Vegas Firm Permanently Barred from Tax Returns
According to United Press International, the Treasury Department said the telemarketing firm’s alleged abusive tax schemes have cost the U.S. Treasury about $324 million in the last three years.
The Justice Department on Thursday said it intends to contact NADN's customers who purchased the firm’s tax schemes or received bad advice. Customers will be given information about amending erroneous tax returns.
Kathleen Delaney, a deputy Nevada attorney general, told the Las Vegas Sun that two pending law suits will move forward. The Federal Trade Commission and the Nevada Attorney General’s Office sued NADN in 2002 for failing to honor money-back guarantees.
Delaney said the May 27 closure of the company is "a victory for consumers."
She added, however, that the liquidation of the company could make it more difficult for consumers to recover their money.
"There are some very significant creditors," Delaney said. "The odds of (disgruntled consumers) being refunded in full are slim." The biggest creditor is the Internal Revenue Service, which had a $1.3 million claim against the company. The Securities and Exchange Commission had filed a $1 million claim.
At the time, company president Weston Coolidge blamed the bankruptcy filing on the SEC, saying its claim was based on an investment NADN executives made in a company that later turned out to be running a Ponzi scheme.
NADN’s move to liquidate the company followed a similar motion by the IRS, which claimed that the company mismanaged its year-long bankruptcy case. The IRS cited a $400,000 loan to Coolidge, excessive sales commissions to managers and other questionable payments to executives just before and after the bankruptcy filing.
Coolidge said the state and federal government have treated NADN unfairly.
"We have been totally harassed," he told the Sun. "If they don't like what you are doing they harass you until you go out of business."
Delaney said the true nature of the company might never be known.
"The key issue throughout our case and others was: Is there a core business that could survive without the alleged fraudulent activities," she said. "I'm not sure if that question will ever get answered."