USA v. Elasass

Summarized by J. Debbeler , Bricker Graydon LLP
11 years 5 months ago

Citation:

14a0236p.06

Tag(s):

Ruling:

The Sixth Circuit Court of Appeals affirmed the decision of the U.S. District Court which granted summary judgment to the plaintiff U.S.A. on its claims that the defendants Elsass and FRG engaged in certain practices prohibited by the Internal Revenue Code which precludes persons from identifying investment scams and claiming improper theft-loss deductions arising out of those scams. The Sixth Circuit also upheld the injunction against Elsass and FRG as well as defendant STS which enjoined them from violating the tax laws and engaging in the prohibited practices..

Procedural context:

Plaintiff U.S.A. had sued defendants under 26 U.S.C. Sections, 7402,7407 and 7408 which prohibit persons from providing services to taxpayers which violate the tax laws. The U.S.A. sought to enjoin defendant Elsass and the two entities he founded and controlled, FRG and STS, from claiming improper theft-loss deductions arising out of certain investment scams. The District Court granted summary judgment and enjoined the defendants from engaging in certain practices in violation of the Internal Revenue Code.

Facts:

The defendants were in the business of helping taxpayers obtain tax refunds for theft losses under 26 U.S.C. Section 165. The business focused on the theft-losses from investment scams such as the one perpetrated by Bernie Madoff. The defendants would either obtain an advance fee payment upfront or get a blended payment of some cash and some portion of the final refund. The IRS found 9 different prohibited practices such as filing on the wrong forms, filing to improperly inflate refunds, claiming deductions for deceased relatives, Elsass' falsely claiming he was an attorney in good standing, and aiding and abetting understatement of tax liability. Defendants appealed on the grounds that the theft-losses were properly claimed and the injunction was overbroad.

Judge(s):

Circuit Court Judges Boggs, Clay and Gillman

ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!