“Flipping houses” is a popular concept. There are several cable shows dedicated to buying “fixer-uppers,” and selling them for a profit. It sounds like a great concept, but it requires a lot of money up front for improvements and a lot of hard work. The Oregonian reports on a Clackamas businessman, who used his failure in real estate to collect more than $400,000 in a bizarre tax refund scheme that started out as a home improvement project.

The article states that the man’s trouble all began when the housing market began to decline and he was “on the edge of financial ruin,” resulting from his flipping activities. He claimed a hefty tax refund was due because of a $2 million overpayment in taxes for 2007 and 2008. (As you might guess, the returns were falsified.) He claimed a refund of $411,773, and the federal government cut a check for that amount. (Unfortunately, many revenue agencies sometimes cut the check first and ask questions later.) Needless to say, the tax refund check didn’t lie around for long. He used the refund for a home loan, a Mercedes-Benz, a boat and to pay off some credit card bills. (Was he concerned about a bad credit record?)

The fraudster also made money off of neighbors and hardworking taxpayers by hawking a popular tax fraud scheme called “the process.” The scheme is based on a theory that the U.S. is not a country, but a corporation that sets aside $1 million for every child born within its borders. But, he eventually failed at this too. During the investigation in this case, the fraudster appeared at a Portland hotel, where he lectured others on how to use 1099 tax forms to make claims for false income tax refunds. Lucky for federal agents, an audio recording was captured of the fraudster stating that he was lazy, greedy and wanted to get rich. (Every once in a while the good guys get lucky.) Another key part of the prosecution involved the man physically walking into the criminal investigation division of the Portland IRS office to talk to federal agents about his tax resister and tax protestor positions. (Did he really think he wouldn’t be investigated? This guy is not exactly the brightest light bulb in the chandelier.)

The 41-year-old will serve four years in federal prison, plus three years of supervision following his release for stealing money from the government and teaching others to do the same. He was also ordered to pay $411,773 in restitution.

Flipping houses is a business fraught with risk. Sometimes, the flipper hits it big; while other times, he or she takes a loss. That’s just how the game is played. Here, the defendant doubled down. He rewrote the game – and the U.S. Constitution, while he was at it – by committing fraud. And, got caught…big time. And, now, he’ll be serving some big time in the big house – and not one he can renovate.

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