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Feds Sue to Stop Alleged Tax Scams

December 8, 2003

WASHINGTON (AP) _ The Justice Department said Monday it had moved to block alleged tax scams that involve counterfeit checks, sham corporations and the attempted obstruction of Internal Revenue Service investigations.

The suit, filed in the U.S. District Court for the Middle District of Florida, alleged that Eddie and Kathleen Kahn of Sorrento, Fla., ran businesses that sold counterfeit checks and bonds destined for the IRS. The federal government has received at least $2.2 million in false checks.

``Tax scam promoters cheat the federal government and all law-abiding Americans when they encourage and enable others to violate the tax laws,″ said Eileen O’Connor, assistant attorney general for the department’s tax division. ``They also cheat their customers, who can expect to pay back taxes, interest and penalties, as well as face criminal prosecution for tax evasion and for presenting counterfeit documents.″

The Kahns’ businesses also allegedly sold fake entities known as ``corporations sole,″ which advised customers that their income would be tax-exempt and their assets collection-proof if they use the corporation, declared themselves a ministry and took a ``vow of poverty.″

The suit also alleged that the Kahns tried to thwart IRS investigations and collections by filing complaints against IRS employees with the Treasury Department Inspector General.

The complaints were allegedly signed by attorney Milton Hargraves Baxley II of Gainesville, Fla., and accountant Bryan Malatesta of Cleburne, Texas, who were also named in the suit. The Kahns allegedly charged customers $50 for the service.

Lastly, the complaint alleged the Kahns marketed fraudulent tax schemes on the Internet and through seminars nationwide.

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