1998
LEAD ATTORNEY
ATTORNEY TO BE NOTICED
Designation: Retained

Ronald E. Jenkins
JENKINS AND KLING, P.C.
10 S. Brentwood Boulevard
Suite 200
Clayton, MO 63105
314-721-2525
Fax: 314-721-5525
Email: rjenkins@...
TERMINATED: 12/21/1998
LEAD ATTORNEY
ATTORNEY TO BE NOTICED
Designation: Retained

Pending Counts
Disposition
18:1343.F FRAUD BY WIRE
(1)  Deft. plead guilty to counts 1 and 2. Imprisonment for term of
18 months. Deft. to vol. surrender. Supervised release for term of 3
years. Special assessment of $200.00 due immediately. Restitution in
amount of $2.75.
18:1957-5800.F ENGAGING IN MONETARY TRANSACTIONS (Money Laundering)
(2)  Deft. plead guilty to counts 1 and 2. Imprisonment for term of
18 months. Deft. to vol. surrender. Supervised release for term of 3
years. Special assessment of $200.00 due immediately. Restitution in
amount of $2.75.

Highest Offense Level (Opening)
Felony

Terminated Counts
Disposition
None

Highest Offense Level (Terminated)
None

Complaints
Disposition
None

----------------------------------------------------------------------
----------

Movant
E. Rebecca Case  represented by E. Rebecca Case
STONE AND LEYTON
7733 Forsyth Boulevard
Suite 500
Clayton, MO 63105
314-721-7011
Fax: 314-721-8660
Email: rcase@...
LEAD ATTORNEY
ATTORNEY TO BE NOTICED

----------------------------------------------------------------------
----------

Plaintiff
USA  represented by E. Rebecca Case
(See above for address)
LEAD ATTORNEY
ATTORNEY TO BE NOTICED

Steven E. Holtshouser
OFFICE OF U.S. ATTORNEY
111 S. Tenth Street
20th Floor
St. Louis, MO 63102
314-539-2200
Fax: 314-539-7695
Email: steven.holtshouser@...
LEAD ATTORNEY
ATTORNEY TO BE NOTICED

Date Filed # Docket Text
09/03/1998 1 WAIVER by defendant Richard C. Neiswonger approved by
Honorable Rodney W. Sippel (SET) (Entered: 09/08/1998)
09/03/1998 2 INFORMATION by USA Richard C. Neiswonger (1) count(s) 1,
2 (SET) (Entered: 09/08/1998)
09/03/1998 3 WAIVER OF VENUE by defendant Richard C. Neiswonger
approved by Honorable Rodney W. Sippel (SET) Modified on 09/08/1998
(Entered: 09/08/1998)
09/03/1998 4 APPEARANCE for plaintiff USA by Attorney Steven E.
Holtshouser (SET) (Entered: 09/08/1998)
09/03/1998 5 APPEARANCE for defendant Richard C. Neiswonger by
Attorney Arthur S. Margulis Sr. (SET) (Entered: 09/08/1998)
09/03/1998 6 RULE 5 Record by Mag Judge David D. Noce as to Richard
C. Neiswonger deft given rights, 5,000 = unsecured Bond set for
Richard C. Neiswonger , and ; sentencing hearing set for 9:00 12/2/98
for Richard C. Neiswonger ; Defendant Location: bond; ; proceedings
started: not indicated - Initial appearance done in chambers (SET)
(Entered: 09/08/1998)
09/03/1998 7 BOND Posted ( $5,000 unsecured) by Richard C. Neiswonger
(SET) (Entered: 09/08/1998)
09/03/1998 8 CONDITIONS of Probation and Supervised Release by USP
and by Richard C. Neiswonger (SET) (Entered: 09/08/1998)
09/03/1998 9 MINUTES: before Honorable Rodney W. Sippel dft Richard
C. Neiswonger arraigned; guilty plea entered to the information;
Attorney present; , and ; sentencing hearing set for 9:30 12/2/98 for
Richard C. Neiswonger stipulation of facts filed and probation office
notified by E-Mail in courtroom as to defendant Neiswonger ;
Defendant Location: bond; court reporter: Ann Taylor; #: Index#s:
proceedings started: 12:30 - ended: 1:05 (SET) Modified on 09/08/1998
(Entered: 09/08/1998)
09/03/1998 10 STIPULATION OF FACTS RELATIVE TO SENTENCING by Richard
C. Neiswonger, USA w/attached memo of agreement (SET) (Entered:
09/08/1998)
09/03/1998   RECEIPT # S98-009423 for passport as to Richard C.
Neiswonger (CEL) (Entered: 10/28/1998)
09/10/1998 11 ARREST Warrant returned executed as to Richard C.
Neiswonger on 9/2/98 (CEL) (Entered: 09/15/1998)
10/27/1998 12 ORDER by Honorable Rodney W. Sippel ORDERED that the
Clerk of Court shall accept a payment of proposed restitution from
deft in the amount of $2,750,000 to be held by the Clerk pending
sentencing in this case. FURTHER ORDERED that this payment shall be
held in an interest bearing accouont until the disposition of the
funds is determined in a judgment and commitment order. (cc: all
counsel, USPT, USP, USM and financial) (CEL) (Entered: 10/30/1998)
10/28/1998 13 ACCEPTANCE TO PSR by USA ; objection to PSR deadline
met on 10/28/98 (CEL) (Entered: 10/30/1998)
10/28/1998 14 RECEIPT # S99-000787 in the amount of $ 750,002.00 for
restitution as to Richard C. Neiswonger (CEL) (Entered: 10/30/1998)
10/28/1998 15 RECEIPT # S99-000786 in the amount of $ 999,999.00 for
restitution as to Richard C. Neiswonger (CEL) (Entered: 10/30/1998)
10/28/1998 16 RECEIPT # S99-000785 in the amount of $ 999,999.00 for
restitution as to Richard C. Neiswonger (CEL) (Entered: 10/30/1998)
10/28/1998 17 MOTION for departure from standard sentencing by USA -
filed under seal (CEL) (Entered: 10/30/1998)
11/25/1998 18 ORDER as to defendant Neiswonger by Honorable Rodney W.
Sippel ; sentencing hearing reset for 3:00 12/4/98 for Richard C.
Neiswonger (cc: all counsel, USPT, USP, USM) (SET) Original image was
corrupt. Replaced with duplicate image from original order database.
Modified on 11/2/2004 (FLJ, ). (Entered: 11/25/1998)
12/01/1998 19 MOTION (Memorandum and Mtn for Downward Departure for
departure from standard sentencing as to defendant Neiswonger by
Richard C. Neiswonger w/exh A, B, C, D, in separate file folder (SET)
(Entered: 12/02/1998)
12/02/1998 20 ORDER as to defendant Neiswonger by Honorable Rodney W.
Sippel ; sentencing hearing has been reset for 1:00 12/21/98 for
Richard C. Neiswonger (cc: all counsel, USPT, USP, USM) (SET)
Original image was corrupt. Replaced with duplicate image from
original order database. Modified on 11/2/2004 (FLJ, ). (Entered:
12/03/1998)
12/17/1998 21 MOTION for attorney Marcia G. Shein to appear pro hac
vice as to defendant Richard C. Neiswonger by Richard C. Neiswonger
(SEALED) (Entered: 12/21/1998)
12/17/1998   APPEARANCE for defendant Richard C. Neiswonger by
Attorney Marcia G. Shein (GLF) (Entered: 12/29/1998)
12/18/1998 22 RULED DOCUMENT by Honorable Rodney W. Sippel granting
motion for attorney Marcia G. Shein to appear pro hac vice as to
defendant Richard C. Neiswonger [21-1] (cc: all counsel, USPT, USP,
USM) (SEALED) Original image was corrupt. Replaced with duplicate
image from original order database. Modified on 11/2/2004 (FLJ, ).
(Entered: 12/21/1998)
12/18/1998 23 RECEIPT # S99-002086 in the amount of $ 25.00 for
Attorney Admission PHV as to Marcia G. Shein for Defendant Richard C.
Neiswonger (SEALED) (Entered: 12/21/1998)
12/18/1998   RESPONSE by plaintiff USA regarding [19-1] Mtn for
Downward Departure LEAVE TO FILE ORALLY IN COURT (RWS) (SET)
(Entered: 12/22/1998)
12/21/1998 24 MINUTES: before Honorable Rodney W. Sippel sentencing
hearing held on 12/21/98 sentence imposed, see jgm, court accepts
plea agreement; denying motion for departure from standard sentencing
[19-1] as to defendant Neiswonger ; Defendant Location: bond; court
reporter: Ann Taylor; proceedings started: 1:15 - ended: 2:05 (SET)
(Entered: 12/22/1998)
12/21/1998 25 PRESENTENCE REPORT FILED UNDER SEAL on Richard C.
Neiswonger (SET) (Entered: 12/22/1998)
12/21/1998 26 RECEIPT # S99-002130 in the amount of $ 200.00 for
special assessment as to Richard C. Neiswonger (SET) (Entered:
12/22/1998)
12/21/1998 27 JUDGMENT by Honorable Rodney W. Sippel as to Richard C.
Neiswonger sentencing Richard C. Neiswonger (1) count(s) 1, 2 . Deft.
plead guilty to counts 1 and 2. Imprisonment for term of 18 months.
Deft. to vol. surrender. Supervised release for term of 3 years.
Special assessment of $200.00 due immediately. Restitution in amount
of $2.75. , case terminated (cc: all counsel, USPT, USP, USM) (CEL)
Original image was corrupt. Replaced with duplicate image from
original order database. Modified on 11/2/2004 (FLJ, ). (Entered:
12/23/1998)
12/22/1998 28 ORDER IMPOSING PROCEDURES FOR DETERMINATION OF
RESTITUTION by Honorable Rodney W. Sippel (cc: all counsel, USPT,
USP, USM) (SET) Original image was corrupt. Replaced with duplicate
image from original order database. Modified on 11/2/2004 (FLJ, ).
(Entered: 12/24/1998)
12/22/1998   ORDER as to defendant Neiswonger by Honorable Rodney W.
Sippel re [28-1] add attorney E. Rebecca Case to serve as Special
Master to assist the Probation Office in providing ntc to
victims . . . to assist the court in determining the identity of the
victims, the amount of loss suffered by each and the amount of funds
from the restitution fund available to each, and to administer the
distribution of the restitution payments, all pursuant to the
procedures set forth below. . . (see Order for details) w/exh A
attached (cc: E. Rebecca Case) (SET) Modified on 01/12/1999 (Entered:
01/12/1999)
01/06/1999 29 MOTION for order for placement in intensive confinement
program as to defendant Neiswonger by Richard C. Neiswonger (SET)
(Entered: 01/07/1999)
01/06/1999 30 ORDER as to defendant Neiswonger by Honorable Rodney W.
Sippel denying motion for order for placement in intensive
confinement program as to defendant Neiswonger (ARGUED HEARD AND
DENIED (RWS) [29-1] (cc: all counsel, USPT, USP, USM) (SET) Original
image was corrupt. Replaced with duplicate image from original order
database. Modified on 11/2/2004 (FLJ, ). (Entered: 01/07/1999)
02/22/1999 31 MARSHAL'S RETURN of judgment executed on 2/18/99 Deft
delivered to: FPC, Las Vegas, NV as to Richard C. Neiswonger (GLF)
(Entered: 02/23/1999)
04/10/2000 32 STATUS REPORT by movant E. Rebecca Case - filed under
seal (CEL) (Entered: 04/12/2000)
05/04/2000 33 MOTION for order returning passport to deft. by Richard
C. Neiswonger (CEL) (Entered: 05/05/2000)
05/04/2000 34 RULED DOCUMENT by Honorable Rodney W. Sippel granting
motion for order returning passport to deft. [33-1] (cc: all counsel,
USPT, USP, USM) (CEL) (Entered: 05/05/2000)
05/04/2000 35 PASSPORT RECEIPT AND ACKNOWLEDGMENT returned to atty
for deft. signed by Atty Levin as to Richard C. Neiswonger (CEL)
(Entered: 05/05/2000)
05/10/2000 36 2ND STATUS REPORT by movant E. Rebecca Case - filed
under seal (CEL) (Entered: 05/11/2000)
08/04/2000 37 3rd STATUS REPORT by movant E. Rebecca Case filed under
seal (CEL) (Entered: 08/08/2000)
09/20/2000 38 STATUS REPORT (4th) by movant E. Rebecca Case (CEL)
(Entered: 09/21/2000)
10/23/2000 39 5TH STATUS REPORT by movant E. Rebecca Case - filed
under seal (CEL) (Entered: 10/24/2000)
11/20/2000 40 SIXTH STATUS REPORT by movant E. Rebecca Case (CEL)
(Entered: 11/21/2000)
01/03/2001 41 SEVENTH STATUS REPORT by movant E. Rebecca Case (CEL)
(Entered: 01/04/2001)
01/11/2001 42 TRANSCRIPT 9/3/98 plea before Judge: Sippel court
reporter: Ann Taylor (CEL) (Entered: 01/16/2001)
01/11/2001 43 TRANSCRIPT 12/21/98 sentencing before Judge: Sippel
court reporter: Ann Taylor (CEL) (Entered: 01/16/2001)
07/31/2001 44 RECEIPT # S2001-008842 in the amount of $ 750,000 for
restitution as to Richard C. Neiswonger (CEL) (Entered: 08/01/2001)
08/06/2001 45 MEMORANDUM as to the amount of loss suffered by movant
E. Rebecca Case filed under seal (CEL) (Entered: 08/08/2001)
08/08/2001 46 MEMORANDUM by plaintiff USA accepting report and
recommendation of special master [45-1] (CEL) (Entered: 08/09/2001)
08/20/2001 47 MEMORANDUM by plaintiff USA [45-1] accepting report and
recommendation of special master (CEL) (Entered: 08/22/2001)
08/23/2001 48 ORDER by Honorable Rodney W. Sippel re [45-1] filed
under seal (CEL) (Entered: 08/23/2001)
09/10/2001 49 MEMORANDUM/schedule of restitution disbursement by
movant E. Rebecca Case w/proposed order - filed under seal (CEL)
(Entered: 09/13/2001)
09/14/2001 50 ORDER by Honorable Rodney W. Sippel re [49-1]- filed
under seal cc: Rebecca Case, US Atty, Scott Rosenblum, Finance (CEL)
(Entered: 09/17/2001)
09/14/2001 51 AMENDMENT (exhibit 1 to schedule of restitution
disbursement) by movant E. Rebecca Case to [49-1] LEAVE TO FILE
GRANTED (RWS) - filed under seal (CEL) (Entered: 09/18/2001)
09/18/2001 52 MOTION for order for compensation w/attachments by
movant E. Rebecca Case - filed under seal (CEL) (Entered: 09/19/2001)
09/20/2001 53 ORDER by Honorable Rodney W. Sippel granting motion for
order for compensation [52-1] filed under seal (CEL) (Entered:
09/24/2001)
09/24/2001 54 MEMORANDUM by plaintiff USA of acceptance of special
master's interim application for compensation[52-1] (CEL) (Entered:
09/25/2001)
01/10/2002 55 MOTION for order terminated supervised release by
Richard C. Neiswonger (CEL) (Entered: 01/11/2002)
01/22/2002 56 RESPONSE by plaintiff USA to motion for order
terminated supervised release [55-1] (CEL) (Entered: 01/22/2002)
01/23/2002 57 RULED DOCUMENT by Honorable Rodney W. Sippel denying
motion for order to terminate supervised release [55-1] (cc: all
counsel, USPT, USP, USM) (CMA) (Entered: 01/23/2002)
04/15/2002   REMARK - documents 58 - 60 have been deleted from this
file (CEL) (Entered: 05/15/2002)
04/16/2002 61 AFFIDAVIT of Dale Baxter re: 10/10/01 check (CEL)
(Entered: 04/16/2002)

Locate a Federal Inmate (includes all inmates from 1982 t o present)
Name Register
Number Age Race Sex Release Date
  Actual  /  Projected Location

1. RICHARD C NEISWONGER 25367-044 54 White M 06-07-2000     RELEASED

http://www.opaobie.com/Synopsis.html

Synopsis of the NADN, Oryan Management, et al, ShopN2000/MallForAll
fraud scheme and a plea for help
Please visit my website often for changes, updates, tips and offers
to help you as you deal with the IRS and to help you earn revenue to
recover from the double loss you have suffered at the hands
of "former" and now "current" IRS "tax experts". They defrauded and
damaged the lives of more than 640,000 clients and defrauded the US
Treasury of hundreds of millions of dollars, yet I'm still waiting to
hear of a single top executive of NADN or Oryan or their other
partners being indicted for a crime.

As you read this synopsis, keep one thought in mind: Tax Returns
filed by Victims of the NADN tax scam were prepared BY or under the
direct guidance of the "Tax Experts" at NADN, and they
were "Guaranteed" to be accurate, correct, legal, and "Audit-Proof".
The "Guarantee" included representation BY NADN at any audits.
Victims are still legally responsible for their own tax returns, but
most people place their trust in Doctors, Lawyers, and
other "Experts" in fields where the ordinary person has no expertise
and must rely on the expertise of the Specialist. "Experts" created
the nightmare through which the victims are now being put a second
time by the IRS auditors...who tell us "You should seek PROFESSIONAL,
EXPERT advice"...isn'that what got us into this position in the first
place?
To join with us in our Class Action Law Suit against Oryan Management
et al and receive updates, click on the email link below. You will
receive instructions and be added to our list for notifications.
Class Act Legal Cooperative

...and keep checking Chris Tulino's Comments pages.

Archived posting page (...continuation of the comments through Jan
2005)

Third posting page (make new comments on this page)
Congress raising taxes?
We are facing the largest tax increase in history unless citizens
across this nation take action!
That's why I signed a crucial petition to stop tax increases.
Grassfire.org has launched this "Taxpayer Freedom and Fairness
Petition" to build grassroots support for real tax and Social
Security reform that does not raise our taxes! Please take a moment
to read this petition and join me in signing.
I have a suggested letter you can use as a template to write to your
Member of the House of Representatives and your TWO Senators -- and
your state legislators if you wish -- posted at the bottom of this
page.
If you would like to review some of the options you have based on
advice received from tax experts to help you decide how to proceed,
please read these Tax Return Guidance Options.

For anyone considering deducting any losses associated with NADN or
Oryan purchases or other costs, please read the following articles
from the IRS.

Misuse of Disabled Access Credits - Virtual Mall Websites - Questions
and Answers
http://www.irs.gov/businesses/small/article/0,,id=106484,00.html.

Misuse of Disabled Access Credits - Virtual Mall Websites
http://www.irs.gov/businesses/small/article/0,,id=124324,00.html

"...the [Internal Revenue] Service's position is that this
transaction was entered solely for tax purposes."

Would you like to see proof of a sale through MY ShopN2000/MallForAll
online store?

Only one exception is needed to disprove a theorem. I offer two. Keep
in mind that NADN offered credentials from former IRS Tax Lawyers,
auditors, CPAs, and caseworkers even in their advertising material,
leading potential clients to trust in them as bone fide, legitimate
tax and financial planning experts based on those credentials.

1. One victim was recovering from a bankruptcy discharged in 2000 and
had no need for a "tax shelter" -- there was nothing left to shelter.
He and his wife felt they needed professional counseling and turned
to NADN for expert advice because of the legitimacy of the nationally
syndicated radio programs they were sponsoring and through the
nationally recognized newspapers and television programs carrying
their ads. NADN was endorsed by then-current members of the IRS and
listed with the Chamber of Commerce and favorably reported by the
Better Business Bureau of Nevada and in "Who's Who" in Nevada. NADN
was one of the largest businesses in Nevada. Their founder was a
regular member of a panel on Public Television as an expert on IRS
issues. NADN offered a complete package including a "guaranteed"
substantial revenue stream in the online malls. Believing these were
prudent steps to take to protect them from any further disaster, that
guarantee along with the "guaranteed in writing audit-proof tax
preparation, audit representation, and on-call assistance" convinced
them to pay the premium costs for the package deal. Tax returns
claiming both the credits and the (now-discredited) 1099s showing
profit were submitted for years 2001-2003 and were accepted by the
IRS without question, leading these victims to continue believing
they were in full compliance with all laws. Once the "problems" began
to surface at NADN and with the malls, they made numerous attempts to
demand a refund, and they have filed a Proof of Claim form with the
NADN bankruptcy proceedings and have joined in the class action
lawsuit against Oryan Management.

2. Another victim was trying to raise funds to pay for a liver
transplant for her daughter and told NADN of her needs -- she, too,
had no need for a "tax shelter"; she desperately needed revenue. They
defrauded her anyway. Once the "problems" began to surface at NADN
and with the malls, they made numerous attempts to demand a refund,
including a trip to NADN headquarters in Las Vegas, and they have
filed a Proof of Claim form with the NADN bankruptcy proceedings and
have joined in the class action lawsuit against Oryan Management.

I have yet to receive one email or phone call from a single victim
stating the reason s/he entered into the contracts with NADN and
Oryan Management was to evade paying taxes. I have received thousands
saying their intent was to make money with an online business.
The "guaranteed legitimate" tax credits and the promise that a
portion of the proceeds from sales through the malls would go to the
disabled in the zipcode of the mall were just additional incentives,
nothing more.


Therefore,
the "position" statement from the IRS article linked above is
factually inaccurate. It presumes a motive without any evidence to
support it; while in fact, all the evidence presented proves just the
opposite. It is an insult to the hundreds of thousands of honest
victims of a scam perpetrated on them by "former" IRS Tax lawyers,
auditors, CPAs, and caseworkers who created and worked for NADN and
whose ideas and work were endorsed and praised in print by - JoDeane
Dykman, Former IRS Chief, Taxpayer Service as quoted below.

'All taxpayers should make themselves aware of every deduction
available under the law. This book ["How to Pay Zero Taxes: Your
Guide to Every Tax Break the IRS Allows! by Jeff Schnepper" written
about NADN] can be a benefit to us all by explaining how to save
thousands of dollars in tax. ' - JoDeane Dykman, Former IRS Chief,
Taxpayer Service.

It's obvious why the IRS is refusing to allow any business deductions
and insisting that the losses be shown as "theft" losses rather than
a failed business investment resulting from "breach of contract"...we
all had signed contracts. No matter how you plan to write it off, you
cannot do so until the year the loss is discovered and the exact
amount is determined. Since the NADN bankruptcy and any lawsuit
against Oryan may not be settled for some time to come, and the loss
would have to be reduced by the amount of any recovery, you will not
be able to claim the loss until the year those issues are settled.
Casualty and theft losses (Schedule A, line 19) are limited by a $100
threshold per loss event and an overall threshold of 10% of your
adjusted gross income. To phrase this another way, your casualty loss
is deductible to the extent that it exceeds $100 per loss event, and
to the extent that it exceeds 10% of your AGI. Casualty and theft
losses are reported and calculated on Form 4684 using Instructions
for Form 4684. If you were defrauded of $2495 (the cost of the online
mall) and your ajusted gross income is more than $23,950, you will
not be able to deduct any of it! Have you contacted your members of
Congress yet?

An interesting question for the IRS:

As a matter of law, IRS is required to charge interest on taxes owed
but unpaid. IRS is only allowed to "abate" or waive interest in
limited circumstances - primarily, where IRS has waited 18 months
past the due date of the return to assess additional tax, and where
the taxpayer has relied upon erroneous "written" advice from the IRS.

Question: Does a refund check from the IRS based on a tax return that
has been accepted by the IRS count as "written" advice that the
credits and deductions accepted on that return are legitimate and
acceptable to the IRS, thus "advising" the filer "in writing" that
continuing to invest in that "investment or business" and claiming
the credits and business expenses associated with that "business" are
perfectly legal activities? What if the return was accepted by the
IRS WITHOUT the credits and deductions and then amended to ADD the
credits and deductions and subsequently audited and again accepted by
the IRS? This is the situation of several of the victims. How would a
jury of your peers decide this case?

If returns were filed on time as described above, interest could
legally be abated by the IRS. Penalties should be abated for the same
reasons.

Here is another link to some IRS info regarding Offer in Compromise
for those who may not be able to pay back the full amount due or who
believe that extenuating circumstances exist whereby the full amount
should not be due. It's worth exploring. Beware of anyone who
promises to be able to settle your tax debt for pennies on the
dollar. They may be able to do that, but just make sure both YOU and
THEY understand our situation FULLY.


...and now, the Synopsis of the fraud scheme and a plea for help

Thousands of former clients of the National Audit Defense Network
(NADN) now face financial ruin and are seeking help because they
mistakenly placed their trust in an organization created by former
IRS tax experts that even officials at the IRS had endorsed.  NADN
was once considered the most reputable of all tax counseling
companies, receiving favorable endorsement from the Nevada BBB,
listed among the "Who's Who" in Nevada, advertising in prestigous
publications, and receiving high praise and honors from other trusted
national and industry wide organizations, including high officials
still in or just out of office in the IRS at the time they issued
their endorsements and praises.

The following are typical of the praises for NADN and in numerous
books written about their advice such as "How to Pay Zero Taxes: Your
Guide to Every Tax Break the IRS Allows! by Jeff Schnepper:

'All taxpayers should make themselves aware of every deduction
available under the law. This book can be a benefit to us all by
explaining how to save thousands of dollars in tax. ' - JoDeane
Dykman, Former IRS Chief, Taxpayer Service.

'Having known Robert Bennington,President of NADN,as a dynamic and
knowledgeable person,this special edition book, How to Pay Zero Taxes
by Jeff A. Schnepper, surely will create raised eyebrows as a
blockbuster publication for the benefit of every American citizen.
Best of luck NADN!' - Nathan Kline, C. E. O., Jalapa Gas and Chemical
Corporation.

'How to Pay Zero Taxes tells the general taxpayer a great story about
how to exercise our right to take all the deductions we have coming
to us. Guaranteed to teach each and every person something they did
not know before!' - Laura Ungaro, Es., Trust Specialist.

'I've spent countless hours searching for a book that
esentially 'lays it all out' as far as providing clear-cut,no-
nonsense tax assistance. Finally,Robert Bennington and the National
Audit Defense Network have aseembled just such a book. Whatever you
do,read this book; it could cost you thousands of dollars not to. ' -
J. J. Childers,Attorney and Author of The Secret Millionaire series.

...and from the publisher: 'Fully updated to include all the latest
tax law changes, How to Pay Zero Taxes outlines the easiest, most
practical strategies you can use to lower your taxes this year - next
year - and beyond. Hundreds of thousands of savvy taxpayers from all
walks of life - business owners, professionals, retirees, homeowners,
and parents - have relied on this trusted guide to find every legal
tax break. Now you, too, can take advantage of all the deductions and
exemptions the IRS doesn't publicize - but allows!

How to Pay Zero Taxes guides you through the ins and outs of every
IRS-sanctioned tax-saving strategy available for preserving income.
From converting personal expenses into business expenses to obtaining
tax credits for dependent care to setting up tax-slashing trusts to
avoiding or surviving an IRS audit, Jeff Schnepper's guide
comprehensively covers more deductions than any other tax book, all
conveniently organized in six fast-access categories: exclusions,
credits, 'above the line' deductions, 'below the line' deductions,
traditional, and supertax shelters.

Many of NADN and Oryan Management's leaders were active in local and
national civic groups, and some had been recognized nationally for
their contributions to the community.

Be A Mentor, Touch A Life

Young entrepreneurs forming group to help businesses prosper --
Thursday, June 01, 2000, (Copyright © Las Vegas Review-Journal)

Their founder was considered an expert on IRS abuses.

Online NewsHour: IRS under fire -- September 24, 1997 (Copyright ©
2004 MacNeil/Lehrer Productions. All Rights Reserved)    You can
listen to the audio here

Many of their victims were introduced to NADN through an ad on a
prominent national radio program and saw their ads in major
publications and on television. Unfortunately, besides driving
thousands to the brink of financial ruin, NADN has now driven its
founder, Robert Bennington, to suicide -- June 20, 2004 -- Father's
Day, if I remember correctly....(linked article Copyright © Las Vegas
Review-Journal, By John G. Edwards.)

~~~~~If you are a tax attorney, CPA, EA, or other tax help provider,
consider joining with us and offering your services by contacting me
through this email link.~~~~~~

If you are a Victim, please use the "Class Act Legal Cooperative"
link at the top of this page or my "Contact Us" form on my website so
I can keep those contacting me sorted correctly. My email filter
moves messages into the proper folder that way and sends the correct
canned initial reply.

As you may now be aware, NADN has been charged with defrauding its
clients for several years through various tax schemes and in mid
April of 2004 filed for Chapter 7 bankruptcy protection in Las Vegas,
Nevada. The first hearing was conducted on July 8, 2004.  Progress is
posted on the US Bankruptcy Court, District of Nevada website (link
posted below).  NADN had initially filed for Chapter 11 protection in
2003 and continued to operate and defraud clients for another year
before being driven to liquidation in 2004 by a $1 million claim
against the company by the Securities and Exchange Commission,
injunctions from the US Department of Justice (DOJ), suits by the
Federal Trade Commission, and complaints filed with the consumer
fraud division of the Office of the Nevada Attorney General. I have
included a few links and some contact information below to provide
you with details. NADN had in its possession thousands of income tax
returns for clients, those returns are now in the hands of the
Bankruptcy Trustee, and former clients are being charged $100 to
retrieve their own documents in order to be able to file 2003 income
tax returns. Interest and penalties accrue for each day they are not
filed as well as for amended returns that must be filed for the
previous two years. For many of the victims, state and local income
tax returns must also be amended.

In Business Las Vegas -- "Tax returns left unfiled at now-defunct
NADN" (All contents © 1998 - 2004 Vegas.com, article By Kevin
Rademacher / Staff Writer)



Darcy Dahlem, left, and Cort Christie -- Photo by Craig L. Moran.
In Business Las Vegas -- "Trustee targets tax firm founder" (All
contents © 1998 - 2005 Vegas.com, article By Kevin Rademacher / Staff
Writer)

As a result of NADN's dishonesty, hundreds of thousands of ordinary
people were defrauded of thousands of dollars each and are now
subject to large back tax assessments along with substantial
penalties and interest. The IRS has made a preliminary ruling that
they may not even claim any of the losses as business deductions or
losses. Many of them will be ruined financially, and many will be
forced into bankruptcy. The former head of NADN, Robert Bennington,
committed suicide on June 20th, 2004, and the US Department of
Justice has filed injunctions against NADN and Oryan Management, the
company NADN used to create and sell online shopping malls allegedly
modified to comply with the Americans with Disabilities Act (ADA) in
order to allow the owners of the malls to claim a credit on their
income tax returns. A portion of the proceeds from the malls was
supposedly donated to the disabled in the zipcode of the malls.  The
concept of ADA compliant online shopping malls was actually
legitimate, but, unbeknown to the mall owners, it was never
implemented as promised.  Guaranteed "audit-proof" tax preparation
and counseling as well as legal representation by NADN during an
audit were included in the price of the mall, the offer came from
verified former IRS tax experts and business advisors, so thousands
of unsuspecting, honest investors purchased malls.  The uncertainty
in the stock market, in the economy in general, and in traditional
investments following the terrorist attack on September 11, 2001,
made this business proposition even more attractive.  Many of the
victims reinvested their tax returns into new "modifications" to the
malls for up to three consecutive years and only learned by chance
from an Internet website that they had been defrauded, even after
filing tax returns for the 2003 tax year -- tax returns that were
accepted by the IRS without question and are only now being
reexamined in light of the discovery by the DOJ of the fraud.

All of the victims believed they were purchasing an honest and
promising business that would generate revenue from commissions on
sales through the 260 name brand stores in the malls and from a
portion of the money paid by advertisers who placed ads on the mall
sites.  Tracking of sales and crediting of commissions was handled
through Link Share corporation, a leading online transactions
handling company.  Although only a handful of victims have been
officially notified or contacted directly by the US Department of
Justice or the IRS, these agencies are contending that the entire
enterprise was a fraud; thus victims will have to file amended
returns for up to three years and repay the $5,000/year ADA tax
credit and perhaps other business-related deductions now challenged
by the IRS because Oryan failed to make any modifications and the IRS
alleges the malls were never legitimate businesses and never ADA
compliant.  Since many victims reinvested the tax returns into
the "business", that money was also lost through the fraud, and they
do not have it.  Besides being defrauded of thousands of dollars and
the revenue that money could have returned, they now face back taxes,
interest, and penalties which must be paid from whatever money they
have available from savings or that they can borrow on their homes or
from retirement plans, if any of those assets are available.  Many of
the victims have none of those sources available to them, so they
will probably be driven into bankruptcy.  This is doubly victimizing
honest people who took every precaution reasonably possible to comply
with the law during the entire period, and it should not be allowed.

There is a strong argument to support a claim of gross failure of the
IRS to perform their duties and protect taxpayers who faithfully
followed the very instructions they now give to everyone who has
contacted them trying to resolve the current problem: "seek the
advice of tax experts before filing your returns". Ironically, that's
exactly how the victims got into this mess.

By accepting the income tax returns without question for at least
three years, the IRS, in fact, failed to alert taxpayers in a timely
manner that their returns contained questionable credits which should
be verified, thus denying the taxpayers the opportunity to utilize
their prepaid legal representation from NADN to clarify the
descrepancy or discover they had been defrauded before the situation
grew into a financial disaster.  Had the credits been challenged and
the fraud been exposed the first year, victims could have sued for a
refund of all money paid to NADN and could have filed amended returns
without the credits.  Now that NADN is under Chapter 7 bankruptcy
protection and is being liquidated, prepaid legal representation is
no longer available to the taxpayers, and NADN is protected from
lawsuits.  Tax refund money spent for tax preparation, amending
returns, and legal representation during an audit is lost to the
taxpayers through NADN's bankruptcy protection.  Failure to alert
taxpayers in a timely manner by the IRS contributed significantly to
this tragedy.

Taxpayers who have contacted the IRS are being told to "seek the
advice of tax experts before filing amended returns" -- again.  Some
tax year 2002 returns were actually amended at the time to claim the
now-rejected credits, were accepted by the IRS for that year, and
refunds were issued. Clearly, neglegence on the part of the IRS in
performing their duties within a reasonable period denied the
taxpayers timely notification of potential errors in their tax
returns and thus contributed to multiple incorrect filings, creating
an unnecessary and avoidable back tax, penalty, and interest burden.
It also allowed NADN to continue and even expand its fraudulent
practices and to defraud thousands of additional victims.  Such
failure to examine the returns properly for at least three years and
at least question the credits during that period constitutes gross
negligence on the part of the IRS. The IRS doesn't allow taxpayers to
file inaccurate returns just because they are busy and don't have
time to gather all the information needed or to error check their
returns before filing them, so an argument by the IRS that they had
too high a workload to discover the errors in the returns shouldn't
be accepted by an appeals panel either. Reason would argue that
thousands of income tax returns claiming a credit for modifications
to an online shopping mall conforming to the Americans with
Disabilities Act should have been cause for at least spot checking
one of them if there was any concern that they might not comply. In
every case, the returns were prepared by "former IRS tax experts" at
Tax Ready, an agent of NADN, or by the taxpayer using data provided
by NADN and Oryan Management.

Had it not been for the victims themselves complaining and initiating
legal action, who knows how many more years NADN would have continued
their fraud, and how many years worth of back taxes and penalties and
interest the victims would be facing? It seems appropriate to request
a full and impartial investigation that could include the questioning
of some IRS managers and some relief for the victims.  The courts and
IRS appeals panels have yet to render final rulings declaring what
credits and expenses are and are not allowable, and the victims of
this cruel fraud do not have sufficient information to refile
corrected and accurate amended tax returns. This fact alone would
argue that, as a minimum, the IRS should suspend any interest and
penalties for all victims.  Each of us wishes to comply with all the
law, but the victimized taxpayers should not bear the full burden
imposed by NADN's fraud and the IRS' failure to perform oversight.
Suing the IRS for damages is not allowed under the law, but seeking
relief from unfair tax burdens is.

A cynic might conclude that the entire situation was an IRS sting and
that illegal entrapment was used. Agents could have set up NADN with
credentialed "former IRS experts" who then sold unsuspecting
taxpayers on tax counseling, audit-proof tax preparation, legal
representation during audits, and "ADA compliant" online malls. NADN
operated the scam for three years to sink the hook deep and draw in
as many victims as they could, and now their associates in the IRS
are "hauling in the catch".  By design or by failure on the part of
the IRS to do their job for three years, the result is the same, and
some culpability is shared by the IRS.

A number of victims have joined forces to share information and to
seek the only allowed remedy by filing Proof of Claim forms against
NADN with the US Bankruptcy court in Las Vegas, but they expect to
receive nothing from the liquidation. The first proceeds will go to
the IRS, and they will largely consist of the reinvested tax returns
the victims paid for products, services, and modifications to the
online malls. Thus, the IRS will recover most of the tax refunds from
the victims via the NADN bankrutcy and then attempt to collect them
again from the victims themselves. Victims are also working with
attorneys to determine whether there are grounds for a class action
lawsuit against Oryan Management; however, as of July 22, 2004, Oryan
Management has issued the following statement to all mall owners:

Dear Mall Owners:

Oryan Management is forced to close. The NADN Bankruptcy Estate owes
Oryan $670,000. Oryan has had no revenue since the NADN Bankruptcy.
It has burned through all its cash looking for new ways to generate
new sales and has failed. Besides the fact that Oryan is a service
company, not a sales company, the Internet bad press regarding the
DOJ lawsuit, and Oryan?s vendor relationship to NADN have been severe
barriers to gaining new sales.

Without compensation, Oryan has kept Mallforall.com and Shopn2000.com
Internet shopping malls active. We have paid the hosting fees and
continued to develop new enhancements to the mall. The intent was
that it would provide you, current mall owners, with additional ways
to generate revenue from your business, and provide Oryan with new
sales channels. However, we ran out of money before achieving our
goal.

All employees have been laid off, with the exception of a few to help
close the business. As of July 22, 2004, the servers will be shut
down and Mallforall.com and Shopn2000.com will no longer be
accessible.

Oryan staff enjoyed the thousands of hours spent on the phone talking
with you mall owners interested in running your businesses. We
sincerely wish each of you the very best in your future endeavors.

Mall owners will now be forced to file Proof of Claim forms with the
bankruptcy court chosen to discharge the Oryan Management bankruptcy,
and they expect to recoup nothing from that effort as well.

That leaves open the matters pertaining to the tax problems created
by NADN and Oryan Management compounded by the inaction of the IRS
for three years. These victims desperately need an advocate for their
inevitable audits from the IRS. A number of factors are in play,
including whether any payments made to purchase or modify the malls
will be allowed as business deductions or fraud losses, how to
compute back taxes, and whether penalties and interest should be
waived for the reasons of IRS failure to notify taxpayers in a timely
manner listed above and since victims were following at all times
guidance from reputed former IRS tax experts up until the day NADN
filed for Chapter 7 bankruptcy protection. NADN still has thousands
of records of clients whose income tax returns they were preparing at
the time they closed their doors, so thousands of people have had to
file for extensions with no idea how to determine what their tax bill
is for 2003 and without the documents needed to be able to file a
return. The Trustee for NADN has worked out an arrangement to return
those records to the individual taxpayers, but a $100 fee will be
charged just for the victims to get back their own records.

Essentially, the IRS has said victims are now "on your own" to find
more "tax experts" to give advice and help prepare amended returns.
Victims feel the treatment they are receiving from the IRS is unfair,
given that following that kind of advice is EXACTLY how they arrived
in this situation in the first place. Victims can't very well simply
stop in at the nearest "H&R Block" and ask for the quick service.
What assurance do they have that the next "tax experts" they consult
will be any more trustworthy or competent than the ones at NADN or
the auditors at the IRS who found no problems with the returns as
filed for three years and who have put victims into the present
crisis?

My request of you is for any assistance and guidance you can provide,
even a list of tax attorneys who might be willing to work with us. We
are trying to collect small donations from each victim to help defray
legal costs, so we are not asking for free help -- just advice and
counsel we can trust and fair treatment by the IRS.

I hope you will give favorable consideration to this request for
assistance. We may become "poster children" for tax reform.


With Regards, and hope for a favorable reply,

Bruce Obermeyer
TR Associates
http://www.opaobie.com


To join with us and receive updates, click on this email link. You
will be added to our list for notifications.
Class Act Legal Cooperative

Below are links and additional information. The following is
information I send each time I am contacted by another of NADN's and
Oryan's victims.

===========
Here is an overview of the situation and actions you should take. You
need to go to the websites listed below and download two forms: the
Proof of Claim form to be mailed to the US Bankruptcy court in Las
Vegas where the initial NADN bankruptcy hearing was held on July 8,
2004, and the Consumer Fraud complaint form to be mailed to the
Nevada Attorney General. You may file a claim against NADN for
anything you believe you bought from them that is illegal or
worthless or for which you did not receive full value (products,
services, hit generators, incorporation of your business, etc.). You
had until October 6, 2004, to file your Proof of Claim with the
bankruptcy court. Late submissions may be rejected.  The Consumer
Fraud complaint against NADN should be mailed to the office of the
Attorney General of the state of Nevada as soon as possible.  No
cutoff date was published, but if you plan to include it as support
data for your Proof of Claim with the bankruptcy court, the October
6, 2004 date would apply.  Addresses are listed below. You might want
to send a copy of that form to the bankruptcy court as well just to
support your claim against NADN.

This process will have to be repeated for the Oryan Management
bankruptcy as soon as official notification of their filing is made
public and the information regarding obtaining Proof of Claim forms
and the address where the forms should be mailed is known.

The IRS has recently issued a ruling that could affect NADN and Oryan
Management victims, or so it seems. This ruling appears to be flawed
and applies tax law in a very narrow interpretation -- eBay and
Amazon.com would not be considered "legitimate businesses" under this
ruling in my view, but I will leave that determination to tax lawyers.

Here is the link to the IRS website notice for "Misuse of Disabled
Access Credits":
http://www.irs.gov/businesses/small/article/0,,id=106472,00.html

=================

Information about US Department of Justice lawsuit can be found at
these links:

http://www.usdoj.gov/tax/04_tax_233.htm
http://www.usdoj.gov/tax/04_tax_309.htm


=================
Here is the DOJ letter:

Email from: Evan.J.Davis@...

(For those who have already received a similar message, this message
differs slightly--we have added a few more names to the list of
entities in which we are interest, plus we have asked a few more
questions. If you have already responded, please respond again only
if you have additional information in response to these additional
questions and lines of inquiry).

It has come to our attention that you have submitted a complaint to
ripoffreport.com or badbusinessbureau.com about the National Audit
Defense Network (NADN), Oryan Management, or TaxReady. We are working
on a civil injunction action, brought by the U.S. Department of
Justice against a number of defendants including NADN and Oryan.

Information about our lawsuit can be found at these links:

http://www.usdoj.gov/tax/04_tax_233.htm
http://www.usdoj.gov/tax/04_tax_309.htm

As part of this lawsuit, we are seeking information from customers of
NADN, Success Matrix Group, CPR Business Solutions, Oryan Management
& Financial Services, and Keyword Gold. We are collecting e-mail
information about these entities (some of which are not currently
defendants in the injunction lawsuit but may have some connection to
the suit) so we can use customers as witnesses in our case. Please
note that we cannot assist you in obtaining a refund of funds paid to
NADN or to figure out any personal tax issues. You may want to
contact the Federal Trade Commission, Nevada Attorney General's
Office, and the US Bankruptcy Court for refund issues and either a
tax professional or the IRS with your tax questions.

If you are willing to share your experiences with us, please e-mail
back to us your name, address, and telephone number, along with any
details about your involvement with NADN, Oryan, Success Matrix, CPR
Business Solutions, and/or Keyword Gold that you think we should know
about. To give you guidance about the type of information that would
be most helpful to us, we have listed some questions below. Please
answer as many questions as you can in a reply e-mail. We are also
interested in receiving from you copies of any documents that you
have relating to NADN or Oryan. Please contact us by e-mail, although
we have provided our telephone numbers in case any difficulties
arise.

Address/info:

Evan J. Davis & Phyllis Jo Gervasio
U.S. Department of Justice
Evan.J.Davis@...
Phyllis.Jo.Gervasio@...
Tel: (202) 514-0079
Tel: (202) 514-6539

Our mailing address is:

U.S. Department of Justice, Tax Division
P.O. Box 7238
Washington, D.C. 20044

Questions:

How did you hear about NADN, Oryan Management, Success Matrix Group,
Keyword Gold, and/or CPR Business Solutions?

If you were referred to any of these entities by someone else, please
state that person's name, address, and phone number, and explain how
you know that person.

How and when were you contacted by (or did you contact) any of these
entities?

What specifically were you told about the products and services
offered by these entities, including about the tax benefits of
purchasing the products? Please be as detailed as possible with the
specific statements, promises, etc. that were made. Please also
include any questions that you asked and the answers given, to the
extent you remember.

Which products or services did you purchase, when did you purchase
them, and how much did you pay for each?

If you paid in part with a promissory note, please state what you
were told regarding how the promissory note would or could be paid
off.

Can you recall the names of any of the individuals you spoke with
about the products and services of these entities?

Have you been contacted recently or are you still being contacted by
any of these entities? If so, please describe the contact(s),
providing names of sales persons and dates and subjects discussed.

Has a representative from any of these entities told you anything
about the Justice Department lawsuit? If so, please describe.

If you have purchased a MallforAll or Shopn2000 website product, has
any representative of any gentility tried to sell you any product or
service related to the website? This could include search-engine
optimization and/or a "hit generator."

In particular, what if anything did the representative say about
these website-related products? Did they make any claims about the
IRS or taxes? Did they make any claims about whether the products
would make your website more profitable?

If you bought a hit generator or search-engine optimizer, please
provide all information about any results seen, including any reports
showing increased "hits" received and commissions earned.

We look forward to hearing from you. Please distribute this list of
questions to whoever else may be interested.

=======================================================


Phone number for the IRS that the DOJ gave to try and ask them about
the 1099-misc received from Oryan or NADN or one of their partner
companies. Latest information is they are not to be reported as
income, but consult a tax lawyer or the IRS before you file any
returns. The phone number for the IRS is 1-866-775-7474

Here are the addresses (and some phone numbers) where the legal forms
can be obtained and are to be sent.

There are two issues and two forms to consider. If you wish to file a
Consumer Fraud complaint against NADN, fill out the Consumer
Complaint form and send it to the Nevada Attorney General at the
address below. If you wish to file a Proof of Claim form with the
bankruptcy court as a creditor against NADN, use the Proof of Claim
(POC) form and send it to the US Bankruptcy Court at the address
below.

Download both the Consumer Complaint form and the Bankruptcy Proof of
Claim form in a zip file from this URL:

There are several files in the zip file. A few are info files from
the bankruptcy court. There are two versions of the Proof of Claim
form. The "POC" form is the original that allowed you to select which
chapter of the bankruptcy law applied. The Customer Claim form is the
one with Chapt 7 and the NADN case number already listed, so that is
the one you will want to submit.

The estate has files in over 7,000 square feet of file storage. For
those customers of NADN who had their tax returns prepared, or had
provided personal documents for any reason to NADN, the estate will
return those documents, if requested, until approximately October 31,
2004. At that time, all remaining documents will be destroyed.  The
Bankruptcy Court entered an order allowing the estate to return
documents and work product to customers of NADN and to charge a
handling and shipping fee of $100. The form to request return of
documents is included in the zip file.

http://www.opaobie.com/download/legalforms.zip

To file a Consumer Fraud Complaint against NADN, use the Consumer
Complaint form in the zip file.

Address to send Consumer Fraud complaint form:
State of Nevada
Office of the Attorney General
Bureau of Consumer Protection
555 E. Washington Avenue, Suite 3900
Las Vegas, Nevada 89101
(702) 486-3777

Nevada AG website: http://ag.state.nv.us/
Their site is "under construction", so forms are not available from
the links, and that is why I placed the Consumer Fraud complaint form
in the zip file.

If you have a claim against National Audit Defense Network (NADN),
you can get a Proof of Claim (POC) claim form for the bankruptcy
hearing from the court web site - under court info, forms, the form
is General Form B10. You need to fill this out and submit it to the
court. (I included it in the zip file mentioned above to save you
time.)

General Form - B10 - Nevada Proof of Claim
http://www.nvb.uscourts.gov/nvb/CourtInfo.nsf/7f77af8ebdbeff2288256448
005e75b0/6c829378368c7aab88256d74006f9195?OpenDocument

This is the link to the actual form (.pdf) to download and is
included in the zip file referenced above:
http://www.nvb.uscourts.gov/nvb/CourtInfo.nsf/7f77af8ebdbeff2288256448
005e75b0/6c829378368c7aab88256d74006f9195/FILE/POCForm.pdf

Send the Proof of Claim form for the NADN bankruptcy to the following
address. You might also include a copy of the Consumer Complaint form
with the Proof of Claim form you send to the bankruptcy court as
support documentation.

U.S. Bankruptcy Court
333 Las Vegas Blvd., South
Las Vegas, NV 89101
702-388-6155

You will need this info for the form to identify the case:
United States Bankruptcy Court
District of Nevada
NATIONAL AUDIT DEFENSE NETWORK
Case number: 03-17306

The Court does not accept claims except by old fashion mail. You have
90 days from the first setting of the 341 meeting, which is July 8th,
to get your claims into the court. You have more than enough time to
submit your claims.

More info about the case is posted on the Bankruptcy court website
and updates are posted as changes occur:
http://www.nvb.uscourts.gov/
...scroll down to NATIONAL AUDIT DEFENSE NETWORK and click on
the "click here" for the latest.

The Trustee for NADN is:

William A. Leonard
5030 Pasadina Road
Suite B216
Las Vegas, NV 89118
phone (702) 262-9322

MEETING OF CREDITORS

Date: July 8, 2004
Time: 3:00 PM
Location: 333 Las Vegas Blvd South, Jury selection room

A meeting of creditors is scheduled for the date, time and location
listed in this Notice. The debtor's representative must be present at
the meeting to be questioned under oath by the trustee and by
creditors. Creditors are welcome to attend, but are not required to
do so. The meeting may be continued and concluded at a later date
without further notice.

NADN provided tax return preparation and audit defense services.

A number of tax returns have been completed and many are in the
process of completion. The estate will not be releasing those tax
returns in the immediate future. Negotiations are ongoing to provide
a follow-up entity to complete those tax returns. Please check back
regularly for a status on the return of those tax returns.

No support is currently available for audit defense. You are advised
to contact a tax attorney to assist you in an ongoing audit.

Please do not contact the Bankruptcy Court, the Office of the United
States Trustee, the Clerk's office or the Trustee regarding tax
returns or audits.



----------------------------------------------------------------------
----------


Suggested Letter to Member of House and your TWO Senators:
Use the form on the website and then follow up with one you send from
your email address using their email address listed on that page.

Find and write to your Member of the House of Representatives here:
http://www.house.gov/writerep/

Find your TWO Senators here:
http://www.senate.gov/general/contact_information/senators_cfm.cfm

Here is one I sent last July. We need to update with our current
situation.

Thu, 22 Jul 2004
caseworker@#####.house.gov (replace ##### with the actual name of the
Representative)

caseworker@#####.senate.gov (replace ##### with the actual name of
the Senator)

Dear Senator #####,

We desperately need your help.

You will find a more complete synopsis at the following URL. I can
supply any additional information you request.

http://www.opaobie.com/Synopsis.html

Below is a short version of our situation and request for your
intervention.

Thousands of former clients of the National Audit Defense Network
(NADN) now face financial ruin at the hands of the IRS and are
seeking your help because they mistakenly placed their trust in an
organization created by former IRS tax experts and even endorsed by
officials at the IRS and by the Nevada BBB. Unfortunately, besides
driving thousands to the brink of financial ruin, NADN has now driven
its founder to suicide -- June 20, 2004 -- Father's Day, if I
remember correctly.

As you may now be aware, NADN has been charged with defrauding its
clients for several years through various tax schemes and in mid
April of this year filed for Chapter 7 bankruptcy protection in Las
Vegas, Nevada. The first hearing was conducted on July 8, 2004.
Progress is posted on the US Bankruptcy Court, District of Nevada
website. NADN had initially filed for Chapter 11 protection last year
and continued to operate and defraud clients for another year before
being driven to liquidation this year by a $1 million claim against
the company by the Securities and Exchange Commission, injunctions
from the US Department of Justice (DOJ), suits by the Federal Trade
Commission, and complaints filed with the consumer fraud division of
the Office of the Nevada Attorney General. NADN had in its possession
thousands of income tax returns for clients, those returns are now in
the hands of the Trustee, and former clients are being charged $100
to retrieve their own documents in order to be able to file 2003
income tax returns.

As a result of NADN's dishonesty, thousands of ordinary people were
defrauded of thousands of dollars and are now subject to large back
tax assessments along with substantial penalties and interest. The
IRS has made a preliminary ruling that they may not even claim any of
the losses as business deductions or losses. Many of them will be
ruined financially, and many will be forced into bankruptcy. The
former head of NADN, Robert Bennington, committed suicide on June
20th, 2004, and the US Department of Justice has filed injunctions
against NADN and Oryan Management, the company NADN used to create
and sell online shopping malls allegedly modified to comply with the
Americans with Disabilities Act (ADA) in order to allow the owners of
the malls to claim a credit on their income tax returns. A portion of
the proceeds from the malls was supposedly donated to the disabled in
the zipcode of the malls. The concept of ADA compliant online
shopping malls was actually legitimate, but, unbeknown to the mall
owners, it was never implemented as promised. Guaranteed "audit-
proof" tax preparation and counseling as well as legal representation
by NADN during an audit were included in the price of the mall, the
offer came from verified former IRS tax experts and business
advisors, so thousands of unsuspecting, honest investors purchased
malls. Most of us reinvested our tax returns into new "modifications"
to the malls for up to three consecutive years and only learned by
chance from an internet website that we had been defrauded, even
after filing tax returns for the 2003 tax year -- tax returns that
were accepted by the IRS without question and are only now being
reexamined in light of the discovery by the DOJ of the fraud.

I respectfully ask that you and other committee members as well as
House members initiate an investigation into the conduct of the IRS
in not only allowing this financial and tax disaster to happen and
continue unabated for years but also in exacerbating the damage to
taxpayers by imposing punitive penalties and interest.

Thank you for your time,

Bruce Obermeyer
TR Associates
http://www.opaobie.com

http://www.vsb.org/disciplinary_orders/titus_agreed_disposition.html

VIRGINIA:

BEFORE THE DISCIPLINARY BOARD

OF THE VIRGINIA STATE BAR



IN THE MATTER OF

VSB Docket No. 04-000-0128

TROY AURELIUS TITUS



AGREED DISPOSITION


Pursuant to the 15 VAC 5-80-50(D)(5)(d) of the Regulations under the
Virginia Consumer Real Estate Settlement Protection Act promulgated
by the Virginia State Bar, the Bar, by Richard E. Slaney, Assistant
Bar Counsel, and the Respondent, Troy Aurelius Titus, Esq., and his
counsel, David Ross Rosenfeld, Esq., hereby enter into the following
Agreed Disposition arising out of the above-referenced matter:



I. STIPULATIONS OF FACT

1. At all times material to this matter, Troy Aurelius Titus (Titus)
was an attorney licensed to practice law in the Commonwealth of
Virginia.


2. On or about November 6, 1998, Titus was the settlement agent in a
residential real estate closing.


3. In investigating a complaint arising out of the referenced
closing, counsel learned Titus had not registered with the Bar as a
settlement agent under CRESPA. Further investigation revealed that,
while Titus did everything necessary to qualify and register with the
Bar as a settlement agent under CRESPA, including the obtaining of
the required surety and fidelity bonds, the completed registration
form and registration fee was not sent to the Bar. Counsel estimates
that, during the period he was unregistered, Titus closed between
1,000 and 1,300 residential real estate transactions.


4. In terms of the lack of CRESPA registration, counsel are unaware
of any complaints made against Titus regarding real estate
transactions during the time Titus was unregistered except for the
closing referenced above, which is the subject of an Agreed
Disposition to be presented to the appropriate District Committee
with a recommendation for private discipline.


5. While this Agreed Disposition is intended to cover Titus's lack of
CRESPA registration from the inception of CRESPA's registration
requirement until April 20, 2001 (the date on which Titus registered
with the Bar), it is not intended to and shall not cover any
allegation of unethical conduct arising from any real estate closing
which does not involve lack of CRESPA registration, or any lack of
CRESPA registration after April 20, 2001.





II. CRESPA REGULATIONS



Assistant Bar Counsel and the Respondent agree the above factual
stipulation could give rise to a finding of a violation of the
following CRESPA Regulations:

15 VAC 5-80-30. Registration; Reregistration; Required Fee.


Every licensed attorney, title insurance company, title insurance
agent or real estate broker, as well as every financial institution
authorized to do business in Virginia under any of the provisions of
Title 6.1, Code of Virginia, or under federal law, and every
subsidiary or affiliate of any such financial institution, now
providing or offering, or intending to provide or offer, escrow,
closing or settlement services as a settlement agent with respect to
real estate transactions in Virginia shall register with the Bar on
or before September 29, 1997, using the registration form available
from the Bar for that purpose. Settlement agents beginning to provide
or offer such services after July 1, 1997, shall register with the
Bar prior to doing so.

Every settlement agent shall thereafter reregister after notice on a
schedule established by the Bar, providing updated registration
information. Every settlement agent shall have a continuing duty to
advise the Bar of any change in name, address or other pertinent
registration data that occurs between registrations.




III. PROPOSED DISPOSITION


Accordingly, Assistant Bar Counsel and the Respondent tender to the
Board for its approval the agreed disposition of a single Five
Thousand Dollar ($5,000) fine as an appropriate sanction if this
matter were to be heard in an evidentiary hearing by a panel of the
Board. The fine shall be paid within ten (10) days of the acceptance
of this Agreed Disposition by the Board.


Upon acceptance by the Board of this Agreed Disposition and upon
payment of the referenced fine, this matter shall be closed. The
Respondent also agrees his prior disciplinary record may be disclosed
to the Subcommittee.



___________________________________ _________________________________

Richard E. Slaney,                Troy A. Titus, Esq.,

Assistant Bar Counsel        Respondent





_________________________________

David R. Rosenfeld, Esq.,

Respondent's Counsel

Source: http://www.vsb.org/disciplinary.html

Disciplinary Actions Taken by the
Virginia State Bar
July 2005 – Present

(Except for agreed dispositions, disciplinary actions imposed by a
District Committee remain subject to appeal for 10 days after notice
of the determination is mailed to the Respondent.)

(Except for agreed dispositions, disciplinary actions imposed by the
Disciplinary Board remain subject to appeal for 30 days after the
Memorandum Order is served on the Respondent.)

September 28, 2005

Troy Aurelius Titus, Troy A. Titus, P.C. 477 Viking Drive, Suite 150,
Virginia Beach, VA  23452

VSB Docket Nos.:  03-022-1772, 03-022-3476, 03-022-3706, 03-022-3852,
04-022-0381, 05-022-0189, 05-022-0235, 05-022-0371, 05-022-0537, 05-
022-2907, 05-022-2966, 05-022-3081, 05-022-3879, 05-022-3984, and 05-
022-4402

On September 28, 2005, the Virginia State Bar Disciplinary Board
revoked Troy Aurelius Titus's license to practice law. The bar
received notice of fifteen overdrafts involving two attorney escrow
accounts and three real estate attorney trust accounts for which Mr.
Titus was responsible.  Mr. Titus consented to the revocation and
agreed to waive his right to petition the Supreme Court of Virginia
for reinstatement.

Titus' consent to revocation is at
http://www.vsb.org/disciplinary_orders/titus_consent_revocation93005.p
df

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Gresham man gets 5 years in $22 million tax-fraud case
Sentence - Terry L. Neal is also fined $50,000 in the scam involving
gold sales and front companies
Wednesday, March 22, 2006
-- Boaz Herzog
A 59-year-old former Gresham business executive was sentenced
Tuesday in federal court to five years in prison for operating an
offshore scam that defrauded the government of $22.49 million in
taxes, authorities said. Terry L. Neal also was ordered to pay a
$50,000 fine at his sentencing in U.S. District Court in Portland.
Until Neal pleaded guilty in April 2004 to conspiring to defraud the
United States, he aggressively promoted to clients his ability to
lower and even avoid federal tax obligations.
Neal and other co-conspirators defrauded the government by hiding
assets, income and expenditures from the IRS, authorities said.
Authorities said they created an elaborate scheme involving foreign
and domestic shell companies that conducted no business and had no
employees, and domestic and foreign bank accounts that made company
funds difficult to trace to owners.

Part of the scheme involved Crowne Gold, a Portland business Neal
helped found that bought gold for clients over the Internet,
according to court documents. Clients were able to convert their
investment into other currencies or apply the money toward a debit
card. Using gold made it harder for the government to trace
investors' money.
A court ruling in September allowed the federal government to seize
some of the gold pieces agents found when they raided the business
several years ago. The government took in $176,275 from sales of 31
10-ounce gold bars and 11 1-ounce gold coins, federal prosecutor
Scott Kerin said. Neal was allowed to keep nine 1-ounce gold coins.
Co-conspirators Aaron Scott Young, 41, and Lee E. Morgan, 39, each
were sentenced in Portland last week to a year and a half in prison
and a $10,000 fine. James A. Fontano, 56, was sentenced last week to
one year in prison and a $4,000 fine.
At least 14 others, including Neal's associates and investors, also
have been convicted of breaking tax laws.
-- Boaz Herzog

THE B.S. BEHIND NEVADA BEARER SHARES
by Randall Edwards, J.D.

Spend about an hour listening to talk radio and you can't miss it –
that radio ad touting Nevada corporations as the bulletproof Asset
Protection shelter that can keep you from getting sued and losing
your fortune to those greedy personal injury lawyers who are laying
in wait to put your name on the defendant line of a meritless
lawsuit.

There's no question that Asset Protection is a good idea – just as
you'd be irresponsible to drive your car without insurance, you'd be
crazy not to shield yourself and your money from a lawsuit. But are
Nevada corporations the one-size-fits-all answer? As a lawyer who has
practiced in Nevada since 1983, I have to tell you that the answer is
a resounding "no."

The marketing of Nevada corporations takes many forms – from Internet
sites promising to incorporate you cheap cheap cheap to a network of
sales representatives pushing a Las Vegas-based program. Nonetheless,
the legal theory behind the craze is always the same: Because Nevada
is the only state that approves "bearer shares" – as negotiable and
easy to transfer as cash – no one can really ever know who owns a
corporation at any time, because at any time anyone might have
the "bearer shares" in their pocket.

The theory appears to go something like this:

Because Nevada's corporate statute differs from the Revised Model
Business Corporation Act as developed by the Committee on Corporate
Laws of the American Bar Association in that NRS does not require
that a stock certificate state the name of the person to whom the
stock is issued, somehow the stock certificate can be made out simply
to "bearer" and thus, just like cash, whoever happens to be hanging
onto the shares at any given time is the "owner" for Asset Protection
purposes. Thus, when a creditor hauls the person who has been running
the corporation up until the morning of his testimony into court,
that person can look the judge in the eye and state truthfully, "Gee,
I don't know who owns the corporation, sir, since I just don't know
where the `bearer' shares are right now, or who's got `em today. And
whoever's got `em is the owner – at least right now."

Accordingly, the judge will shrug his shoulders, throw his hands in
the air and confess, "Well, I guess that's the end of that. We just
can't figure it out, so … CASE DISMISSED! Next?"

The debtor then scurries home, where his grandma, or whoever happens
to be holding the stock certificates, says, "Welcome home, Sonny …
here are those pesky papers you gave me this morning," after which
life goes on unabated, since the debtor now has the stock (and thus
ownership of the corporation) back in his hands, with the frustrated
creditor stamping his feet in the background, muttering, "Curses!
Foiled again by that darned Nevada `bearer shares' law!"

That's the theory, at least. Unfortunately, this structure appears to
be built on a pretty shaky foundation. Here's why:

First, there is no statutory or case authority that stands for the
proposition that such a thing as "bearer shares" exists in Nevada -
at least not in the form pushed by the "Asset Protection" promoters.
There are no Supreme Court opinions dealing with the concept, no
Attorney General's opinions, no federal cases and, as far as I've
been able to ascertain, no district court opinions upholding such a
concept.

In fact, the whole "bearer share" idea stems from this language, in
NRS 78.235(1):

"Except as otherwise provided in subsection 4, every stockholder is
entitled to have a certificate, signed by officers or agents
designated by the corporation for the purpose, certifying the number
of shares owned by him in the corporation." That's it. There's not a
word in Nevada statute that says "bearer," no indication that the
owner of a corporation can scam a creditor by claiming that he
doesn't know who owns the corporation, and no provision that
entitlement to a certificate equates to entitlement to hide from a
valid debt.

In fact, Nevada case law appears to stand for just the opposite
conclusion. As far back as 1942, the Nevada Supreme Court held
that "a transfer of stock between individuals, in order to receive
recognition by the corporation, must be registered upon its books."
See Petition of Simrak , 61 Nev. 431, 132 P.2d 605. This concept has
been upheld as recently as 1986, in the case of Schwabacher v.
Zobrist, 102 Nev. 55, 714 P.2d 1003, which again confirmed that an
ownership interest in a corporation is not valid as to the
corporation until that interest is registered with the corporation.
In fact, the case went on to say that when a stock transfer isn't
registered on the corporate books, the person transferring the stock
stands as a trustee for the person receiving the stock. Doesn't sound
much like the idea that there somehow exists a provision under Nevada
law that authorizes "bearer shares" that can be transferred like
cash. To the contrary, it appears that Nevada case law stands for
just the opposite proposition.

Second, under Nevada law, the holding of the stock certificate
doesn't necessarily mean anything. In 1921, the Nevada Attorney
General's Office issued an opinion that the stock certificate does
not equate to the stock itself, but is merely a piece of paper
evidencing ownership. See AGO 38 (6-7-1921). In all the intervening
years, the Attorney General's Office has never modified or rescinded
this opinion. In fact, because Nevada does not necessarily require
that corporations issue certificates at all, it makes no sense to
assume that possession of a stock certificate equals ownership of the
shares anyway.

Along that same line, Nevada law provides that stock shares are
personal property. NRS 78.240. All rules, regulations and taxes that
would otherwise apply to transfers of personal property would also
apply to transfers of "bearer shares," if indeed such an animal
exists. For example, my car is also my personal property. Handing my
buddy the keys until I got back from court wouldn't equate to
transferring ownership, nor could I get away with telling a
judge, "Gosh, your honor, I don't know who's driving the jalopy right
now, so I couldn't really tell you who owns the old clunker."

Thus, even if such a concept as "bearer shares" did somehow exist
under Nevada law, and even if the transfer of ownership of a
corporation could somehow be accomplished with such ease, there would
still be all sorts of estate, gift and capital gains tax issues.
Furthermore, there is also the possibility that the transferee of the
bearer shares would also be hit with any judgment that had been
levied against the transferor since, as the Schwabacher case stated,
when an unregistered transfer of stock has occurred, the transferee
of that stock is "responsible for the burdens and liabilities growing
out of its ownership," at least as against the transferor of the
stock. Presumably, this would carry with it any court order relative
to the stock arising from the transferor's liabilities.

Finally, does anyone seriously believe that any judge would fall for
this sham? I've been practicing law in Nevada since 1983, and I know
or have practiced before an awful lot of the judges on the Nevada
bench, including the Nevada Supreme Court. Now, even granting that
not everyone who's ever been appointed or elected to the bench
(that's right, in Nevada, judges are elected) is the brightest lamp
on the casino marquee, I don't believe that even the dimmest of
Nevada's legal luminaries would fall for the idea that a corporate
ledger book that makes out the owner of stock shares to "Bearer,"
coupled with a befuddled-looking debtor defendant smugly
saying, "Yup, I think I might've had some of them stock certificates,
but I don't have any now," would somehow leave the judge without any
ability to fashion a legal remedy other than dismissal of a case
against a debtor.

I think that the most tame thing that a judge would do under such
circumstances would be to declare the debtor to be in constructive,
if not actual, ownership of the shares and order the corporation to
be liquidated to satisfy a creditor's claim. Most of the judges I
know wouldn't sit still for just that, though; somehow, the
phrase "contempt of court" keeps springing to mind.

So, when you hear that radio ad that promises untold Asset Protection
by merely filing articles of incorporation in Nevada, I have this
work of advice: RUN! Actually, a few more words: AS FAST AS YOU CAN.
THE OTHER WAY!

Randall Edwards practices law in California, Nevada, Arizona and Utah
with his primary office in Salt Lake City.

FOR IMMEDIATE RELEASE
MONDAY, JUNE 7, 2004
WWW.USDOJ.GOV
  TAX
(202) 514-2007
TDD (202) 514-1888


PROMOTER OF SHAM TRUSTS PLEADS GUILTY
TO TAX FRAUD CHARGES IN ARIZONA


Defendant Sold Tax Schemes Through "Innovative Financial Consultants"




WASHINGTON D.C. - Eileen J. O'Connor, Assistant Attorney General for
the Tax Division, Department of Justice; Paul K. Charlton, U.S.
Attorney for the District of Arizona; and Nancy Jardini, Chief,
Internal Revenue Service Criminal Investigation Division, announced
today that at the federal courthouse in Phoenix, Arizona, before U.S.
District Judge Mary H. Murguia, Mark D. Poseley pled guilty to a
felony charge of conspiracy (18 U.S.C. §371) to defraud the Internal
Revenue Service (IRS) for his role in marketing bogus trusts through
an organization known as Innovative Financial Consultants (IFC). Mr.
Poseley also pled guilty to a charge of willfully failing to file his
2000 income tax return, despite having earned substantial income from
his work with IFC.

On April 4, 2003, Mr. Poseley was indicted - along with Dennis O.
Poseley, Patricia Ann Ensign, John F. Poseley, David W. Trepas,
Rachel McElhinney, Jeffrey G. Lewis, Keith D. Priest, and Frank C.
Williams - for conspiring to defraud the IRS. Mr. Poseley faces a
maximum potential sentence of six years in jail, followed by up to
four years of supervised release, $500,000 in fines and liability for
the costs of prosecution. Judge Murguia scheduled sentencing for
September 13, 2004.

"Putting money into a trust does not exempt it from taxation," said
Assistant Attorney General Eileen J. O'Connor. "People who act as
though it does risk criminal prosecution and jail. And in the end,
they will still owe the taxes, with interest and penalties added."

"IRS Criminal Investigation has made the investigation of individuals
who market or who intentionally buy into abusive tax schemes a
national priority. It is a matter of maintaining public confidence in
the fairness of the tax laws," said Nancy Jardini, IRS Chief,
Criminal Investigation. "Trusts established to hide the true
ownership of assets and income or to disguise financial transactions
are considered sham trusts."

The indictment alleges that from 1995 to 2003, IFC, based in Tempe,
Arizona, created and sold over 3,000 bogus "onshore" and "offshore"
trust packages by falsely claiming that taxpayers could avoid paying
income taxes if they placed their income and assets into such trusts.
IFC allegedly sold each onshore trust package for approximately
$4,154, and each offshore trust package for approximately $10,500.
According to the indictment, IFC enabled its clients to retain
control and use of any income and assets they placed into the trusts,
while making it more difficult for the IRS to track the true
ownership of income and assets.

In his plea agreement, Mr. Poseley admitted he worked as an IFC
salesman and sold both onshore and offshore trust packages. He
admitted that he falsely represented to taxpayers that they could
lawfully avoid paying income taxes by placing their income and assets
into trusts, despite remaining as the trusts' "managing directors."
Mr. Poseley acknowledged he knew the IFC clients, as "managing
directors," retained control over any income and assets they placed
into their trusts. He admitted he ignored written publications from
the IRS and other sources which directly contradicted the false
claims he made. He also admitted that for the year 2000, he earned
substantial gross income from the sale of IFC's trust packages but
willfully failed to file an income tax return and report that income
to the IRS.

Assistant Attorney General O'Connor thanked Tax Division Trial
Attorneys Larry J. Wszalek and Mark T. Odulio, who prosecuted the
case. She also thanked the special agents of the Internal Revenue
Service, whose assistance was essential to the successful
investigation and prosecution of the case.

On December 11, 2003, John F. Poseley pled guilty to the conspiracy
charge and is awaiting sentencing. Trial of the remaining defendants
is scheduled to begin in August 2004. The charges contained in the
indictment are only allegations. In the American justice system, a
person is presumed innocent unless and until he or she is proven
guilty in a court of law.

###

04-394

Source: http://www.usdoj.gov/tax/txdv04394.htm

FOR IMMEDIATE RELEASE
THURSDAY, JUNE 29, 2006
WWW.USDOJ.GOVTAX
(202) 514-2007
TDD (202) 514-1888

Trust Promoters Sentenced to Prison for Tax Fraud
WASHINGTON— Five persons associated with Innovative Financial
Consultants (IFC) were sentenced to lengthy prison terms for
promoting a tax evasion scheme using so-called "pure trust
organizations," the Justice Department and Internal Revenue Service
(IRS) announced today. U.S. District Judge Mary Murguia found the tax
fraud scheme caused, at a minimum, a loss to the federal Treasury of
between three to seven million dollars and ordered the following
sentences:

Dennis Poseley, a former resident of Phoenix, Ariz. and co-founder of
IFC, was sentenced to 84 months of imprisonment and fined $175,000
after being convicted on charges of conspiracy to defraud the
government and willful failure to file tax returns;

Patricia Ensign, a former resident of Phoenix, Ariz. and co-founder
of IFC, was sentenced to 18 months of imprisonment and fined $100,000
after being convicted on charges of willful failure to file tax
returns;

David Trepas, a former resident of Scottsdale, Ariz. and consultant
for IFC, was sentenced to 60 months of imprisonment after being
convicted on charges of conspiracy to defraud the government and
willful failure to file tax returns;

Rachel McElhinney, a resident of Scottsdale, Ariz. and consultant for
IFC, was sentenced to 16 months of imprisonment after being convicted
on charges of willful failure to file tax returns;

Keith Priest, a former resident of Tempe, Arizona and a "trustee" for
IFC, was sentenced to 18 months of imprisonment after being convicted
on charges of willful failure to file tax returns.

"People who promote tax evasion schemes will be prosecuted, convicted
and sentenced to substantial prison terms," said Eileen J. O'Connor,
Assistant Attorney General for the Justice Department's Tax
Division. "The Department of Justice is working vigorously to stop
tax scammers who harm the federal Treasury and all honest taxpayers."

"Promoting abusive trusts and tax schemes for the purpose of
committing tax evasion isn't tax planning; it's criminal activity,"
said Nancy Jardini, Chief of IRS Criminal Investigations. "Public
confidence in our system of taxation is vital; therefore, we will
continue our enforcement efforts to halt fraudulent tax schemes and
hold the promoters of these schemes accountable for their actions."

On Sept. 8, 2005, after a six-week trial, a jury convicted the
defendants of tax crimes in connection with their promotion of a tax
evasion scheme through IFC, a consulting company based in Tempe,
Ariz. The defendants advanced their scheme through several avenues,
including domestic and offshore seminars, a promotional website, and
an interactive telephone conference line.

According to evidence the government presented at trial, from 1996
through early 2003, the defendants received $4.7 million in fees from
their sale of 2,000 "pure trusts," falsely claiming that their
customers could lawfully avoid income taxes by placing their income
and assets into a trust. Evidence introduced at trial showed that
IFC's trusts enabled customers to retain the use and control of any
income and assets they placed into their respective trusts, while
making it difficult for the IRS to track the true ownership of assets
or income assigned to the "trusts." Trial evidence also showed that
IFC was a prominent vendor with the "Institute of Global Prosperity"
(IGP). At offshore seminars hosted by IGP, defendant Dennis Poseley
promoted IFC's trust schemes to thousands of people.

Assistant Attorney General O'Connor thanked Tax Division trial
attorneys Larry J. Wszalek and Mark T. Odulio who prosecuted the
case. She also thanked the special agents of the Internal Revenue
Service whose assistance was essential to the successful
investigation and prosecution of the case.

More information about the Justice Department's efforts against tax-
scam promoters can be found at
http://www.usdoj.gov/tax/taxpress2006.htm. Information about the
Justice Department's Tax Division can be found at
http://www.usdoj.gov/index.html.

###

06-403

Source: http://www.usdoj.gov/opa/pr/2006/June/06_tax_403.html

More information coming soon. We have previously reported on Rick Neiswonger's
conviction and jail time for selling bogus franchise opportunities.

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