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Illinois couple guilty of $41M Best Buy fraud
Tax | 2010/06/04 08:53

A federal jury has found an Illinois couple guilty of defrauding Best Buy out of $41 million by over-billing the Richfield-based company for computer parts.

Russell Adam Cole, 50, and Abby Rae Cole, 53, of Deerfield, Ill., were found guilty Thursday of mail fraud, wire fraud, conspiracy, tax evasion and conspiracy to commit money laundering in connection with the scheme.

The IRS led the investigation into the case.

According to prosecutors, Best Buy created a repair service on products in the early 2000s and solicited vendors to submit bids on certain parts they wanted to supply for the repair service.

The Coles owned and operated a computer parts distribution company called the Chip Factory, Inc. For about four years ending in August 2007, Best Buy accounted for most of Chip Factory's sales.

But court records showed that the Coles made Chip Factory quote fraudulently low prices in Best Buy's auction system to obtain computer repair parts. After winning bids, the Coles billed Best Buy prices that were higher than the ones quoted in the bidding process.

Over time, prosecutors said the Coles billed Best Buy for more than $41 million than had been agreed to in the bidding process.

A former Best Buy employee, 39-year-old Robert Paul Bossany of Prior Lake, helped carry out the scheme. Bossany pleaded guilty in January 2009 to accepting bribes from Chip Factory and conspiring to defraud Best Buy while working as Best Buy's primary contact with Chip Factory.



Chicago lawyer found guilty in tax shelter scheme
Tax | 2010/06/04 03:53

A Chicago lawyer was found guilty Wednesday of conspiracy to commit tax fraud in connection with the sale of tax shelters.

A New York jury also convicted John Ohle III, 42, of two counts of tax evasion for failing to report about $6.5 million in income in 2001 and 2002, the U.S. attorney's office in Manhattan said Thursday. A fellow lawyer, William Bradley of Hammond, La., also was convicted in the conspiracy scheme.

The guilty verdicts are a big victory for New York federal prosecutors who have investigated a web of Chicago lawyers, bankers and accountants who helped hundreds of wealthy clients skirt taxes through the sale of questionable tax shelters starting in the 1990s. Last year, seven people, including the former chief executive of BDO Seidman, a Chicago-based accounting firm, were charged with fraud and conspiracy related to the sale of allegedly fraudulent tax shelters.

One of the shelters was known as "Hedge Option Monetization of Economic Remainder" or "HOMER." The U.S. attorney's office said Ohle sold HOMER to clients of Bank One, where he was employed from November 1999 to early 2002. Ohle continued selling the shelter after leaving the bank and forming his own company, Chicago-based Dumaine Group LLC.

Prosecutors had alleged that Ohle and Bradley conspired with others to create fraudulent invoices to obtain referral fees on transactions involving HOMER. Ohle illegally collected more than $800,000, prosecutors said.



High court to hear Arizona school case
Tax | 2010/05/25 02:06
The U.S. Supreme Court will consider ending a lawsuit that challenges Arizona's tax breaks for donations for thousands of private school scholarships.

The Washington-based court on Monday said it will hear two appeals filed by the state and supporters of the 13-year-old program that provides dollar-for-dollar state income tax breaks for donations to school tuition organizations.

The action "is terrific news for the thousands of families who desperately need scholarship assistance to send their children to the school of their choice," said Tim Keller, executive director of the Institute for Justice's Arizona chapter.

The institute was one of several groups defending the program.

A lawyer for the challengers said he hopes the justices' action doesn't mean the Supreme Court intends to open the door for broad state funding of religious instruction.

"I hope they didn't take this case to say that," said attorney Paul Bender.

The American Civil Liberties Union and others challenged the program as unconstitutional because religious organizations award most of the scholarships and require children to enroll in religious schools. The suit says the program amounts to an unconstitutional state endorsement of religion.

The Arizona Supreme Court previously upheld the constitutionality of the 1997 law as written, but the current case being considered by federal courts challenges how the program has been implemented.

A U.S. District Court judge dismissed the current case, but the federal appeals court in San Francisco last year ruled that the lawsuit could proceed. In that ruling, a 9th U.S. Circuit Court of Appeals panel said the program could be unconstitutional because parents seeking scholarships didn't have a realistic range of education choices for students to attend nonreligious schools.



IRS sues St. Louis tax lawyer over fraud claim
Tax | 2010/04/13 02:50

The federal government is trying to bar a financial attorney from offering alleged fraudulent tax saving schemes that help wealthy clients, many of them in the St. Louis area, according to a suit filed Monday in U.S. District Court here.

In the suit, the Internal Revenue Service asks the court to forbid St. Louis attorney Philip A. Kaiser and others affiliated with him from promoting fraudulent tax schemes. The suit says those schemes include:

- sham transactions claiming "massive" charitable deductions, with little or no money going to legitimate charities;

- evasion of federal income tax on gains from stock sales by disguising the sales as loans;

- illegal circumvention of contribution limits for Roth IRAs;

- and evasion of income tax on business earnings by using transactions with sham corporations.



Tax service drops legal action against Portsmouth
Tax | 2010/03/16 04:06
Portsmouth's survival hopes have been helped by Britain's tax authority dropping a legal challenge against the club entering a form of bankruptcy protection.

London's High Court on Tuesday suspended a winding-up order against the debt-ridden Premier League club that was being pursued by the revenue and customs service.

Gregory Mitchell, the lawyer representing the service, told the court that Portsmouth entering financial administration "offers the best chance of the club surviving".

Portsmouth is likely to be relegated to the League Championship. The south-coast club is bottom of the Premier League -- eight points from safety -- and is set to be docked nine points for entering administration.



Court turns down energy company over Okla. taxes
Tax | 2010/03/01 08:02
The Supreme Court has rejected an appeal from an energy company over a court ruling that could allow counties in Oklahoma to collect taxes on natural gas that is shipped by pipelines that run through the counties.

The justices did not comment Monday on their order in an appeal filed by Missouri Gas Energy. In 2008, the Oklahoma Supreme Court ruled that the natural gas is subject to taxation.

The ruling could mean millions for several counties in the state and could affect similar disputes in Kansas and Texas.

Harriet Miers, President George W. Bush's White House counsel and briefly his nominee to the Supreme Court, handled the company's appeal in its lawsuit against Woods County, Okla.



Appeals court rejects Ky. online hotel tax suit
Tax | 2009/12/24 03:06

A federal appeals court has upheld the dismissal of a lawsuit in which Louisville and Lexington officials tried to collect taxes from hundreds of online hotel brokers such as Hotels.com.

The U.S. 6th Circuit Court of Appeals ruled on Tuesday that Kentucky's law governing hotel taxes doesn't cover online travel companies. U.S. District Judge Thomas Russell dismissed the suit in 2008.

The city of Louisville three years ago sued hundreds of Web sites, including Orbitz and Travelocity, that rent discount hotel rooms, accusing the online travel companies of not paying taxes on the rooms rented.

Lexington joined the lawsuit, asking Russell to award an unspecified amount from the online travel companies to the two municipalities and to the 24 cities and 25 Kentucky counties that have hotel taxes.



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