The Justice Department on Wednesday filed a civil lawsuit asking a federal judge to issue a temporary restraining order against the National Audit Defense Network.
In court papers filed in a U.S. District Court in Law Vegas, the government said that NADN has sold fraudulent tax schemes, including phony web site businesses, to an estimated 100,000 customers, costing the Federal Treasury and estimated $324 million to date.
The Justice Department alleges that NADN runs a “tax-scam boiler room” that sells bogus “web sites,” home-based businesses, and “incorporation” packages designed to help customers claim bogus tax deductions and credits.
“People ought to use their common sense: the fact that a scheme is advertised on the radio or Internet, or sold by a large company, doesn’t make it legitimate,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division. “The Justice Department is striving to bring people who sell fraudulent tax schemes the response they deserve: injunctions, penalties, and-where warranted-criminal prosecutions.”
Also named in the suit were three other companies: ALR, Inc., which operates under the name Success Matrix Group; Free Trade Enterprises, which operates under the name Oryan Management; ADA Adventure; and thirteen individuals. The suit also asks the court to permanently bar NADN and four of the individual defendants from preparing federal income tax returns for others, and to order the defendants to turn over their customer lists.
The Alleged Scam:
The “websites” are allegedly designed to help customers claim to have a business with a website, and then improperly claim tax deductions and credits for supposedly “modifying” the website-purportedly to comply with the Americans with Disabilities Act. According to court papers, NADN charges customers $2,495 to make sham website modifications, but also adds a sham $7,980 promissory note as part of the ostensible purchase price to artificially raise the total cost to $10,475. NADN allegedly tells prospective purchasers that they can use that inflated cost to claim a $5,000 ADA income-tax credit and a $5,475 business tax deduction, thereby reducing their taxes by more than double the $2,495 they paid for the “modifications.”
In reality, according to court papers, purchasers never received their own website or their own ADA modifications. Instead, in what court papers say is “one of the oldest swindles in the book,” NADN allegedly sold one website 17,000 times, and modified it only once while charging each purchaser for supposed separate modifications. Moreover, the Justice Department alleges, the supposed ADA modifications were largely useless to disabled computer users, making the scheme “a cruel hoax.”
“The scale of this scheme is truly staggering,” said IRS Commissioner Mark W. Everson. “As we’ve said time and time again, people shouldn’t fall prey to schemes and scams. No matter how slick the sales pitch, taxpayers should be wary of anyone promising to eliminate their taxes. There is no secret way to escape paying taxes, either through a home-based business or any other scam.”
The thirteen individuals named in the suit are Las Vegas-area residents Robert Bennington, Weston J. Coolidge, Alan L. Rodrigues, Adam Mangabang, Lee Panelli, Christine Reid, Jeffrey Klingenberg, Rich Klingenberg, and Marie Orie, as well as California residents Daniel W. Porter of Chino, Robert Goetsch of Hayward, Michelle M. Hernandez of Upland, and Joseph Prokop of Mt. Baldy.
This case is part of the Justice Department’s initiative to stop the spread of fraudulent tax schemes.
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I just received a phone call from cpr buisness solutions who knew that i was once a member with the NADN and they are offerring a prepaid legal package and to hook me up with other NADN members in a civil action suit they are looking to carry out. They mentioned that Oryan management had closed it’s doors and now the IRS was looking at the promissary notes as assets. They said they are making people pay these back in 90 days after contacting them. I received an e-mail previously stating they were being dissolved by Oryan management. Does anyone have any information about this CPR company to know if they are legit or just another Scam (they to are out of Nevada). Their website is http://www.cprbusinesssolutions.com. Any help would be appreciated. As of yet i have not joined there service.
Brad
Our business has been scammed by NADN as well. We checked it out for 2 years and then decided to try it out. We didn’t lose as much as some but we are a small company and it hurts our business just the same. ( Almost $600) That was only 2 of the payments that the want us to pay to them. We didn’t get involved in the internet mall part of it. When we were about to cancel because the rep that was suppose to contact us never called, we received a notice that they had gone bankrupt. A big envelope with all kinds of court documents arrived the day I was calling to cancel. Then we tried calling them and the phones were either out of service or disconnected depending on the number we tried that they gave us. We hope that we recope some of our moneys. Some is always better then none. You would have thought that they would have been on the up and up since they were advertising on radio… Been hearing about them for years and then all of a sudden they are being sued… (former IRS Agents, LOL. Sorry but they were taught by the best I guess. Scam the tax payers again.
I joined up with NADN a few months ago and just found out it was a scam. If anyone would let me know how to get in to any class action suits against them it would be greatly appreciated. I have about 5 thousand invested in them to receive nothing or have not been able to contact them or received any call backs from msg left. Thanks for your help
NADN is now in bankruptcy, but was they did constituted FRAUD. If anyone knows of a class action being brought against them please contact me.
Thank You
If anyone knows how to get involved with the lawsuits against NADN would you please advise. Thanks
Thanks to all who shared their NADN testamonies — apparently I was suckered into believing that NADN was a legit business, especially after hearing their advertisemnet on a popular NYC radio station CD101.9. I really wanted to obtain their “free” mentioned on the radio advertisement. However, after calling the advertised toll free number, NADN “suckered” me to go ahead and sign up as a two-year subscriber to NADN at the “introductory one-year cost of $1,628.95, inwhich I was told that this cost is a tax write-off. However, I did receive a judgement notice from the US Bankruptcy Court of Nevada urging me to file a proof of claim or interest with the Court before 10/6/04 in order to be entitled for any distributions from NADN’s estate (I am also advised in the notice that there is no guaranty of assets recovery).
My husband and I joined NADN toward the early part of 2000. We found several errors on our Tax forms. After numerous corrections on our part, NADN prepared the final documents which were filed that year. We ended up with a Tax Audit. We found out that NADN had duplicated several items and we had to pay back the credit we received with interest. After that, we went back to our old regular tax preparer! To date, we have had no other problems with our taxes. For years now, I thought we were the only ones swindled…until I read the postings on this site. I wish you all the best with the class action suit. Hope you all recover your losses. And I wish, like the rest of you, for more than a slap on the hand for the perpetrators!
If you are interesting in being a plaintiff in a class action lawsuit against Oryan then please email me for more information.
If you are interesting in being a plaintiff in a class action lawsuit against Oryan then please email me for more information: angryguyatnadn@hotmail.com
Tax Dude,
I don’t know enough about you to call you names, however from what you have written I get a mental picture of a guy doing Tax Returns, as a sideline, at a surf shop. This is not how I judged NADN. Please give me a better picture of yourself. Perhaps you could start by unveiling your credentials for minimal comparison to the following Editorial Review for “The Guaranteed Tax Savings System (2001 Edition)” at Amazon.com:
“Robert Bennington is nationally recognized as an entrepreneur and an expert on taxation and the IRS. He is currently President or CEO of three companies that employ over 300 people and specialize in tax strategies that have helped over 60,000 Americans save nearly one hundred million dollars in new tax deductions. He has appeared as an expert on the IRS on more than 1,000 radio and TV shows including CNN, Hard Copy, and ABC News. Ernst and Young named Robert and his business partner, Cort Christie, Entrepreneurs of the Year in 1999 for emerging business people.”
Apparently all those “respected” News, Information & Professional organizations collectively did not have the mental alacrity to exceed the individual mentality of a “peep” or an “idiot” in questioning relative credentials.
I remind you that the people that you have attacked here were involved with NADN to remain on the legal side through NADN’s purported expertise and council and not to recklessly defy tax code. The tax aspect was supposed to be a dot the I’s and cross the T’s type of relationship. NADN supposedly researched and developed these “Tax Strategies”, not their clients. NADN & affiliates like Oryan Management obviously failed to produce workable products/strategies but succeeded at misleading many individuals for “profit”. As far as the “fine print” goes, many here tried to back out & cancel in the beginning (look at FTC’s lawsuit on that subject). Finding themselves stuck through deceptive default tactics, some ate the initial cost, but others chose to “make lemonade” by following NADN’s strategies.
So if you are not an ex-employee of NADN/Oryan or the likes striking out at the people who are after you for what you have done; Then please explain what level of expertise, or involvement, that you have that qualifies you to be Judge & Jury over the people posting here. With the credentials available, under what rationale would you have expected NADN to develop an undefendable tax strategy? FYI, NADN’s “help” for “defendable” support was supposed to stop at the “Tax Court” door. That means a Tax Attorney after that. Because it is counterintuitive to me, I am very interested in your professional take on what you think would motivate a person to pay money to knowingly become a tax cheat with all the known risks, fees & penalties involved.
Gary Wilson,
I could not have said it better in your response to “Tax Dude”. “Tax Dude” reminds me of the stuff my baby leaves behind in her diaper. Gary, we could use you in our law suit. Send me an email at angryguyatnadn@hotmail.com
Tax Dude,
So are you saying that everyone that wants to do business with you as a CPA/Tax expert should contact the IRS first to make sure that you are legit and are giving sound advise? Why would anyone think that your single Certification would make you anymore of an expert than the “Team” of CPA’s, Tax Lawyers & others that came from the ranks of the IRS where even you “PeepMaster” have suggested that we should have gone? Are you saying that when employees leave the IRS for the private sector they suddenly don’t know about tax code anymore? If the people you see here were intentional tax cheats then you wouldn’t be seeing lawsuits against NADN & Oryan Management. Are all of your clients “peeps” because the don’t know tax code? Nice attitude, Dude! If you advised them to do something illegal or outside of code and charged for your services wouldn’t you expect to be sued?
Every once and a while I sway from my personal policy of not trying to deal with opinionated name-calling types on an intellectual level. I think Tax Dude validates the worth of that policy. I’m sure Tax Dud is back for comment, now that he finished that 1040EZ refresher course, and we get to enjoy his wit and wisdom again. I’m happy to see that his name-calling bag has yielded a few new vocabulary entries. I wonder if he only has the “Playground” version of “the bag”?
For others…NADN claimed its “ex-IRS” affiliation for years without the IRS issuing a word of warning. The “Virtual Malls” were marketed with for years, with the ADA tax credit feature in place, without a peep from the IRS. Today, to their credit, the IRS has this series at:
http://www.irs.gov/businesses/small/article/0,,id=106472,00.html
Hopefully this URL might help new visitors to this page, but that series wasn’t there in time to help with the problem when we were “checking” it out. Apparently the IRS, who “is” the authority on the subject, saw no clear problem at the same time most of us saw no clear problem with this company and its tax preparation or strategies.
With the breakdown of secure job status in the US & with the outsourcing of jobs to other countries many have been trying to “feel out” new sources of income. The Internet is still a promising frontier. There seem to be a number of IRS accepted internet/virtual-mall type businesses out there. There are also businesses that do qualify for the ADA tax credit. The possibility that, as a “professional” organization, NADN put those two things together is not a far-fetched idea. That people were paying an exorbitant amount for these malls with ADA modifications, in my mind, is a valid observation. That is biased with the realization that what was received in return for payment was much less than what was promised or expected. Basically, the “x” money “equals” the “y” product “formula” did not materialize.
Ask yourself if it was horrible to try to enter a business that also helped handicapped persons. If “horrible”, I guess it’s getting harder to do anything good in this world.
I joined NADN in 2001 for $540, spent $500 for tax prep, and purchased 3 years of shopn2000.com, so i guess you could say I’m a sucker altho when you have former tax attorneys and former IRS agents etc who knows all the red tape and the sales agent saying “you can save on your taxes for the 1st couple of years with all these benifits then the website will take off, the money you make in the business will pay the promissory note (the note for 2001 was almost pd off) as well as the 1099 taxes” they will work with me all i have to do is advertise, which i then bought the hit generator for $1500. how could you not think that it was a great deal this company already went through the red tape for me and they are giving me all the benefits right now plus the money i was spending was coming back to me in taxes for the 1st 3 years. now im out my life savings and i owe all the taxed back. I have contacted 2 tax attorney and they tell me i have to amend my taxes as tho i never had a business. i don’t have the money for the taxes and i cant claim bankruptcy on my business cuz that would be fraud (how did NADN do then?) I dont know where to file a claim against NADN (I have a proof of claim form, but I’m not sure of how to fill it out) and i feel there is something i sould be able to claim on my amended taxes. HOW IS THIS A FRAUDULENT BUSINESS when there were companys advertising on the mall and business was being done? anybody have any suggestions? hawkeyes2@prodigy.net.
I also heard about NADNon the radio station and needed some tax assistance so I called for the free book. The station WBAB talk radion has alwasys been very reputable and I didn’t think they would represent a deciteful company like this one. NADN employee’s are all scam artists.I am very frustrated and disappointed as I thought this was a reputable company. I had tried for months to contact them with no response. They have done noting for me except take my money. I am hoping that somehow we all get back the money they took from us.
Hello Is ther any class action suit or the like pending againest nadn I was told I,d get a refund .But no dice Thanks William
William (or anyone with similar questions),
Run a search for:
San Jose estate planning,NADN
or:
Chris Tulino,NADN
either search should lead you to some good information to help you with this mess.
My question to all this is its march 2005 and its still going on I have been getting these ntoices and bills from them, and besides reporting them like I see so many have done what really is being done to stop this. I am just upset with the fact that if we are they fdral whatever knows that this company is afraud then why haven’t they been made to re-pay those bill payemts to the people. Yes I am the dumb one that payed the first bill but today I recieve another for the same magazine I did not order for a different amount. will someone please tell me what a oerson is to do if it does no good to call. I myself summited a letter to the State genral attorney office in IL. what the use.
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