Washington (June 15, 2004) -- The Justice Department scored another victory in its war on tax scams when a federal bankruptcy court barred a Las Vegas-based telemarketing firm from selling abusive tax schemes and preparing federal tax returns, and granted the Justice Department access to the company's records, including its customer information.
The Justice Department's lawsuit, filed in April, alleged that the National Audit Defense Network, known as NADN, sold fraudulent tax schemes to an estimated 100,000 customers that bilked the government out of $324 million in federal income taxes over the past three years. The suit, which also named 13 individuals and three other companies, alleged that NADN ran a “tax-scam boiler room” that sold bogus Web sites, home-based businesses and “incorporation” packages designed to help customers claim improper tax deductions and credits.
The Justice Department, which noted that the company’s database had more than 640,000 customers, said that court papers showed that NADN ceased operations last month and filed a petition to liquidate its operations under Chapter 7 of the bankruptcy code.
The Justice Department, in cooperation with the bankruptcy trustee and the Internal Revenue Service, said that it intends to contact customers who purchased NADN’s tax schemes or to whom NADN may have given false tax advice to alert them about the injunction and to provide information about amending tax returns containing erroneous NADN-initiated credits and deductions.
The Justice Department is still seeking permanent injunctions against 10 other defendants in the lawsuit, including NADN's former president and its former general manager. Six other defendants named in the lawsuit agreed last month to a permanent injunction barring them from organizing or selling abusive tax shelters and from preparing federal income tax returns. It also required them to give copies of the orders to their customers and to give the Justice Department lists of their customers’ names, addresses and Social Security numbers.
-- Melissa Klein Aguilar
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