LV firm accused of tax scam in Justice Department lawsuit

Jace Radke

Wednesday, April 14, 2004 | 10:56 a.m.

The Las Vegas-based National Audit Defense Network is allegedly engaged in running a tax scam and filing false federal income tax returns for customers, costing the government an estimated $324 million, according to a lawsuit filed Tuesday by the Justice Department.

The suit asks that a temporary restraining order and preliminary injunction be placed on the company to prevent it from selling what the complaint calls, "sham" products.

"National Audit Defense Network runs a tax-scam boilerroom that sells three products. (1) bogus home-based businesses, (2) a phony Web site modification plan called Shopn2000 that falsely claims Americans with Disabilities Act related tax credit and (3) worthless incorporation services," the suit states.

The Shopn2000 Web site advertises personal "internet-mall" Web sites for people with disabilities. The customers then pay $10,475 to modify the Web sites to "comply" with ADA, and customers are told that by paying for this modification every year they can claim a yearly $5,000 ADA tax credit and a $5,475 business tax deduction, according to the complaint.

Other defendants named in the suit include Oryan, a California-based Web site company that supplies Web accounts to the National Audit Defense Network.

Several former and current employees and managers allegedly involved with the National Audit Defense Network are also named as defendants, including Robert Bennington, a former co-owner and co-founder of the company, Weston J. Coolidge, the company's director and Alan L. Rodrigues, who runs the day-to-day operation of the company.

The National Audit Defense Network is described as a 470-employee telemarketing company that has about 100,000 customers, according to the suit.

Calls to the company for comment this morning were transferred to an executive assistant who did not immediately return a voicemail message.

The company is also facing a federal lawsuit filed in 2002 by the Federal Trade Commission, and a lawsuit filed in Clark County District Court that same year by the state. Those lawsuits claim that the company failed to honor a money-back guarantee the company offered on its services.

In June 2003, NADN also filed for Chapter 11 bankruptcy protection. At the time of the filing the largest creditor was the IRS with a $1.3 million claim against the company.

The bankruptcy was brought on by a $1 million Securities and Exchange Commission claim against the company, Coolidge said last year. The SEC's claim, he said, was related to an investment the company made in a failed company later determined to be a Ponzi scheme.