Gambling with Other People’s Money

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26835495 - side view of hacker using multiple computers to steal data at table

Las Vegas is widely known for some of the world’s most luxurious casinos and hotels, drive-through wedding chapels, celebrity performances and the chance to engage in excessive indulgence. (I’m sure you’ve heard the adage that ‘what happens in Vegas, stays in Vegas.’) An article published in the Las Vegas Review-Journal tells about three Las Vegas businessmen who indulged in a tax fraud scheme that victimized thousands of clients and stole more than $60 million from the Internal Revenue Service (IRS).

The article reports that the tax fraud scheme promoted fraudulent tax deductions through an Internet package that claimed clients could get up to $10,475 in improper tax credits and deductions under the Americans with Disabilities Act. (That should have been the first warning sign to victims. If it sounds too good to be true, it probably is.)

Three Las Vegas businessmen were involved in the tax scam. A marketing agent sold the illegal Internet program to the general manager and former chairman of a company that marketed the program across the nation, victimizing thousands. (The scheme was revealed after many customers, who were audited by the IRS, were questioned on the legality of the program.)

The perpetrators were convicted following a six-day trial that included two days of arguments from witnesses, many who were victims of the scheme. The general manager, who also happened to be the former owner of two casinos, received a six-year prison sentence. (The 55-year-old man tried to flee to Mexico, but was caught by FBI agents the night before his sentencing and was placed in federal custody.) The fraudster had also been indicted on charges for another telemarketing scheme that allegedly promised federal grants to small struggling businesses.

The former 70-year-old company chairman received a sentence of 70 months. (I bet he didn’t figure on spending his retirement in jail.) The 54-year-old marketing agent, a former NFL punter, got an 18-month sentence plus 30 months of home confinement following his prison sentence. All of the men were ordered to serve three years of supervised release following their prison terms and must share in paying back more than $35 million in restitution to their victims.

Gambling with your own money is risky, but gambling with other people’s money comes with higher stakes. It’s apparent that these men did not consider the consequences before launching their indulgent scheme, nor did they bet on getting caught. Now it’s time to pay back their illegal earnings. (Let’s hope they didn’t already gamble it away.)

Source: Today’s ”Fraud of the Day” is based on an article titled, ”3 Sent to Federal Prison in Massive Vegas Tax Fraud Scheme,” written by Jeff German and published by the Las Vegas Review-Journal on March 11, 2015.

Three men have been sentenced to federal prison terms and ordered to pay more than $35 million in restitution in a massive tax fraud scheme that left thousands of victims across the country in its wake.

The scheme, which federal prosecutors said took place between 2001 and 2004, involved the now-defunct Las Vegas company the National Audit Defense Network. The company was accused of selling an Internet package, dubbed Tax Break 2000, to help its nationwide clients claim improper tax deductions.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.