White Collar Crime News

Tax advisor allegedly helps hundreds commit IRS refund fraud December 27, 2010

On promotional flyers spread through the United States and Canada, Ron Brekke called himself a U.S. Filing Agent, a kind of a tax guru who could get you out of debt by helping fill out the right forms.   But federal prosecutors said Brekke’s methods ended up with hundreds of people filing more than three-quarters of $1 billion in frivolous IRS claims.  Brekke, who lived in an office building in California, would hold seminars and correspond by email with people, charging $50 to $75 in fees for his help, according to a flyer that was submitted as evidence in a previous trial.

Allegedly, Brekke would help people fill out IRS 1099-OID forms, telling them to list their total debt as the amount they expected as a tax refund as federal tax withheld.  It’s a scam first identified in 2008 as Form 1099-OID Fraud. The IRS cautions taxpayers that the fraud is “disguised as a debt payment option for credit cards or mortgage debt”. The fraud is also marketed as a way to reduce taxes or pay outstanding tax liabilities. It involves the filing of Form 1099-OID, Original Issue Discount, and/or bogus financial instruments such as bonded promissory notes or sight drafts.

In October 2009, that teller caught Donald Mason, one of Brekke’s students, trying to cash a refund check worth $359,926.80 at a Bellingham Bank of America, according to a evidence submitted during Mason’s trial.  Mason was found guilty and sentenced to 33 months in prison.  Another person using Brekke’s method, John Chung, pled guilty to a similar crime and spent one year, one day in prison.

After those convictions, federal investigators went after Brekke, who they said was still holding financial seminars, despite knowing that Mason and Chung had been captured.  This just really shows how some people really buy their own BS.  At the first sign of trouble, he should have hired an attorney.

Story is here.

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