The Federal Trade Commission said it is mailing more than $16 million in refund checks to 18,571 consumers who had paid money to American Tax Relief, a company that allegedly bilked financially distressed consumers by falsely claiming it could reduce their tax debts.
Under a settlement that the FTC reached last year, American Tax Relief turned over millions of dollars in assets the court had frozen, including bank accounts, jewelry and a Ferrari. The parents of one of the defendants also turned over bank accounts, jewelry, a Beverly Hills residence and a Los Angeles condominium.
The FTC said last week that affected consumers would receive, on average, 16 percent of the amount they lost. Those who receive checks from the FTC’s refund administrator should cash them within 60 days of the mailing date. The FTC never requires consumers to pay money or to provide information before refund checks can be cashed. Those with questions should call the refund administrator, Gilardi & Co., LLC, at 1-(877) 430-3699, or visit www.FTC.gov/refunds for more general information.
Under last year’s settlement order, American Tax Relief LLC and its leader, Alexander Seung Hahn, were banned from telemarketing, and they and Hahn’s wife, Joo Hyun Park, were permanently prohibited from selling debt relief services. As part of the FTC’s ongoing efforts to protect consumers in financial distress, this was the agency’s first action against a tax relief company.
A number of other tax relief companies have also run afoul of regulators and state attorney generals in recent years after advertising their IRS tax resolution services to consumers and been forced to shut down, including TaxMasters, JK Harris and “Tax Lady” Roni Deutch (see TaxMasters Goes Bankrupt, JK Harris Goes Out of Business and Tax Lady’ Roni Deutch Pleads Guilty).
The FTC originally filed charges against American Tax Relief, Hahn, and Park in September 2010. A court subsequently halted the allegedly illegal practices, froze the defendants’ assets, and appointed a receiver to manage the company pending resolution of the case.
In August 2012, the court entered partial summary judgment in favor of the FTC, finding that the defendants falsely claimed they already had significantly reduced the tax debts of thousands of people and falsely told individual consumers they qualified for tax relief programs that would significantly reduce their tax debts. The court found Hahn personally liable for the challenged practices.
The 2013 settlement order imposed a $103.3 million judgment against ATR, Hahn, and Joo Hyun Park. It also imposed judgments of $18 million and $595,000, respectively, against relief defendants Young Soon Park and Il Kon Park, Joo Park’s parents, who were not charged with participating in the scheme but were found by the court to have received significant sums. At the time, the FTC said the judgments would be suspended once the defendants and relief defendants have surrendered assets that total more than $15 million, including cash, a home in Beverly Hills and a condo in Los Angeles, jewelry and gold items, and a 2005 Ferrari. The order also prohibited ATR, Hahn, and Park from misrepresenting material facts about any products or services, collecting payments from the scheme’s customers, selling or otherwise benefitting from customers’ personal information, and failing to properly dispose of customer information.
The FTC vote to approve the proposed stipulated final judgment was 5-0. The stipulated final judgment was entered by the U.S. District Court for the Central District of California on Jan 29, 2013.