IRS moves to liquidate Las Vegas company

Friday, May 21, 2004 | 11:08 a.m.

Attorneys for the Internal Revenue Service this week filed a motion in U.S. Bankruptcy Court in Las Vegas to force the liquidation of National Audit Defense Network Inc.

Las Vegas-based NADN -- which claims to sell tax advice and audit services -- filed for Chapter 11 bankruptcy protection last year. At the time, the Internal Revenue Service was the company's largest creditor with a $1.3 million claim.

Attorneys for the government in the new filing said the company has mismanaged its bankruptcy case. The IRS alleged NADN made a series of dubious payments to company executives and insiders prior to and following the bankruptcy filing. The motion alleged the company made payment of a $400,000 loan to Weston Coolidge, the company's president, just prior to the bankruptcy filing.

It also alleges the payment of $450,000 to the ex-wife of Robert Bennington, one of the company's founders, the payment of excessive sales commissions to managers and an unauthorized salary increase for Coolidge.

NADN officials could not be reached for comment.

If the conversion to a Chapter 7 liquidation proceeding is not granted, the IRS asked for a trustee to be appointed to take control of the case.

In separate NADN dispute, U.S. District Court Judge Lloyd George has not yet ruled on a motion by government attorneys to issue a temporary restraining order preventing NADN's preparation of tax returns and promoting some of the company's products. During arguments earlier this month, company officials said the restraining order would put NADN out of business.

The IRS has claimed that NADN is selling illegal tax schemes.