How to Legally "Cheat" the IRS
At this time of the year, everyone looks for ways to "cheat" the IRS.
Professional con criminals take advantage of this the desire to save money.
Here is the FBI's description of a $132 million tax fraud.
"Edward H. Okun, 57, of Miami was arrested today and charged in an unsealed indictment with mail fraud, bulk cash smuggling and making false statements U.S. Attorney for the Eastern District of Virginia Chuck Rosenberg announced.]The indictment stems from Okun's scheme to defraud and obtain millions of dollars in client funds held by The 1031 Tax Group, LLP, (1031TG) a qualified intermediary company owned by Okun.
On March 17, 2008, a federal grand jury in Richmond, Va., returned a three-count indictment charging Okun with one count of mail fraud, one count of bulk cash smuggling, one count of false statements and forfeiture. Okun's initial appearance was held today in the U.S. District Court for the Southern District of Florida.
According to the indictment, from August 2005 through April 2007, Okun used 1031TG and its subsidiaries, all owned by Okun, in a scheme to defraud clients of millions of dollars through false pretenses.
Section 1031 of the Internal Revenue Code allows investment property owners to defer the capital gains tax that would otherwise be due on properties sold, dependant on the use of the proceeds to purchase new property in a specified time frame.
To facilitate this exchange, investment property owners deposit the proceeds of sales with qualified intermediaries and sign exchange agreements which include various promises by the qualified intermediaries to clients regarding the safekeeping and use of exchange funds.
The indictment alleges that 1031TG obtained funds by promising clients that their money would be used solely to effect 1031 exchange as outlined in the exchange agreements.
After making such promises, Okun misappropriated approximately $132 million in client funds, to support his lavish lifestyle, pay operating expenses for his various companies, invest in commercial real estate, and purchase additional qualified intermediary companies to obtain access to additional client funds."
You can see how this worked. Okun was pitching to his investors that he could defer indefinitely any capital gains.
People attracted to "beating the Government" would love the idea that they could use section 1031 to defer their capital gain taxes indefinitely.
Like all marks, their own love for complexity, deceit and sham was used against them.
Tax dodges always match the unscrupulous with the incredulous.
Read More From BizOp News
February 28, 2008
Advertising that Makes You Rich
Read my prediction about about how the new owners of Tasti D-Lite are going to make themselves rich, at the expense of the existing licensees, read the comment too, How To Kill a Franchise.
There are approximately 45 licensees in Manhattan.
None of these licensees are listed in the FFD, under item 20. Counsel for Tasti D-Lite convinced the regulators that it was not necessary to list these licensees as franchisors.
Tasti D-lite plans on opening 44 "new" stores in New York. That means they plan on converting all of the Manhattan stores.
That is going to be the pitch: You might as well sign the franchise agreement, get $5,000 towards the cost of your renovation because if you don't we will just put a franchise right next to you. (Oh, and by the way -the poor franchisee schmuck's territory allows this.)
You are going to be given a short period - roughly a month to make this decision to convert or not.
You will not be given adequate costing figures about the cost of conversion - you will be told about all the wonderful advertising that is now coming your way.
You will not be told exactly how much of a mark up there is on supplies, other than a 5% kickback on paper supplies.
You will be rushed to make a decision. Join us or fight us as competition.
You will immediately lose 7% of your gross; which will pale in comparison to you new supply costs - which will kick in a year from now.
You will immediately lose the ability to offer other goods -this lack of choice will only become apparent in 1-2 years, once all the suppliers have been locked up by the franchisor.
Many of you will be encouraged to finance the conversion upgrade with promissory notes. To make things "easy" for you.
10% of you will unconditionally hate conversion, and will be derided.
10% of you will unconditionally love conversion, for you have the heart of a shill.
The rest will look around to see how the others are leaning. The shills will win converts, and then silently sell their stores at the peak of frenzy to get in on the latest New York craze.
Most of you will convert because a) you will be rushed to make a decision, and b) you will come to believe that "you might as well do it now" to avoid head on competition. And you will be wrong, so very wrong.
I leave at as exercise for the reader to determine which one, if any, of the above representations are "fair" advertising - because they are certainly going to make someone rich.
