Sydney Jack Williams of Naples, Florida was sentenced today to a year and a day in prison for failing to report more than $12 million to the IRS in related commissions received in Nevin Shapiro’s $930 million Ponzi scheme.

Williams previously plead guilty to an Information that charged him with one count of subscribing to a false tax return. During that proceeding, Williams admitted that he recruited more than 60 people to invest in Capitol Investments USA Inc. (“Capitol”), which Shapiro has admitted was a fraud.

According to court documents, Williams was an investor in Capitol, which Shapiro used to solicit approximately $930 million between January 2005 and November 2009 from individuals who believed they were investing in Shapiro’s grocery distribution business. Shapiro has admitted that Capitol had virtually no income generating business during that time, and that he used new investor funds to make principal and interest payments to existing investors, as well as to fund his own lavish lifestyle – including by giving payments and gifts to student and professional athletes.

Williams personally invested more than $100 million. Though Williams received more than $7 million in interest payments, he ultimately suffered an overall $3 million loss on his personal investment when the scheme collapsed.

In return for bringing new investors to Capitol, Williams was paid commissions equal to as much as the interest payments for those investors. Williams received more than $12 million for bringing more than 60 investors to Capitol – more money than any other individual received and for more investors than any other individual recruited. Individuals recruited by Williams invested more than $307 million with Capitol, eventually losing more than $38 million as a result of the scheme. The government does not allege that Williams was aware that Shapiro or Capitol was engaged in fraud.

In pleading guilty to subscribing to a false tax return that failed to report $1.7 million income for 2005, Williams admitted that he also failed to report Capitol-related income for all tax years from 2004 through 2007. According to the Information, Williams failed to report more than $6.4 million in income during that time and owed approximately $2.2 million in taxes on that income.

Father and son Roberto Torres, and Alejandro Torres – the former chief financial officer and an accountant with Capitol, respectively – each pleaded guilty April 4, 2011, to one count of securities fraud, admitting that they assisted Shapiro in the operation of the Ponzi scheme. Roberto and Alejandro Torres were sentenced Oct. 5, 2011, to 48 and 46 months in prison, respectively.

In addition to the prison term, Judge Wigenton sentenced Williams to a year of supervised release and ordered him to pay a $25,000 fine. The judge also ordered Williams to cooperate with the IRS in paying his outstanding tax obligations – Source.

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Read the full article at GetOutOfDebt.org, click here: Largest Recruiter Of Shapiro’s $930 Million Ponzi Scheme Sentenced

Janika Fernae Bates, a resident of Alabama, was sentenced today in the Middle District of Alabama to 94 months in federal prison for stealing identities of student loan borrowers and providing them to a co-conspirator, who used them to file false tax returns, the Justice Department and Internal Revenue Service (IRS) announced.

On Sept. 23, 2011, a jury in Montgomery, Alabama, convicted Bates of identity theft, wire fraud, aggravated identity theft and conspiracy to make false claims for tax refunds.

According to evidence introduced at the five day trial, Bates obtained the names and Social Security numbers of student loan borrowers from the databases at her former employer and conspired to use the stolen identifying information to steal money from the government and from a bank. Several victims testified that they did not consent to the use of their names and Social Security numbers on tax returns and they testified that they did not receive any money from refunds generated from the false documents filed with the IRS. Evidence also revealed that Bates and her co-conspirator, Keshia Brayboy, fraudulently obtained refund anticipation loans from a bank predicated on the fraudulently filed tax returns. Brayboy pleaded guilty in 2009 to filing a false tax return and served two years in federal prison.

U.S. District Judge Myron H. Thompson also ordered Bates to pay $246,064 in restitution to HSBC Taxpayer Financial Services and $30,211 in restitution to the IRS – Source.

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Read the full article at GetOutOfDebt.org, click here: Woman Sentenced For Stealing Identities Of Student Loan Borrowers

A trucking company’s owners have been indicted on embezzlement, tax evasion and million dollar fraud charges related to the World Trade Center site clean-up.

A thirty-one count indictment was unsealed in federal court in Brooklyn this month charging trucking company owners Gerardo P. Fusella and Vincent J. Fusella, Jr., with crimes including embezzlement, mail fraud and tax charges.

As alleged in the indictment, between 2007 and 2009, the defendants used their trucking companies, Fusella Group L.L.C. (“Fusella Group”) and Alpine Investment Group, Inc. (“Alpine Investment”) to truck construction and demolition debris between construction sites and landfills in Long Island, New York City, New Jersey and elsewhere.

During 2007 and 2008, the Fusella Group entered into a collective bargaining agreement with the International Brotherhood of Teamsters, Local 282 (“Local 282″), in order to be eligible to enter certain valuable contracts. This agreement obligated the defendants to pay specific hourly wages to their drivers and to make payments to Local 282′s welfare, pension, annuity, job training, and vacation and sick leave trust funds. In violation of the agreement, and at times with the assistance of a union shop steward working at the Fusella Group to whom the defendants allegedly paid bribes, the defendants hid their drivers’ true work hours to avoid paying the required hourly wages and benefit fund contributions. In addition, as detailed in the indictment, beginning in 2008, the defendants began to conduct a substantial portion of their trucking business through Alpine Investment in order to embezzle funds from Local 282′s benefit funds, and succeeded in embezzling more than $1,000,000 in union benefit fund payments by 2009.

The indictment also alleges that, in 2007, the Fusella Group received a contract to remove dirt and debris from the World Trade Center reconstruction site in lower Manhattan. This contract required that the defendants pay the hourly wage and benefit fund contributions specified in the agreement with Local 282. The Fusella Group failed to make these payments but submitted false certifications verifying that it had done so.

In addition, the indictment charges that the defendants avoided paying social security and federal and state income tax contributions for employees by, among other things, falsely classifying truck driver-employees as independent contractors and by failing to report salary payments made to their office workers and mechanics. Instead, they claimed that the payments were deductible business expenses. As a result, the defendants are charged with failing to make more than $150,000 in employee social security contributions between 2007 and 2009.

“It is imperative that employers provide the wages and benefits to which their employees are legally entitled,” stated United States Attorney Lynch. “America’s workers rely on their benefit funds to set aside hard earned dollars for an uncertain future. They rely on their employers to properly move monies into those accounts on their behalf, as required by law. As alleged, these defendants not only failed to pay their workers full pay and benefits, they failed to make the legally required security benefit contributions designed to provide security in retirement, and they also embezzled more than $1,000,000 from the Local’s benefit fund account. Thanks to the combined efforts of this investigative team, they will now be held to account for their charged crimes.”

“Today’s indictment should serve as a deterrent to those who would defraud unions and their employee benefit funds and submit false wage and tax documents in order to conceal their crimes. These alleged actions were done for personal enrichment. The OIG will continue to work with our law enforcement partners to vigorously investigate and prosecute these crimes within the construction industry,” stated Special Agent-in-Charge Panella, the New York Regional Office for the U.S. Department of Labor’s Office of Inspector General, Office of Labor Racketeering and Fraud Investigations.

Special Agent-in-Charge Shoemaker, U.S. Department of Transportation, stated, “This investigation demonstrates that ensuring employment integrity in the transportation industry is a top priority for both the Office of Inspector General and the Department of Transportation. Working with our law enforcement and prosecutorial colleagues, we will continue our efforts to promote the prevention, detection and prosecution of embezzlement and workforce fraud.”

Port Authority Inspector General Van Etten stated, “I want to commend United States Attorney Loretta Lynch and her staff for bringing this prosecution and the superb investigative work performed by the investigative agencies. Firms doing business with the Port Authority are legally bound to pay their employees the fair and prevailing wage, as well as union benefits and taxes. Here, however, the defendants allegedly chose to line their pockets and enrich themselves at the expense of their workers. These charges serve notice to all would-be contractors that the Port Authority and law enforcement authorities simply will not tolerate wage fraud or any other cheating on public projects.”

Internal Revenue Service Special Agent-in-Charge Pine stated, “IRS-Criminal Investigation understands the very real consequences of an employer who illegally fails to withhold employment taxes and report wages to the IRS – employment tax schemes result in the loss of tax revenue to the United States government and can reduce future Social Security or Medicare benefits for employees. The investigation of such schemes remains a priority for IRS-Criminal Investigation, and we are pleased to work with our law enforcement partners in this case.”

If convicted, the defendants face maximum sentences ranging from 5 to 20 years of imprisonment on each count – Source.

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Read the full article at GetOutOfDebt.org, click here: Fraud Scheme Related to the World Trade Center Site Clean-Up

In early December Edward Lawson pleaded guilty to wire fraud in connection with a $6.2 million fraudulent investment scheme.

According to his plea, Lawson was the president of “Automated Revenue Creation LLC” and “Guaranteed Results Advertising, LLC” (collectively, GRA). GRA’s investment literature stated that it was in the business of providing advertising through “Narrow Cast television commercials,” purportedly consisting of advertising displayed on LCD television monitors located at convenience stores and gas station pumps.

From May 2006 to September 2008, Lawson made presentations to potential GRA investors at hotels in the Washington, D.C. metro area and at a GRA office in Rockville, Maryland. In the early stages of GRA, an investor who purchased a screen for $15,800 was guaranteed a monthly return over a 10 year period that began at $3,000 and escalated to approximately $30,000 after 15 months. Later in the scheme, an investor who purchased a screen for $23,800 was guaranteed a monthly return of $3,000 and escalated to approximately $15,000 after 12 months. In GRA’s final phase, an investor who purchased a screen for $89,800 was guaranteed a monthly return of $13,950 over a five or 10 year period.

Lawson made several misrepresentations in soliciting GRA investors, including that: Lawson had over 30 years experience as an entrepreneur; Lawson had invested approximately $1.5 million of his own money into GRA; at all times, the GRA screens were generating sufficient revenue to meet the revenue projections promised to investors; the screens were generating so much revenue that Lawson encouraged investors to reinvest their earnings rather than cash out; advertisers had provided checks representing payments to GRA, which Lawson distributed at investor meetings; and Lawson had issued payments to investors via checks, which bounced due to conditions beyond Lawson’s control.

As a result of the scheme, GRA received at least $6.2 million in investments from over 60 investors.

Lawson faces a maximum sentence of 20 years in prison followed by five years of supervised release and a fine of $1 million or twice the gain or loss associated with the offense, whichever is greater.

As part of his plea agreement, Lawson agrees to the entry of an order of restitution and forfeiture for the full amount of the victims’ losses, which will be determined prior to sentencing.

“Edward J. Lawson’s promises of ‘automatic revenue’ and ‘guaranteed results’ were entirely fraudulent,” said U.S. Attorney Rod Rosenstein. “Investors should be wary of investment
opportunities that seem too good to be true.”

“In financial fraud schemes the promoter eventually runs out of other people’s money and the scheme collapses like a house of cards,” said IRS Acting Special Agent In Charge Jeannine Hammett – Source.

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Read the full article at GetOutOfDebt.org, click here: Owner of Advertising Investment Companies Pleads Guilty To $6.2 Million Fraud Scheme

In late November it was announced that New Jersey mortgage broker, Robert Cusic Jr., admitted that he conspired with a New Jersey attorney, Thomas Frey, and others to extort victims out of money and property by falsely stating they were the subjects of criminal investigations.

Cusic plead guilty to an Information charging him with conspiracy to commit extortion under fear of economic harm.

Cusic, Frey and an uncharged co-conspirator (“CC-1″), schemed to extort and to defraud four victims, including two police officers, by falsely representing to the victims that they were the subjects of criminal investigations, principally by the IRS, in connection with investment properties some of them owned. Cusic falsely represented that while at a property formerly owned by one of the victims, Cusic encountered two IRS special agents (SA-1 and SA-2) who questioned him extensively about some of the victims.

Frey falsely told the victims he had ongoing communications with SA-1 about the alleged investigation and had a special relationship with SA-1. Frey told the victims if they paid up to $20,000 each, he would call SA-1 and have the investigation converted from a criminal tax investigation to an IRS “desk audit,” a civil matter. Frey and CC-1 falsely stated that if the victims did not retain his services and pay the fee, the investigation would likely result in the arrest of certain victims.

Cusic admitted the goal of the conspiracy was to obtain approximately $80,000 in fees for Frey and to cause the victims to sell the properties to Frey and others. Cusic stood to receive a portion of any fees paid by the victims, a percentage of the sale price of each of the investment properties sold to Frey and others, and property management fees on any of the properties sold.

The extortion conspiracy charge to which Cusic pleaded guilty carries a maximum potential penalty of 20 years in prison and a fine of up to $250,000. Cusic’s sentencing is scheduled for Feb. 28, 2011.

Thomas Frey has been charged by Indictment with one count of conspiracy to commit extortion, one count of extortion and attempted extortion, four counts of wire fraud and one count of conspiracy to commit wire fraud, in addition to a charge seeking the forfeiture of $10,000. The charges and allegations contained in the Indictment against Frey are merely accusations, and he is considered innocent unless and until proven guilty Source.

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Read the full article at GetOutOfDebt.org, click here: Mortgage Broker Pleads Guilty To Extortion Conspiracy Of Homeowners

Earlier this year Janice Edwina Demmitt was convicted of the federal felony offenses charged in a 27-count indictment against her and her son, Timothy Fry. At trial, Demmitt was convicted on on one count of conspiracy to commit money laundering, eight counts of wire fraud and 11 counts of money laundering. Her son, Fry, whom plead guilty to one count of money laundering is now serving an 87 month prison sentence. Both were ordered to pay, jointly and severally, nearly $600,000 in restitution. Demmitt will now face 70 months in prison, herself.

Between 2006 and 2009, Demmitt and her son ran an insurance agency in Amarillo, Texas, and as part of their business, as registered agents of Allianz Life Insurance Company of North America, they sold annuities to investors. The majority of their clients were elderly investors.

Fry and Demmitt represented to their clients that Allianz would match each investment they made, up to $100,000, and encouraged their investors to either cash-in or borrow against their existing Allianz annuities and use those proceeds to reinvest to take advantage of the “matching” funds.

However, instead of reinvesting their funds as they told their clients they would do, Fry and Demmitt deposited the funds into their personal accounts.

In fact, evidence presented showed that they tricked their investors with the promise of the matching investment money so that the clients would liquidate their legitimate investment accounts. Approximately $600,000 in client funds was transferred into Fry’s and Demmitt’s personal accounts.

“Ms. Demmitt’s greed robbed her clients, most of them in their golden years, of their hard-earned security,” said U.S. Attorney Saldaña. “In fact, she not only robbed these vulnerable clients of their savings, she robbed them of their dignity. This office will continue to make it a priority to protect those in need of our help.”

“The IRS Criminal Investigation Division is committed to lending its financial expertise to investigations of professionals who target vulnerable individuals’ money for the purpose of lining their personal piggy banks,” said Andrea D. Whelan, IRS Special Agent in Charge of the Dallas Field Office – Source.

If you have been scammed and would like to file a scam report, please click here.

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Read the full article at GetOutOfDebt.org, click here: Mother Sentenced To Almost 6 Years Jail Time In Family Fraud Affair

I’ve never really thought or paid much mind to where a criminal would buy a car. Have you? I mean, think about it, you’d figure if someone was hiding from the police or the Internal Revenue Service (IRS) that they’d probably buy a car in cash and pay off a dealer to keep it off the records, right? Right.

Well, if a car dealer is going to do it for one criminal wouldn’t he do it for another? Probably. Which instantly reminds me of the children’s book “If You Give A Mouse A Cookie” which tells the tale of a mouse that once he gets a cookie he wants a glass of milk and then more and more and more from then on. I suppose, if you give a corrupt used car dealer a cookie he’ll want a glass of fraud. What a money making opportunity for car dealers! Right? What could be wrong with this picture … aside from committing a money laundering scheme that lands you over 15.5 years in prion.

Richard Alan Arledge found out the hard way that if you cater to criminal customers you might end up a criminal.

In court, prosecutors presented evidence that Arledge served as the owner and operator of Richard Arledge Suzuki, and as the director and president of Expressway Financial, Inc.

Over thirty witnesses testified during trial to establish that Arledge intentionally sold high-end luxury cars – including Bentleys, Aston Martins, and Maseratis – to individuals who derived their income from the illegal distribution of controlled substances, the promotion of prostitution, and mail and wire fraud.

These criminal customers usually paid for their luxury cars in cash, and provided tens of thousands of dollars in cash to the dealership in pillowcases, in shrink-wrapped plastic packages, in backpacks, and even in fast food paper bags.

During these financial transactions, Arledge and other dealership employees promised the criminal customers that the dealership would not report the financial transactions to federal authorities, despite federal reporting regulations requiring that all cash received in excess of $10,000 be reported to the Internal Revenue Service.

Arledge and others also concealed the fact that the criminal customers were purchasing the cars by titling the transactions in the names of third parties and labeled the car purchases as “leases” in order to permit the dealership to re-acquire the luxury cars if ever seized by law enforcement during the course of a federal investigation.

Fourteen other individuals were either convicted or pleaded guilty in connection with the money laundering scheme. Former employees Cecil Coleman and Rustyn Thomas each pleaded guilty for their roles in conspiring with Arledge to assist with the illegal transactions, while Steve Ham was convicted at trial. Former employee Julius Farr pleaded guilty for concealing material facts from a law enforcement investigation. Warren Barconia and Jerome Helen each pleaded guilty to conspiring to launder proceeds derived from prostitution. Patrick Dread, Robert Louis Hawkins, Jr., and Stoney Kidd each pleaded guilty to conspiring to launder proceeds derived from the illegal distribution of controlled substances. Tyrone McCray pleaded guilty to conspiring to launder proceeds derived from mail and wire fraud as well as the illegal distribution of controlled substances. Charo Knight and Clarence Williams pleaded guilty to conspiring to launder proceeds derived from illegal gambling. Marcus Deaand Jason Palmore each pleaded guilty to assisting in the concealment of the luxury car transactions.

“The IRS is committed to lending its financial expertise to investigations of businessmen who knowingly assist criminals in covertly purchasing assets with illicit funds,” said Andrea Whelan, Special Agent in Charge of the IRS Criminal Investigation Division’s Dallas Field Office. “The consequences of such greed-induced actions can be severe, as evidenced by the outcome of this case” – Source.

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Read the full article at GetOutOfDebt.org, click here: If You’re Catering To Criminals, You’re Probably A Criminal

So, A Fraudster, Arsonist And Drug Dealer Walk Into A Bar… OUCH.

The last of the six defendants in an indictment charging mortgage fraud, arson, marijuana trafficking and money laundering has entered a guilty plea in federal court in Michigan as of last week.

The following defendants entered guilty pleas before United States District Judge Sean Cox:

• Linda Abdullah, aka Linda Holt (pled guilty to bank fraud, arson, conspiracy to distribute marijuana and money laundering conspiracy)

• Eric Waldon (pled guilty to making a false statement in a matter within the jurisdiction of the United States)
• Rolando Hampton (pled guilty to conspiracy to distribute marijuana)
• Felicia Hairston (pled guilty to money laundering conspiracy)
• Jacqueline Holt, aka Jacqueline Jones (pled guilty to conspiracy to distribute marijuana) and;
• Andrew Holt (pled guilty to conspiracy to distribute marijuana).

The indictment, unsealed in July of 2011, charged that Linda Abdullah (aka Linda Holt), from August 18, 2006 through February 27, 2009, devised and participated in a scheme to defraud various lenders by acting as a mortgage broker and arranging six mortgage loans to purchase five properties for straw buyers based on false statements pertaining to their employment, income, the source of their down payments and their intentions to reside in the homes. She was also charged with attempting to obtain yet another mortgage loan which was unfunded.

Eric Waldon pled guilty to a Superseding Information charging him with making false statements to federal agents investigating the fraudulent loan scheme. The indictment charges further that Linda Abdullah (Linda Holt) knowingly aided and abetted the arson of a rental home (which had been previously obtained with a fraudulent mortgage), located on Sussex Street in Detroit, on March 14, 2007.

The indictment also charged that from June of 2008 through August of 2009, five defendants were part of a drug organization that shipped marijuana from Arizona to the Detroit area, typically using United States Postal Service Express Mail Parcels weighing 10 to 20 pounds.

At least 60 such parcels were shipped, using a system of falsified business names and return addresses to disguise the true sender and receiver of the parcels. During the same time period, proceeds of the illegal drug and fraud activity, exceeding $400,000, were deposited in Detroit-area bank accounts. The money was then withdrawn at the corresponding branch bank in the Phoenix, Arizona area, in order to pay for the marijuana being purchased by the organization.

The money laundering was conducted in cash deposits and withdrawals of less than $10,000, so as not to require the filing of currency transaction reports with the Internal Revenue Service. The indictment alleges that the profits from the mortgage fraud scheme were used to promote the drug trafficking enterprise. In their guilty pleas, Linda Abdullah (Linda Holt), Rolando Hampton, Andrew Holt, Jacqueline Holt and Felician Hairston admitted their respective roles in the shipment of marijuana from Arizona to the Detroit area.

Based on their criminal history, if any, and the federal sentencing guidelines, the defendants face a range of possible sentences. Linda Abdullah (Linda Holt), faces a mandatory minimum sentence of five years’ imprisonment both arson and a marijuana conspiracy of 100 kilograms or more. Rolando Hampton faces a mandatory minimum term of five years’ imprisonment for a marijuana conspiracy of 100 kilograms or more.

Linda Abdullah (Linda Holt), remains in custody pending sentencing. All other defendants have been released on bond.

DEA Special Agent in Charge Robert L. Corso stated, “This investigation should send a clear message to drug traffickers that no matter how elaborate the scheme, or how diverse the crime, DEA stands ready to work with our federal, state and local partners to halt the illegal trafficking of drugs.”

Joseph Pirone, Postal Inspector in Charge of the Detroit Division stated, “This investigation was an excellent example of a partnership between local, state and federal law enforcement agencies working together to bring down a drug and fraud conspiracy. I fully commend the hard work and countless hours put forth by all of the law enforcement agencies involved, which resulted in bringing the defendants in this case to justice.”

“This extensive criminal conspiracy was disrupted because of the outstanding collaboration between various law enforcement agencies,” McQuade said. “It is not often that you see a case like this one, involving such different kinds of crimes, but thanks to the cooperation and information sharing between these agencies, these defendants have been brought to justice” – Source.

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Read the full article at GetOutOfDebt.org, click here: So, A Fraudster, Arsonist And Drug Dealer Walk Into A Bar…

Andrew Hamilton Williams, Jr., was convicted last week in Maryland of fraud conspiracy, wire fraud and conspiracy to commit money laundering in connection to a massive mortgage fraud scheme. The scheme, entitled “Metro Dream Homes” promised to pay off homeowners’ mortgages on the homes of their dreams but instead left them high and dry.

According to evidence presented at the two week trial, beginning in 2005, Williams and his conspirators targeted homeowners and home purchasers to participate in a purported mortgage payment program called the “Dream Homes Program.” In exchange for a minimum of $50,000 initial investment and an “administrative fee” of up to $5,000, the conspirators promised to make the homeowners’ future monthly mortgage payments, and pay off the homeowners’ mortgage within five to seven years.

Dream Homes Program representatives explained to investors that the homeowners’ initial investments would be used to fund investments in automated teller machines (ATMs), flat screen televisions that would show paid business advertisements, and electronic kiosks that sold goods and services. To give investors the impression that the Dream Homes Program was very successful, Metro Dream Homes spent hundreds of thousands of dollars making presentations at luxury hotels such as the Washington Plaza Hotel in Washington, D.C., the Marriott Marquis Hotel in New York, New York, and the Regent Beverly Wilshire Hotel in Beverly Hills, California. Metro Dream Homes had offices in Maryland, the District of Columbia, Virginia, North Carolina, New York, Delaware, Florida, Georgia and California.

According to trial testimony, Williams and his co-conspirators failed to advise investors that the ATMs, flat-screen televisions and kiosks never generated any meaningful revenue. The defendants used the funds from later investors to pay the mortgages of earlier investors, in a Ponzi-like fashion.

Evidence showed that MDH had not filed any federal income tax returns throughout its existence. The defendants also failed to advise investors that their investments were being used for the personal enrichment of select MDH employees, including Williams, to: pay salaries of up to $200,000 a year as well as their mortgages; employ a staff of chauffeurs and maintain a fleet of luxury cars; and travel to and attend the 2007 National Basketball Association All-Star game and the 2007 National Football League Super Bowl, staying in luxury accommodations in both instances. Nor were investors told that investor funds were used to: pay off investors in a prior failed ATM investment venture called Bankcard Group; make multiple donations of up to $50,000 each to charitable organizations to give MDH the appearance of being financially successful; and transfer millions of dollars in investor funds to third-party businesses for purposes not disclosed to investors.

Trial testimony showed that Williams and his co-conspirators arranged for early Dream Homes Program investors, whose monthly mortgage payments had been paid by MDH using the funds of later Dream Homes Program investors, to attend recruitment meetings to assure potential investors that the Dream Homes Program was not a fraud. MDH used a third party company to pay investors to advertise the Dream Homes Program to friends and family. MDH encouraged homeowners to refinance existing mortgages on their homes in order to withdraw equity and generate the funds necessary to enroll their homes in the Dream Homes Program.

On August 15, 2007, the Maryland Securities Commissioner issued a cease-and-desist order to MDH and other related companies directing them to immediately cease the offering and sale of unregistered securities in connection with their promotion of the Dream Homes Program. However, Williams thereafter called meetings in which investors were told that MDH was earning up to $10 million in one month and that the company’s legal difficulties were the result of either misunderstandings or racial animus against company leaders.

As a result of the scheme, more than 1,000 investors in the Dream Homes Program invested approximately $78 million. When Williams and his co-conspirators stopped making the mortgage payments, the homeowners were left to attempt to make the mortgage payments MDH had promised to make in full.

Williams faces a maximum sentence of 30 years in prison for the fraud conspiracy; 30 years in prison on each of the 15 counts of wire fraud; and 20 years in prison for conspiracy to commit money laundering. Yes, that’s just shy of 100 years.

U.S. Attorney Rod J. Rosenstein said, “Metro Dream Homes was an egregious fraud scheme, and an excellent example of the principle that financial schemes that sound too good to be true are usually scams.”

“This case shows that the appearance of success can be a mask for a tangled financial web of lies,” said IRS Special Agent in Charge Jeannine Hammett. “Ponzi schemes can thrive for a time on false claims about how the money is being invested and where the returns are coming from. But that time is gone, and as this verdict shows, it’s time for those responsible to face judgment” – Source.

I hope Williams’ dream home involved steel bars, a roommate and a toilet next to his bunk bed.

If you have been scammed and would like to file a scam report, please click here.

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Read the full article at GetOutOfDebt.org, click here: $78 Million Mortgage Fraud “Dream Home” Scheme Owner Convicted

I love the names investigators attach to investigations. For example, last week 16 arrests in conduction with Operation “Psyched Out” were made. Operation “Psyched Out”! Love the name, not the act.

Apparently sixteen people affiliated with the Manor Medical Imaging Clinic and pharmacies in and around the San Gabriel Valley in California participated in “prescription harvesting” related to an $18 million scheme to defraud Medicare and Medi-Cal. The “prescription harvesting” included fraudulent prescribing expensive anti-psychotic medications, and then re-billing the government for those drugs over and over. This caused at least $7.3 million in actual loses to the government health care programs. One person named in this federal case and investigation still remains a fugitive.

This is the first case in the nation alleging an organized scheme to defraud government health care programs through fraudulent claims for anti-psychotic medications, a type of scheme that investigators say is on the increase around the nation. Court documents outline a conspiracy in which Manor operated a bogus clinic authorized to make claims to Medicare, employed a doctor to write prescriptions, and had close relationships with pharmacies and a fraudulent drug wholesale company that was used to funnel prescription drugs back to the pharmacies participating in the scheme.

The affidavit in support of the criminal complaint alleges that Manor used “cappers” to recruit Medicare and Medi-Cal beneficiaries – including veterans, the homeless, low-income patients and the elderly – whose beneficiary information was used to bill Medicare and Medi-Cal for millions of dollars worth of illegitimate medical services and prescriptions for expensive anti-psychotic drugs. The drugs that were dispensed by the pharmacies allegedly did not go to the beneficiaries but, rather, were diverted to black market wholesalers and back to the pharmacies, where members of the conspiracy re-labeled, re-packaged and re-dispensed bottles of the medications so they could submit new bills to Medicare and/or Medi-Cal as though the drugs had never been dispensed.

While Manor recruited beneficiaries, many other beneficiaries had their identities stolen and used in the fraudulent scheme without their knowledge. As a result of the drugs being fraudulently dispensed in the names of those beneficiaries, some were denied Medicare and Medi-Cal coverage for drugs that they legitimately needed.

Dr. Peter Budetti, Deputy Administrator for Program Integrity, Centers for Medicare and Medicaid Services (CMS), stated: “[The] arrests further signal CMS’ commitment to preventing fraud in Medicare and Medicaid. In this situation, our beneficiaries played a pivotal role in rooting out fraud, reporting their suspicions to their Medicare Prescription Drug plan. Beginning in 2007, CMS’ anti-fraud units opened investigations and made referrals to law enforcement. Since then, CMS has actively supported the investigation by our law enforcement partners and will continue to work with them to minimize the theft of taxpayer dollars while maximizing criminal consequences to thieves.”

The anti-psychotic medications that are the subject of the fraudulent prescriptions alleged in this case include Abilify, Seroquel and Zyprexa. Ninety-pill bottles of these drugs can bring a pharmacy reimbursements of up to $2,800, which is why there is a wholesale black market for these products where the drugs can be purchased for as little as several hundred dollars.

“[The] coordinated arrests and searches are yet another blow against highly-profitable drug trafficking financed by taxpayers,” said Glenn Ferry, Special Agent in Charge of the United States Department of Health and Human Services, Office of Inspector General’s region based in Los Angeles. “Federal, State and Local law enforcement agencies will work together to investigate and prosecute these schemes.”

The primary pharmacy involved in the case, Huntington Pharmacy in San Marino, saw a huge spike in claims to Medi-Cal – going from just under $45,000 in 2009 to nearly $1.5 million in 2010 – and the vast majority of claims were the result of prescriptions written by Manor’s in-house doctor, according to the criminal complaint, which alleges that the owners of Huntington Pharmacy were receiving kickbacks and “structuring” cash deposits totaling hundreds of thousands of dollars into their personal and business accounts.

“The U.S. Food and Drug Administration’s Office of Criminal Investigations (OCI) is fully committed to investigations such as this, whereby a coordinated network of individuals are alleged to have conspired to widely distribute misbranded prescription drugs which placed the public’s health and safety at risk. The security of our nation’s drug supply chain is one of OCI’s top priorities,” said Thomas Emerick, Special Agent in Charge, U. S. Food and Drug Administration’s Office of Criminal Investigations, Los Angeles Field Office. “We commend our law enforcement partners for their dedicated and collaborative efforts in pursuing this multifaceted investigation.”

In conjunction with the arrests, authorities executed search warrants at five pharmacies, offices belonging to a drug wholesale company, the Manor clinic and residences of several conspirators. More than 200 agents from across the country participated in this morning’s enforcement action.

Leslie P. DeMarco, Special Agent in Charge for IRS-Criminal Investigation, commented: “By pursuing financial leads in this case, IRS-CI tackled the structuring and laundering of illegal funds used to promote the health care fraud scheme in this case. [The] arrests affirm our commitment to contribute our financial expertise in these important investigations.”

All 17 defendants named in the federal criminal complaint are charged with conspiracy to commit health care fraud, a charge that carries a statutory maximum penalty of 30 years in federal prison – Source.

If you have been scammed and would like to file a scam report, please click here.

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Read the full article at GetOutOfDebt.org, click here: Is It Prescription Harvesting Season Again? Sixteen Arrested In Conjunction With Operation “Psyched Out”

It was announced on October 26, 2011 that Michael Powers, former owner of Commonwealth Temporary Services, a temporary employment agency, has been sentenced to seven years in prison in “one of the most egregious tax evasion schemes” the sentencing judge had ever come across.

The former temp agency apparently ran a $30 million under-the-table payroll scheme and avoided more than $9 million in federal and state payroll taxes and workers’ compensation insurance premiums.

Powers now faces 84 months (7 years) in prison, two years supervised release and owed over $9 million in restitution to the Internal Revenue Service (IRS), Massachusetts Department of Unemployment Assistance and two insurers.

Powers’ accomplice, John Mahan, were both convicted in July of this year for one count of conspiracy to defraud the IRS among other workers’ compensations insurers along with one count of mail fraud and two counts of falsifying tax returns.

For four years between 2000 and 2004 the two men operated Commonwealth Temporary Services, Inc., which supplied hundreds of temporary laborers to businesses throughout Eastern Massachusetts.

Like every other employer, the defendants were required to pay payroll (FICA) taxes and to obtain workers compensation insurance. The amount an employer pays in payroll taxes and workers compensation insurance premiums is largely dependent on the size of their payroll. Powers and Mahan lied to both the IRS and their insurers about the size of their payroll, and paid the majority of their employees in cash to make their fraud more difficult to detect – Source.

To avoid paying employment taxes, such as Social Security and Medicare, and to fraudulently reduce the businesses’ insurance premiums, Powers and Mahan under-reported their payrolls. In order to hide their fraud, they arranged to pay more than $30 million of their payroll in cash, under the table.

John Mahan will be sentenced within the next week on November 3. The sentencing Judge also commented that this scheme was noteworthy for its brazenness and conniving ways – Source.

If you have been scammed and would like to file a scam report, please click here.

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Read the full article at GetOutOfDebt.org, click here: Commonwealth Temporary Services Owner Sentenced For “One Of The Most Egregious Tax Evasion Schemes”

After a conviction last November following a seven-week trial David Moro was sentenced on October 5, 2011 to 10 and a half years (126 months) in prison for orchestrating and carrying out a $4.2 million broadcasting equipment lease and financing scheme which yielded a loss of more than $3 million to lenders.

Moro was convicted of one count of conspiracy to commit mail and wire fraud; six counts of mail fraud; five counts of wire fraud; three counts of bank fraud; 17 counts of money laundering; and one count of making false statements in a matter within the jurisdiction of the FBI and IRS. Those were 33 counts of his 34 count Indictment. He was not convicted on a second count of making false statements.

Moro is the former Chief Excecutive Officer of Inchon, a New Jersey based business that ran the Russian Radio Network. The network was a broadcasting company that marketed to Russian speakers. Between 2003 and 2005 contacted lenders, directly and through brokers, and informed them that he needed to purchase high-end broadcasting equipment as part of lease-financing agreements which totaled more than $4.2 million.

Moro advised lenders that Inchon needed the broadcasting equipment in order to upgrade and expand its ethnic radio programming. As proof of his need for financing, Moro presented the lenders and brokers with fraudulent equipment invoices reflecting that Smart Function LLC, based in Parsippany, N.J., as well as other purported vendors, had provided Inchon with new high-end Digital Audio Servers, when in fact, Smart Function was acting as a front for Inchon, and was sending the vast majority of the money back to Inchon and Moro after receiving it from the lenders.

Although Moro convinced the lenders the servers contained state-of-the-art software valued at more than $10,000 for each server, in reality the servers contained nothing other than software available for download free-of-charge from the Internet.

Letters and fraudulent equipment invoices were sent to investors informing them that the Digital Audio Servers had been provided. Obviously no such servers even existed. One lender arranged for an inspection of the new servers before funding the lease and Moro had a co-conspirator put new serial numbers on the old servers so that the inspector would think they were brand new.

Moro also submitted phony financial documents to the lenders to convince them that Inchon was a highly profitable company, when in reality it was relying largely on the proceeds of the fraud to continue its operations. Moro had false tax returns prepared for Inchon and for an individual he portrayed as the 100 percent owner of Inchon. In reality, these tax returns were never filed with the IRS, and reflected income and profits for the business and the purported owner that neither ever received.

In Ponzi-scheme fashion, Moro used funds received from the financial institutions through the fraud to make payments on earlier leases. After all of the lease financing agreements were executed and funded by the lenders, Inchon was due to pay more than $100,000 per month. Moro ceased making the required lease payments on behalf of Inchon, resulting in a loss to the lenders in excess of $3 million.

The lenders affected by this scheme are located across the company and include: CFC Investment, Hewlett Packard Financial Services, Santa Barbara Bank and Trust, Wells Fargo Equipment Finance, Citi Capital, the CIT Group, American Express Business Finance Corporation, ACC Capital Corporation, Diamond Lease, Cathay Bank and Bank of the West.

The money laundering charges stem from the movement of funds from Smart Function and other entities to Inchon. Moro used the laundered funds to pay unrelated business expenses and personal expenses, including travel and gifts to family members.

In addition to the prison term, Judge Walls sentenced Moro to five years of supervised release and ordered him to pay restitution in the amount of $3,589,350.20 – Source.

If you have been scammed and would like to file a scam report, please click here.

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Read the full article at GetOutOfDebt.org, click here: $4.2 Million For Free Internet Download Software?

On Thursday, October 7, 2011 Rober Schroy, of California, pleaded guilty to wire fraud and tax evasion for his role in a $1 million investment fraud scheme. Schroy pleaded guilty to one count of wire fraud and one count of tax evasion.

According to filed documents in this case:

Schroy said from 2004 through 2009 he solicited people to invest in an alleged “international bank trade.” Schroy admitted he and his co-schemers falsely promised prospective investors extraordinary gains – ranging between 10 and 100 percent per week for a minimum period of 25 weeks – plus the return of their principal investment. Based on Schroy’s misrepresentations, numerous investors from multiple states in the US wired investment monies to accounts controlled by Schroy and his co-schemers. The money was wired to the designated accounts, however, Schroy admitted it was not invested in any supposed bank trade. Instead it was used by Schroy and his co-schemers for personal expenditures, including automobiles, vacations, and meals at restaurants. In total, Schroy admitted he and his co-schemers misappropriated at least $1 million in investor money.

Schroy admitted in his guilty plea that he failed to file his 2007 tax return and did not report $479,566 of taxable income which $151,781 of that was owed to the IRS.

Schroy now faces a maximum of up to 25 years in prison and a $500,000 fine. Wire fraud has a maximum penalty of 20 years and tax evasion, 5. Each count caries a fine up to $250,000 – Source.

If you have been scammed and would like to file a scam report, please click here.

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Read the full article at GetOutOfDebt.org, click here: $1 Million Investment Fraud Scheme Could Mean 25 Years In Jail

This just in! ANOTHER person thought it would be a GREAT and SUPER SMART idea to defraud a bank … and it WASN’T! When will people learn?

Multiple Virginia banks were defrauded almost $3.4 million by Osvaldo Mercado for submitting fraudulent loans.

Mercado was indicted on conspiracy, six counts of bank fraud, two counts of mail fraud, and two counts of fraud in connection with identification documents. If convicted, he faces a maximum penalty of 30 years in prison on each bank fraud count, five years on each mail fraud count, and 15 years on each identification document fraud count.

According to the indictment, Mercado operated a tax preparation business, Union Hispana, based out of Northern Virginia. Beginning in 2004, Mercado allegedly began helping clients of complicit realtors secure personal mortgage loans by creating fraudulent tax letters stating that the borrowers had self-employment income and owned their own businesses.

In fact, the borrowers often had low-wage jobs and could not afford the homes or qualify for the loans. As part of the scheme, Mercado’s company also prepared fraudulent tax returns knowing that they were never intended to be filed with the IRS. The indictment states that, based in part upon the fraudulent tax letters prepared by Union Hispana, Virginia banks approved more than a dozen personal mortgage loans to clients who were unemployed and lacked the ability to repay the loans.

During the three-year scheme, these lenders were allegedly cheated out of $3.4 million in fraudulent loans – Source.

Mercado was indicted by a federal grand jury on September 29, 2011 and as always indictments are not evidence of guilt. Mercado is presumed innocent until and unless proven guilty.

If you have been scammed and would like to file a scam report, please click here.

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Read the full article at GetOutOfDebt.org, click here: Union Hispana Defrauds Multiple Virginia Banks

55 people have been indicted with connections to a large tax fraud scheme which involves hundreds of falsified income tax returns that sought over $250 million in refunds.

This scheme has been deemed “Operation Stolen Treasures” and while it is not a big blockbuster movie starring Nicholas Cage it is a criminal investigation revolving around two California companies: Old Quest Foundation, Inc and De la Fuente and Ramirez and Associates. Both of these companies were used to file the fraudulent income tax returns in hopes of obtaining their stolen money.

Operation Stolen Treasures has resulted in 32 federal indictments that name a total of 55 defendants, many of whom reside in the Inland Empire. In a takedown that began on Friday, special agents arrested 18 defendants. Additionally, 27 defendants will receive summons to appear in United States District Court for arraignments in the coming weeks. A total of 10 defendants are either fugitives or have agreed to surrender today.

A 19-defendant indictment related to Old Quest alleges that members of a conspiracy filed false Forms 1099-OID that collectively reported that more than $1 billion in federal income tax had been withheld. The indictment alleges a scheme that resulted in more than 400 fraudulent federal income tax returns being filed with the IRS, and those tax returns cumulatively sought more than $250 million in fraudulent refunds. As a result of those false claims to the government, the IRS erroneously issued millions of dollars worth of tax refunds, including one tax refund check for $1,192,653.

Old Quest – which did business in Fontana under the names Old Quest Foundation and Old Quest Services – promoted the fraudulent scheme by telling customers they could receive tax refunds of hundreds of thousands of dollars from a “secret government account.” During presentations made across the Southland, members of the conspiracy promoted the supposedly secret government account and made other “tax defier” arguments, such as the United States was bankrupt and the United States was actually owned by England. The potential customers heard presentations from people falsely claiming to be attorneys, accountants, CPAs and former IRS employees. Those who chose to sign up were required to make “donations” as high as $10,000 to Old Quest and were required to pay Old Quest a percentage of any refund they fraudulently received.

The 88-count indictment alleges that, in exchange for the payments from the customers, Old Quest prepared and filed false income tax returns that routinely sought hundreds of thousands of dollars – and sometimes millions of dollars – in income tax refunds. One of the tax returns allegedly sought a refund of $4,656,566. According to the indictment, when Old Quest customers received IRS letters warning that their tax returns were frivolous, members of the conspiracy prepared responses and assured customers the IRS sent letters only to “intimidate” them because the “IRS did not want to pay.”

During a search warrant executed at Old Quest’s offices two years ago, IRS agents seized several false tax returns before they could be filed, including one signed tax return that fraudulently reported $10,500,106 in federal income tax withheld and would have sought a $6,868,675 refund.

Allegedly Old Quest brought in around $1 million from customer payments in it’s scheme.

In the scheme related to De la Fuente and Ramirez and Associates (DLFRA) , four people were named in an indictment that alleges a conspiracy to defraud the United States by filing more than 35 false income tax returns that claimed more than $80 million in fictitious federal income tax withholding and sought more than $19 million in income tax refunds. DLFRA used seminars and one-on-one consultations to recruit people, who were charged $2,500 to become customers. According to the indictment, DLFRA operated the same type of fraudulent tax scheme as Old Quest.

Most of those charged in Operation Stolen Treasures face charges of conspiracy and could face up to 10 to 15 years in prison – Source.

Maybe this would be a good film idea for Nicholas Cage…

If you have been scammed and would like to file a scam report, please click here.

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Read the full article at GetOutOfDebt.org, click here: 55 Indicted In Operation Stolen Treasures

Victor Cilli pleaded guilty on October 3, 2011 to an Information charge against him with one count of securities fraud, one count of conspiracy to commit bank fraud and one count of tax evasion. Cilli was a commodity pool operator and day trader in New Jersey and directed two schemes to defraud investors and financial institutions out of about $2 million and evaded more than $150,000 in tax payments.

Chilli was the owner and president of Progressive Investment Funds (PIF), as a commodity pool operator (CPO) and engaged in a trust of investment that solicited funds for the sole purpose of trading commodity futures beginning in 2006 until around February of 2009.

Beginning as early as January 2007 and through September 2007, Cilli engaged in a Ponzi scheme to defraud at least four commodity pool participants of approximately $506,000. Though Cilli returned some funds to the investors, the payments were not from actual trading profits but from funds of existing pool participants. Cilli made false and misleading statements to the pool participants claiming he had made money for them when, in fact, most of his trading resulted in losses. Of the $506,000 invested, Cilli traded approximately $263,000, losing approximately $200,168. Cilli never disclosed to the pool participants that he had traded less than half of their money or that most of his trading had resulted in significant losses.

Cilli also misappropriated thousands of dollars in pool funds for personal expenses – including hair salon visits, skin care treatments, payments on his Harley Davidson motorcycle, and other personal entertainment, meals, and travel expenses.

In a separate scheme Chilli, and 16 others, defrauded Cleveland, Ohio’s KeyBank from 2002 through September of 2006 out of more than $1.5 million in a student loan scam. They claimed they were going to attend Tab Express International (“Tab”) in Florida which is why they needed the student loans.

Based upon prior agreements between Cilli and his co-conspirators, they never intended to enroll at Tab, nor repay principal or interest on the student loans to KeyBank. After KeyBank disbursed the loan proceeds to the school, approximately $600,000 of the loan proceeds were deposited into bank accounts solely owned and operated by Cilli. Cilli then made kickback payments totaling approximately $130,000 to his co-conspirators for signing up for the loans. Tab retained approximately $900,000 of the total loan proceeds. KeyBank was never repaid any of the principal or accrued interest on the loans.

To conceal his fraudulent conduct, Cilli maintained bank accounts in the names of Northeast Flight Training Inc., which was not a flight training school, and United Charities of America Inc., which was not a charitable organization. Both accounts were maintained by Cilli solely to perpetuate his frauds and fund his personal expenditures.

In 2003 and 2004, Chilli knowingly and intentionally failed to prove an information regarding the proceeds that he received to the IRS.

If Chilli is sentenced with all of the potential penalties at hand he could be facing 55 years in prison and over a $6 million fine. – Source.

If you have been scammed and would like to file a scam report, please click here.

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Read the full article at GetOutOfDebt.org, click here: New Jersey Commodity Pool Operator And Day Trader Faces 55 Years For Two Separate Schemes

The Internal Revenue Service has launched a new program to allow employers to get their workers classified correctly. The Voluntary Worker Classification Settlement Program is designed to allow employers to make the switch from contractor to employee without facing stiff penalties if caught with incorrectly classified workers. It’s sort of an amnesty program.

Under the program, eligible employers can obtain substantial relief from federal payroll taxes they may have owed for the past, if they prospectively treat workers as employees. The VCSP is available to many businesses, tax-exempt organizations and government entities that currently erroneously treat their workers or a class or group of workers as nonemployees or independent contractors, and now want to correctly treat these workers as employees. – Source

It seems that many sales based debt relief operations classify workers as contractors when in fact that would be a cloudy matter at best.

“Employers accepted into the program will pay an amount effectively equaling just over one percent of the wages paid to the reclassified workers for the past year. No interest or penalties will be due, and the employers will not be audited on payroll taxes related to these workers for prior years.”

And in a big surprise, the form to accomplish this is only a simple two pager. Shocker.

I understand why employers in all industries want to classify employees as contractors, it saves money. Labeling a person that works for you as a contractor also makes them easy to dispose of without unemployment penalties if things change or don’t work out.

This new IRS reclassification program may be worth talking to your tax adviser if you currently have contract workers on your books. And it should be attractive for the debt relief industry, it’s a settlement program.

@GetOutOfDebtGuy

I can always use your help. If you have a tip or information you want to share, you can get it to me confidentially if you click here.

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Stephen Sparks, a business partner of Global Points, was sentenced on September 29, 2011 for federal fraud offenses after pleading guilty in January of 2011 to wire fraud and money laundering.

Sparks was given a prison sentence of 24 months (2 years) with a following 3 years of supervised release. Sparks will also have to pay $1.3 million in restitution. He will also have to pay a “special assessment” of $200 as ordered by Judge Denise Page Hood.

According to court records, during 2006 through 2009, Sparks took part in a scheme that solicited over $1 million from individual investors known to him as family, friends and former church members. Sparks represented to these investors that his business, Global Points, had an opportunity to purchase a warehouse full of Chinese electronic equipment and sell it in the United States at a substantial profit, returning over five times the amount invested. Sparks also represented that Global Point was in a position for a second had a second deal to acquire CD and DVD players that had been seized n Chicago, Illinois, and were being sold for the payment of back taxes. Sparks indicated that there would be a quick turn around and the profit would be twice the original investment.

Sparks knowingly failed to inform investors that he gave most of their money to Barry Sparks, his uncle. Barry Sparks actually has past criminal convictions for fraud. I suppose it runs in the family now. Stephen Sparks continued to provide excuses for the failure of the deals to close, and continued to solicit additional funds, claiming that closing were on the horizon. In 2007, Spark withdrew $12,000 in cash from his bank account knowing that the funds had been wired by an investor.

“This sentence should send a clear message; schemes designed to defraud innocent investors are violations of Federal law and the consequences of such schemes can and will result in jail time.” said Special Agent in Charge, IRS Criminal Investigation, Erick Martinez – Source.

If you have been scammed and would like to file a scam report, please click here.

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Read the full article at GetOutOfDebt.org, click here: Global Points Owner Gets 2 Years In Prison For Wire Fraud And Money Laundering

I’m a proud Maryland native but after reading a recent press release of a Bethesda, Maryland resident’s pay phone fraud scheme, I can’t help but feel embarrassed that this took place so close to my old home. This must be what people from New Jersey feel like every week after an airing of The Jersey Shore.

Bethesda resident, Nicolas Kantartzis, pleaded guilty today to scamming victims of payments through pay phones, totaling up to $4 million over the past six years.

I spend day after day reading about what new scams are hitting the press and I have to say, this one was a novel idea. Dishonest and idiotic; but different.

You see, Kantartzis owned and operated his company, Federal Telephone Corporation Inc. (FTCI), and controlled about 165 pay phones scattered across Washington D.C., and Montgomery and Prince George’s counties in Maryland. Kantartzis then programmed his phones to dial toll-free numbers from his pay phones; completed calls from the toll-free numbers earned him $0.494 each. This doesn’t sound like much but if you add up all of the calls between January 2005 until July 2011 he brought in about $4 million and targeted between 200 and 250 victims. Some of his victims include: the U.S. General Services Administration, the U.S. Department of Labor, the U.S. Department of Education, the Internal Revenue Service (IRS), the computer company Dell, D.C.’s Homeless Shelter Hotline and various financial institutions and airlines.

Kantartzis programmed his payphones to call toll-free numbers in a repeating pattern, consisting of blocks of 10 calls within three minutes followed by five hours of no toll-free calls. These calls typically lasted only a few seconds. For example, in January 2008 Kantartzis programmed his payphone located at Super Dollar on Georgia Avenue in Washington, D.C. to make 2,669 outgoing calls, of which 1,688 (63%) were to toll-free numbers. Of the 1,688 toll-free calls, 93% lasted 10 seconds or less. Surveillance at some of the Kantartzis’ programmed phones showed that no user was physically placing a call at the payphone at the time the calls were made and in fact, calls were made after the business was closed and locked. – Source.

In his plea Kantartzis agreed to forfeit all of the pay phones owned by him and his company, FTCI, $2,886,158 he had in investment and bank accounts and the future funds coming his way from this scheme. Oh, he also faces a potential 20 years in prison and $250,000 fine. Dishonest and idiotic; but different.

On a side note… pay phones still exist?

If you have been scammed and would like to file a scam report, please click here.

Other Related Articles to Read

• New Jersey Commodity Pool Operator And Day Trader Faces 55 Years For Two Separate Schemes
• Get Free Help and Advice From Former IRS Agent
• Owe The IRS? Here Are Eight Awesome Insider Tips to Make it Less Painful and Cheaper
• If You Thought the Recession Was Bad, Wait Till You See The Tax Problems Many Will Have as a Result
• American Express is the Least Helpful and Scariest Creditor I Have. – Patricia
• I Recently Bought a Business That Isn’t Doing Well and Owes the IRS. – Susan
• Student Loans Getting Shuffled All Over. Leaves Many Confused.
• The IRS Has Not Debited My Account Yet. Should I Worry? – Art
• Did You Get Paid Unemployment Benefits in 2011? Prepare to Pay the Taxes.
• Tax Refund Check Cashing Scheme Hits Southern Florida

Read the full article at GetOutOfDebt.org, click here: This Just In: $4 Million Pay Phone Fraud Scam …. And Pay Phones Still Exist!

I’m proud to announce that Jim Buttonow has agreed to assist readers with tax issues for free. Jim is a great guy and certainly a very knowledgeable tax expert. I have no reservations in recommending him as an expert to help site readers.

Jim is a licensed CPA who spent 19 years with the IRS coordinating large compliance teams of IRS agents and specialized personnel. In the last 5 years, Jim has invented consumer and practitioner software and treatises on how to address many different tax issues. He has also represented many people before the IRS examination, collection, filing, and appeals functions. He currently assists taxpayers on an active pro bono tax practice aimed at serving people in need.

If you have a tax debt question you’d like for Jim to answer and publish on the GetOutOfDebt.org site, just complete this form.

@GetOutOfDebtGuy

Other Related Articles to Read

• New Jersey Commodity Pool Operator And Day Trader Faces 55 Years For Two Separate Schemes
• This Just In: $4 Million Pay Phone Fraud Scam …. And Pay Phones Still Exist!
• Owe The IRS? Here Are Eight Awesome Insider Tips to Make it Less Painful and Cheaper
• If You Thought the Recession Was Bad, Wait Till You See The Tax Problems Many Will Have as a Result
• American Express is the Least Helpful and Scariest Creditor I Have. – Patricia
• Substitute Teacher Lives in Shelter Instead of Paying Rent. – Tim
• I Recently Bought a Business That Isn’t Doing Well and Owes the IRS. – Susan
• The IRS Has Not Debited My Account Yet. Should I Worry? – Art
• Did You Get Paid Unemployment Benefits in 2011? Prepare to Pay the Taxes.
• Tax Refund Check Cashing Scheme Hits Southern Florida

Read the full article at GetOutOfDebt.org, click here: Get Free Help and Advice From Former IRS Agent

The following guest post was contributed by Jim Buttnow. Jim is a licensed CPA who spent 19 years with the IRS coordinating large compliance teams of IRS agents and specialized personnel. In the last 5 years, Jim has invented consumer and practitioner software and treatises on how to address many different tax issues. He has also represented many people before the IRS examination, collection, filing, and appeals functions. He currently assists taxpayers through his blog, IRSMind.com and through an active pro bono tax practice aimed at serving people in need.

If you would like to contribute a guest post, click here.

Each year, about 20 million taxpayers owe when they file their tax returns. On Sept. 30, 2010, the number of taxpayers with serious tax delinquencies increased to more than 10 million.

With the economy only marginally better and unemployment still at recession levels, the trend looks to continue.

What can you do if you owe on April 15? Here are eight tips to save money and ensure you don’t owe again.

#1: Whatever you do, file on time and save up to 25%. The worst thing you can do when you find out you owe on your tax return is to not file it on time. The penalty for filing late is 5% per month, up to 25%. If you owe $2,000 on your return, that penalty amounts to $500. If you file on time, you will be charged only a small failure to pay penalty and interest on the accrued balances.

#2: It’s easy to set up a payment plan with the IRS. The IRS has basically three payment plans. Most people qualify for the two simple payment plans, and they are dirt simple to set up. In fact, the following two simple agreements make up 94% of all IRS payment plans:

• Guaranteed installment agreement (GIA): This is for taxpayers who owe less than $10,000, can pay in the full balance in three years and have a clean compliance history (no payment plans and all tax returns filed for the last five years). More than 87% of taxpayers who owe have a balance of less than $10,000 – in fact, three out of four taxpayers owe less than $3,000. For the person who owes $3,000, that is a payment of less than $100 a month.
• Streamlined installment agreement (SLIA): This is for taxpayers who owe less than $25,000 and can make payments over five years. The minimum monthly payment is the assessed balance divided by 50, to allow for accruals of the failure to pay penalty and interest. For someone who owes $20,000, the minimum payment would be $400 a month.

The third type of payment plan is a “negotiated payment agreement,” based on the amount you owe and your ability to pay. In this case, you would owe more than $25,000 or you wouldn’t qualify for a GIA or SLIA. In these rare cases, you would have to provide a financial statement to the IRS and work out payment terms. If you have to go this route, visit a local IRS office to speak with a representative for the best results. Bring all of your bank statements, proof of income, and receipts for all of your expenses for the past three months.

#3: Set up a payment plan online to save money and time. The IRS has made it easy to get a payment agreement. You can do it by mail via Form 9465 or at IRS.gov using the Online Payment Agreement. Last year, more than 61,000 taxpayers set up an online payment arrangement, avoiding long IRS phone wait times and professional accountant fees.

#4: Set up a direct debit payment agreement to save $53 and greatly reduce your chances of default. The IRS charges $105 for a payment agreement. But if you set up a direct debit agreement, the fee drops to $52. Also, because the IRS requires you to pay a minimum amount each month (you can’t prepay the next month), a direct debit agreement helps you avoid default. Taxpayers default more than 40% of payment agreements, often because of late-arriving payments. Defaults require another IRS contact, intrusive questions and a $45 reinstatement fee. Avoid this mess by setting up a direct debit agreement.

#5: If you can’t pay anything now, ask for 120 days. Sometimes, all you need is a few months to pay. The IRS will give you 120 days to pay the amount in full. And the cost for a 120-day extension: nothing. If your financial circumstances change within the 120 days, you can inform the IRS and set up a GIA or SLIA, no questions asked. Interest will continue to accrue during this time, but it may give you time to get the funds.

#6: The IRS gives cheap loans at a current 4% interest rate. Each quarter, the IRS sets the interest rate it will charge on underpayments. Currently, it is 4% and has been that low or lower for more than a year. The IRS charges a failure to pay penalty for all balances due, but if you get into a payment plan, this penalty is 0.25% per month – or 3% per year. That is an annual interest and penalty rate of 7% — not bad for any consumer loan.

#7: Do not fall for those late-night ads for “pennies on the dollar” tax relief. These commercials tout the little-used IRS tax relief program called the Offer in Compromise. To illustrate how little it is used: Last year, out of the about 20 million taxpayers who filed and owed, the IRS accepted only about 14,000 Offers in Compromise. Also, the average amount taxpayers paid was over $9,000 in 2010. The tax relief firms that advertise on late-night TV charge $3,000 or more for what is rarely available. Don’t make matters worse with an expensive gamble.

#8: Don’t owe again: Change your withholding or start making estimated tax payments. If you owe for the first time or find yourself owing each year, change your withholding using Form W-4 or start making quarterly estimated tax payments to stop the file-and-owe cycle. Next April 15, you will be glad you did.

If you owe Uncle Sam on April 15, don’t be paralyzed. File on time, pay if you can or make arrangements to pay, and make sure it does not happen next year by changing your withholding. Follow the eight tips outlined here to save yourself money and time.

Other Related Articles to Read

• If You Thought the Recession Was Bad, Wait Till You See The Tax Problems Many Will Have as a Result
• Former IRS Agent Tells Tax Debt Relief Services May be Dangerous to Consumers
• How Do I Uncover My Wife’s Hidden Debts? – Denny
• I Recently Bought a Business That Isn’t Doing Well and Owes the IRS. – Susan
• I Feel So Embarrassed, Ashamed, and Without Hope Because of My Debt. – Karen
• Tina Says “My CPA is Under Investigation For Fraud”
• The IRS Has Not Debited My Account Yet. Should I Worry? – Art
• Did You Get Paid Unemployment Benefits in 2011? Prepare to Pay the Taxes.
• New Jersey Commodity Pool Operator And Day Trader Faces 55 Years For Two Separate Schemes
• This Just In: $4 Million Pay Phone Fraud Scam …. And Pay Phones Still Exist!

Read the full article at GetOutOfDebt.org, click here: Owe The IRS? Here Are Eight Awesome Insider Tips to Make it Less Painful and Cheaper

Jim Buttonnow from easyIRS.com sent me over the following article to post in an attempt to warn consumers of the looming tax problems to come as a result of living through tough times.

He raises some very important points and issues that will undoubtably catch consumers and land them in trouble with the IRS. This will lead more people to fall victim of dubious tax relief companies and create yet more pain and suffering.

@GetOutOfDebtGuy

As the recession continues, More Americans owe and cannot pay the IRS

Many believe the longest economic downturn since the Great Depression is over. However, for the unemployed and those who had to sustain by taking on debt, it seems like the recession never ends. It appears Congress may extend long term unemployment benefits that will help more than 2 million Americans whose benefits were due to expire this month. But, absent on the mind of Congress are any tax breaks for the unemployed in 2010 as well as any other significant tax relief for Americans affected by the recession. This is in contrast to 2009, when Congress provided some tax relief to the unemployed.

How does this impact taxpayers and the US Treasury? Since the recession, tax problems, specifically tax debtors, have been on the rise. More Americans are pursued by the IRS for unpaid tax debt. In fact, federal tax liens for the largest unpaid liabilities are up 41% in the past two years. The recession has created many of these tax problems because the tax laws are not gentle to those who are down on their luck. As a result, many in financial distress have created unintended tax problems for themselves.

In many instances, these tax problems will manifest itself in the form of “balance due” letters from the IRS that cannot be paid.

Consider this:

• The current unemployment rate in the United States remains high at 9.8%. In fact, it has remained over 9% since May, 2009. There are currently 6.3 million individuals who are long-term unemployment, i.e. over 27 weeks without work. Currently, there are about 8.5 million Americans collecting unemployment benefits. In 2008, the IRS saw a 48.5% increase in the amount of unemployment reported on tax returns. With higher unemployment in 2009, the amount will only increase. These benefits are taxable.
• Many Americans are strapped with credit card and mortgage debt that they cannot pay due to unemployment. The Center for Responsible Lending reports that 2.5 million have already lost their homes to foreclosure and there are 5.7 million more homeowners who are currently at-risk for foreclosure. Homeowners in Nevada, Arizona, California and Florida will feel the cancellation of debt affects from home foreclosures the most. The debt cancelled may be all or partially taxable, especially if it is credit card debt or a refinanced mortgage.
• With 15.1 million Americans currently out of work, many have no choice but to distribute from their pension or IRA to meet expenses, often long before they are ready to retire. For example, from 2007 to 2008, the number of taxpayers who reported a premature distribution to the IRS from an IRA increased 12.6%. From 2005-2008, IRA premature distributions reported increased by 63%. These distributions may be taxable and subject to an early withdrawal penalty. In 2008, 60% of reported pension distributions were taxable income.

Financial woes may bring tax woes

These situations may signal future tax problems in addition to their current financial burden. In many cases, these problems are a surprise on April 15th because many believe that “if they do not make money, they probably do not owe taxes.” However, in these three situations that may not be the case:

1. Taxes due on unemployment compensation – In 2009, those collecting unemployment was allowed to exclude the first $2,400 from income. Not so for 2010- every dollar received for unemployment is taxable income. Adding to the problem: as the amount of unemployment paid is barely enough for most to make ends meet, most do not have any tax withheld on their unemployment income. On April 15th, many will be surprised that unemployment if fully taxable. They may be faced with a tax bill on top of catching up with their other bills.
2. Debt forgiveness must be reported on your tax return, and it may be taxable income- Unbeknown to many, when your credit card or mortgage debt is forgiven, this may be taxable income. At a minimum it needs to be reported on your tax return along with a calculation of taxability of the debt that was cancelled. Unless you meet one of the exceptions such as bankruptcy or insolvency, you may have a significant tax bill due. Most in this situation probably do not have the financial means to pay the potentially large tax bill. They definitely will have problems borrowing more money to pay the IRS as their credit probably has been damaged by the past creditors who wrote off the debt.
3. Taxes AND a 10% penalty for an early withdrawal from IRAs/401k plans – Many are misled to believe that when they have their IRA administrator withhold 20% of their early distribution for taxes that they have paid ALL of their taxes on this income. However, for those who have spouses with income or have other income during the year, 20% may not be enough to cover their taxes at the end of the year. Why? Add a 10% early withdrawal penalty on top of the income taxes due, and there is only 10% remaining to pay for the income taxes on April 15th. The additional 10% penalty for early withdrawal surprises many who believe that their money woes will allow them leniency on April 15th. There is no “financial hardship” exclusion to the 10% penalty. The result for many: a tax bill with little means to pay.

Recession aftermath: more cannot pay the taxes they owe

Alarmingly, there are an increasing number of Americans who cannot pay their taxes each year. Furthermore, the IRS is serious about investigating whether they can pay, and they are willing to enforce payment. For example, from 2005-2009, the amount that the IRS was actively collecting at the end of year increased 48% – that amounts to over $103 billion under IRS collections at the end of 2009.

Furthermore, the Federal tax liens filed for those who cannot pay increased 53% to almost 1 million new liens filed in 2009. This adds to the economic woes of those trying to meet their financial obligations by downsizing property as they now have a tax lien that may hinder their sale.

For those making ends meet by getting cash from unemployment and premature distributions of their retirement plans or faced with debt forgiveness from unpaid loans, April 15th may bring another financial problem- a tax bill. With pressure on the government to collect more taxes, these people may go through another round of stress called the IRS.

If you owe, face it head on and get it behind you

If you find you owe, ignoring the problem will not help. In fact, if you owe more than $5,000 and you do not make arrangements to pay by an IRS installment agreement, you are almost certainly facing a tax lien, which will add to your woes by lowering your credit score by 100 points and complicating the ability to sell property.

When you know you owe, contact the IRS with a proposal. Look for an arrangement that meets your budget so you do not overextend yourself. When you are in an agreement with the IRS on your unpaid taxes, you will avoid the surprise of the IRS levying your bank account or garnishing your wages. And if you can pay your entire balance, look on the bright side. The current interest rate the IRS charges on unpaid balances is only 3%.

Other Related Articles to Read

• Owe The IRS? Here Are Eight Awesome Insider Tips to Make it Less Painful and Cheaper
• Owe The IRS? Former IRS Agent Tells You What You Need to Know to Deal With the IRS.
• Tina Says “My CPA is Under Investigation For Fraud”
• Did You Get Paid Unemployment Benefits in 2011? Prepare to Pay the Taxes.
• New Jersey Commodity Pool Operator And Day Trader Faces 55 Years For Two Separate Schemes
• This Just In: $4 Million Pay Phone Fraud Scam …. And Pay Phones Still Exist!
• We Did Not Pay Our Payroll Tax and Now Owe the IRS. What Should We Do? – Annitra
• Get Free Help and Advice From Former IRS Agent
• Former IRS Agent Tells Tax Debt Relief Services May be Dangerous to Consumers
• American Express is the Least Helpful and Scariest Creditor I Have. – Patricia

Read the full article at GetOutOfDebt.org, click here: If You Thought the Recession Was Bad, Wait Till You See The Tax Problems Many Will Have as a Result

“Dear Steve,

4-1/2 years ago I decided to go back to school for Dental Hygiene. My wife would not let me work during the four years of school and her income did not quite meet all our expenses. I took out private loans to pay for school and living expenses plus rolled an old HELOC loan into our fianal school tab which now stands at about $110,000.

In October we were able to sell a rental property (it was always just breaking even each month, so not a major contributer to our income) and banked the proceeds in 3 CDs; a 3 month CD of $30K to hopefully take care of the capital gains this year (we have not lived in the house for 7 years) another for $10K for 12 months (we’re hoping to move to a warmer climate) and a third CD of $25K for 16 months (new house downpayment).

Here in Utah I have been unable to get more than 3 days a week employment and recently my hours were cut because one of the Dentists (Hygienists are required to work under some form of supervision of Dentists), has left the practice leaving me to work just 2 days a week now. Our present situation is that we left $20K in our checking account for living expenses and have managed to stay at that level since October 2008. We have no other bills (we replaced our aging cars with a new Mercury Hybrid and used Volvo) and our house mortgage is at 5.875%, $850 p/m and due to adjust in June of 2011 (we are shopping for loans now, just waiting to pounce on the perfect rate).

My question is: How might I negotiate paying less on my student loans ($12.000 to Wells Fargo and $98,000 to Next Student) than I am paying now. I have a payment of $900 per month combined. My dream is to pay 50 cents on the dollar, but it’s only a dream. In our present state of financial difficulty, are banks willing to negotiate?

Russell”

I asked my friend Mike Killian to answer your question for you. I wanted to make sure you got an answer as quickly as possible as I’m a bit backed up at the moment. I’ll be watching the comments on this question and be around to help if you need me.

Big Hug!

@GetOutOfDebtGuy

Hi Russell,

Before discussing student loan negotiating, have you communicated with your schoo’ls student aid office and have you tried to have the lender suspend or reduce the payment? By seeing a financial aid officer and communicating with your lender, at least your appearance will be one of trying to repay.

And though this may not be applicable to you, you need to be aware of the new Income Based Repayment Plan passed this past summer. You should look at it to see if it holds any hope for you.

The basic answer to your question is I don’t know. They may or may not. But my recommendation is to contact a professional debt negotiator and check out the facts before doing so.

As with most debt negotiations you or a professional debt negotiator offer less than what you owe…. Say 50%. That sounds good on the surface but has some drawbacks. In order for a creditor to take less than agreed, they will have to think that is the best they will do. To make them think that, you usually stop payment to them so that they think you will be declaring bankruptcy. The negotiator often “holds” your payment and often simply keeps it as payment. If the negotiator successfully settles your debt for less than owed, a lump sum payment is usually required. Of course in the process your credit is completely destroyed. Additionally any debt forgiven above $600 will be taxable by the IRS as added income. Debt negotiation is rarely recommended for the preferred solution.

Obviously before you take this action, you want to talk to a Financial Aid officer for any other options that might be available.

I wish I had better news.

Sincerely,

Mike

If you have a credit or debt question you’d like to ask just use the online form. We are happy to help you totally for free.

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Read the full article at GetOutOfDebt.org, click here: Will Banks Negotiate My Student Loans? – Russell

Patricia

“Dear Steve,

For 10 years I was self employeed making very good money on the inernet. Over the past 6 months the sites I got work from began to close, or remain open with little to no clients. My income dropped 80% (seriously) I am 3 months behind in my mortgage and currently working with them. I owe the IRS 2 years of taxes and my accountant is working with them. I am barely surviviing. American Express called me today and got me so upset I am sitting here shaking. I am having a major anxiety attack and am already on Zanex for anxiety. If had money I would have paid my mortgage and IRS. Im not claiming bankrupcy as my accountant told me to wiat a few years so I can bankrupt my IRS money owed. (You have to wait 3 years before you can bankrupt an account with them. Of everyone I am working with American Express was the most unhelpful and the most scary. I owe them about $50,000 between two cards, a business card and a pesonal card. I explained my situation to them and they think I can pull money out of the air. I have always paid them on time, I would pay them if I could, I seriously would.

What will AMEX eventually do? Can they take money from any of my checking accounts they have on file, when I made payments to them in the past over the phone? Do they usualy take you to court? Will they honour a cease comm letter to stop calling me?

Patricia”

The Answer:

Dear Patricia,

I am not a bankruptcy attorney and I can’t give you legal advice. What I do know about IRS and bankruptcy I’m not sold on the accountants advice. If the IRS files a lien on your property it survives any discharge in Chapter 7 bankruptcy and if you file a Chapter 13 bankruptcy the amount of the claim can be reduced. So there are some advantages to filing for bankruptcy to deal with the total situation.

But rather than trust the accountant, or me, contact a local bankruptcy attorney and go in and talk to them about your situation. Generally bankruptcy lawyers off a free bankruptcy consultation to answer questions. And what you need here are facts, not assumptions.

American Express is doing their best to scare money out of you. A cease and desist letter does not apply to the original creditor, only third party collectors.

So in order to address all of your situations and get you on a payment solution that you can make, a Chapter 13 bankruptcy sounds like the best approach. If the lender comes up with a payment you can make and you can afford that, you can keep your house in bankruptcy. The AMEX and IRS debts will receive what you can afford to pay them at the end of your bankruptcy, any remaining debt due them will be wiped off.

The final benefit of the bankruptcy protection is that once you are represented by a bankruptcy attorney then American Express can no longer contact you.

As an aside, I believe that once you take action to address your situation that you will find that your income will start to go back up. Nothing kills creativity and enthusiasm than overwhelming and scary debt.

Big Hug!

@GetOutOfDebtGuy

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• I Discharged My Mortgage in Bankruptcy. Can I Really Sell The House Now? – Romy
• Get Free Help and Advice From Former IRS Agent
• Owe The IRS? Here Are Eight Awesome Insider Tips to Make it Less Painful and Cheaper
• If You Thought the Recession Was Bad, Wait Till You See The Tax Problems Many Will Have as a Result

Read the full article at GetOutOfDebt.org, click here: American Express is the Least Helpful and Scariest Creditor I Have. – Patricia

With so little time before the next presidential election it is a good time to take a quick look at some important issues that are impacting the wallets and purses of the American consumer.

Under the Bush administration consumers were significantly harmed by unreasonable and unfair bankruptcy reforms that clearly helped big business, hurt consumers and only made bankruptcy more expensive for the same people that still need to file for protection.

A future administration for change and putting people first should strongly look at repealing or enacting legislation to turn back the hands of time to allow consumers in an ever-tightening economy, to have more reasonable access to bankruptcy.

The Obama-Biden ticket has promoted a Credit Card Bill of Rights for some time now and it would be beneficial to see the McCain-Palin ticket pledge to work diligently to put similar protections in place.

The advent of the foreclosure next door has been upon us for some time now but little help is available to truly allow people to remain in their homes and avoid foreclosure. While lip service is given to industry pledges, the reality is that the paperwork and processes is so arcane and less than helpful that people continue to lose their homes who don’t need to.

During the past Bush administration the Internal Revenue Service and many state governments worked to crack down on abuses in the consumer credit counseling industry. Many of these prosecutions were against companies that had truly strained the limits of the law, such as Ameridebt. But many nonprofit credit counseling groups sought to drag out the IRS audits for compliance, where they would have not been in compliance to let a statue of limitations expire so they could remain in business.

At the same time as consumer advocates, and local and federal governments were cracking down on these consumer assistance agencies, no new legislation has been to provide shelter or assistance for consumers was enacted.

Consumers have lost more rights and are worse off today, than they have been in nearly a decade.

And now in the face of discouraging financial news, consumers have little hope in front of them of being able to allow them fair and reasonable access to bankruptcy or an impartial fair and pro-rata way for them to repay what they can afford without bankruptcy.

At the same time, creditors are offering non-binding agreements in debt management plans and not offering truly constructive offers to help a sinking consumer to have any real hopes of resolving their unexpected financial difficulties without more pain, punishment and stress.

Source

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Read the full article at GetOutOfDebt.org, click here: The American Consumers Nuclear Winter

“Dear Steve,

Several years ago (6-8 years) I accumulated approximately $25,000 of debt and no reasonable way to pay it back after a divorce. I dodged the creditors and collection agencies-but never had the means to pay anything to any of them. (I lived in subsidized housing,received food stamp benefits and was qualified for rehab services for my hearing loss, which then made me elligible for a ‘donated’ car and computer skills training!)

Over the next couple of years, I secured some full time employment but only at minimum wage. Then I met and married my husband, who provided me and my kids with a very significantly improved lifestyle! He wanted nothing to do with my debts and insisted that everything-EVERYTHING – be in his name only…to ‘protect me’ from the creditors, and to protect HIM from my bad credit.

Now, 4 years into this marriage (at age 50) I am determined to clear my credit and be released from the vulnerability of no resources and bad credit. I have contacted the credit bureau’s for a recent listing (within the last 6 months) of debts/creditors etc. and amazingly, most of the older and biggest debts have…’dropped off’ my report.

I called one of the credit bureau counselors to confirm this- and it was suggested that I just ‘wait out’ the remaining debtors as they will likely drop off as well- and that if I attempted to pay back the now listed debts totaling only $800, my report would then carry around the details of THAT transaction for the next several years.

Then, just recently, a collection agency ‘found’ me and offered to make a deal- I make payments and they knock off about 1/4 of the total owed….I haven’t responded because this could mean the OTHER collector’s would then add ‘their’ offer etc…..and I do not have the means to pay back any of them! I’m considering doing the bankcruptcy to get out from all the potential trouble I could find myself faced with if I don’t do SOMETHING. As I said, my husband will do nothing, and I work (no pay…) only part time in my husband’s office while going to school to finish a degree.

My question is this….why wasn’t THAT debt/creditor listed on my report when I checked into it a few months ago- this was indeed a debt I had, but it was from 7 years ago…and it was NOT on my recent credit report check that I did just 6 months ago……can the debts/creditors/collection agencies ‘hide’ by not listing the debt I owe on my report and just ‘wait’ until I somehow trigger their attention? Keeping in mind their goal being that if I were to do a bankcruptcy, I would have to LIST ALL CREDITORS – and knowing that I might not even KNOW all my creditors at this point…( what if I don’t know who they ALL are,) and they are not ALL on my credit report?

Carrie”

The Answer:

Dear Carrie,

Interesting.

Well credit reports do not list all debts, only the ones reported to the individual credit bureaus by the creditors. And you individual credit reports don’t contain the same debts if the creditor does not report to all the credit bureaus. The only way to see what your credit report really looks like is to get a consolidated credit report, that’s what I do.

So the old debt that was just reported could have been recently purchased by a bad debt buyer and they took the initiative to report it recently. They should have still reported it with the original default date, not a recent date.

Your question also highlights a common misperception people have. Just because an account has been charged off, written off, or fallen off a credit report it does not mean it is not available to be collected on. The first two are accounting functions and the last is a credit report requirement. None of them invalidate or terminate a debt owed. In certain situations your credit report can show all debts from all time to someone looking at it. It’s the typical consumer credit report that has things falling off.

The time when someone can see your entire credit history over seven years are:

• a credit transaction involving, or which may reasonably be expected to involve, a principal amount of $150,000 or more;
• the underwriting of life insurance involving, or which may reasonably be expected to involve, a face amount of $150,000 or more; or
• the employment of any individual at an annual salary which equals, or which may reasonably be expected to equal $75,000, or more.

On that $800 debt, your payment should not extend the clock since the reporting date and seven year clock is from the date it first went into default.

You should be able to get a better deal from that collection agency. I would suggest no more than half of the debt as a settlement. But make sure you have the full payment on-hand to pay it off immediately.

Debt settlement also has some consequences. Debt forgiven more than $600 is reported to the IRS as if you earned the money and you’ll have to pay income tax on that debt. But when you reach a deal to payoff an old debt it closes the door on that debt and you won’t have to worry about it again. Well, that is, as long as you keep your receipts showing you just paid the debt in full or reached a mutually agreeable settlement that retired the debt completely. Without that last statement from the debt owner they could come back years from now and claim they never forgave a thing. Get the deal in writing and keep it with all your other important life papers you protect.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big Hug!

@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

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Read the full article at GetOutOfDebt.org, click here: Some Old Debts Just Resurfaced on My Credit Report. – Carrie

“Dear Steve,

I recently bought a business that isn’t doing well. I’m just making enough to pay the business expenses with zero left over. I’ve accumulated $68000 in debt plus an additional $81,000 in a Home Equity loan due to a gambling problem I have. I’ve since gotten help for the habit and haven’t gambled in over 7 months. At any rate, I don’t want to lose our home and the $68000 includes $21000 back taxes I owe to the IRS. I have $80000 in a 401k plan and $12000 in stocks. I’m not sure where to go from here. Everyone is telling me not to touch the retirement plan but how do I get out of this?

Please help provide the best solution possible with the least amount of tax ramifications. Should I file for bankruptcy?

Susan”

The Answer:

Dear Susan,

I’m sure you’d agree, that’s a mess.

The biggest issue is the massive IRS debt. When the IRS calculate a repayment plan they don’t factor in any unsecured debts you owe. In their mind, they come first before anything else. My biggest concern is even if they gave you a repayment plan, with your other debts I seriously doubt you’d have any money to make the payment each month.

You probably don’t have many options other than giving back the house if it has little to no equity and going bankrupt to discharge the mortgages and credit card debt. That will leave you in the best position possible to start repaying the IRS.

And no, you should not touch the 401(k) money since it is protected from your creditors. But the money in simple stocks would not be protected. You could sell the stocks and use the funds to pay down the IRS. But you have to be careful doing that and you should only do it under the guidance and wing of the bankruptcy attorney you decide to work with.

Find a local bankruptcy attorney you like, make an appointment to go in and talk to them and see how you feel after that conversation about bankruptcy.

In working with the IRS you might want to look into an Enrolled Agent who can represent you with the IRS. Check out the National Association of Enrolled Agents to find a local EA for you.

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big Hug!

@GetOutOfDebtGuy

P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

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Read the full article at GetOutOfDebt.org, click here: I Recently Bought a Business That Isn’t Doing Well and Owes the IRS. – Susan