Fraud is alleged as feds close Vegas tax operation

Cy Ryan and Richard N. Velotta

Tuesday, Feb. 5, 2002 | 11:09 a.m.

The Federal Trade Commission has obtained a court order closing two controversial Las Vegas income tax-advising companies and placing them under receivership.

The two companies, National Audit Defense Network Inc. (NADN), 4330 S. Valley View Blvd. Suite 114, and Tax Coach, Inc., which did business as Tax Ready, 4310 Cameron St., guaranteed people across the nation they could save them money on taxes and assist with IRS audits or their money would be refunded. Tax Coach also lists an office at the Valley View address.

The FTC complaint, filed Wednesday under a seal that was lifted Monday, also lists company officers Cort Christie and Robert Bennington and general manager Al Rodriguez as defendants in the case.

The complaint focuses primarily on the company's refund guarantee policy.

"When consumers who meet the requirements of the guarantees contact defendants to attempt to obtain a refund, defendants fail or refuse to make such refunds, or otherwise frustrate consumers in a variety of ways from receiving refunds in a timely manner," the complaint says.

"If issued, many refunds take an inordinate amount of time to be received," the complaint says. "Some consumers never receive a refund. Other consumers receive refunds only through the intercession of law enforcement agencies or consumer protection organizations such as the Better Business Bureau."

The two companies also were sued Monday by the Nevada Attorney General's Bureau of Consumer Protection in U.S. District Court in a parallel filing to the FTC action. The state lawsuit alleges deceptive trade practices.

Deputy Attorney General Kathleen Delaney said the office has received more than 140 complaints from consumers in 40 states about the behavior of the two companies.

The dual suits seek refunds for consumers and the state action asks for civil fines up to $2,500 for each violation.

Delaney said the two companies advertised nationwide over the radio offering a product for a consumer to save money on taxes or offering to prepare a tax form or appear before the Internal Revenue Service.

The two companies, according to the suit, sold their products ranging in price from $400 to $1,400 and offered an unconditional money-back guarantee within 30 days. In one case, they offered a guarantee that the taxpayer would see a $3,000 tax benefit within a year or their money would be refunded.

Delaney said the refunds never came. The suit said the failure to follow through with the refunds was "evidence of the alleged intent of both companies to harm consumers and competitors alike."

NADN also was the subject of a class action lawsuit filed by a San Diego man last summer.

Eugene Morrill filed suit in San Diego Superior Court in August, complaining that he had paid $1,024 for the company's services in March, then canceled and couldn't get a refund. After the suit was filed, Morrill eventually got his refund.

The Better Business Bureau of Southern Nevada recently listed NADN as the company for which it received the most consumer complaints in 2001. It had received 350 complaints from consumers in the last three years, most of them over the company's refund policy.

Christie, who served as NADN's chief executive officer, disputed the allegations after that suit was filed. He said every client that had requested a refund had received one. He also said he had problems with the Better Business Bureau documenting complaints.

NADN has been a high-profile business since it was founded by Christie and Bennington in 1994. In 1997, the company, which billed itself as a network of 1,000 former IRS agents that specialize in fighting on behalf of persons who are audited, offered to represent Paula Jones in an audit case.

Jones, who filed a sexual misconduct lawsuit against former President Bill Clinton, eventually declined the offer.

NADN also offered assistance to the persons who caught home runs hit by St. Louis Cardinal first baseman Mark McGwire in his record-setting 1998 baseball season.

Christie and Bennington also won the emerging entrepreneur award in the 1999 Ernst & Young Entrepreneur of the Year award program for Nevada.

Representatives of the company and the court-appointed receiver could not be reached for comment on the most recent suit.