Bankruptcy court to get case against telemarketing firm

Jace Radke

Wednesday, May 26, 2004 | 10:46 a.m.

A government request for a temporary restraining order and a preliminary injunction against the National Audit Defense Network will be taken up in U.S. Bankruptcy Court, according to an order filed Tuesday by U.S. District Judge Lloyd George.

The National Audit Defense Network, a Las Vegas-based telemarketing company that claims to sell tax advice and audit services, is at the center of a federal lawsuit brought by the Internal Revenue Service alleging that the company is selling illegal tax schemes.

George's order states that the government's motions for restraint and injunction are indisputably related to the company's ongoing bankruptcy petition that was filed June 11.

Moving the government's case to bankruptcy court will more efficiently utilize judicial resources, the judge wrote.

In its civil court case, the government has argued for a restraining order that would stop the telemarketing company from preparing tax returns and making false and fraudulent statements to promote its products.

The government alleges that the company is running a tax scam and filing false federal income tax returns for customers, costing the government an estimated $324 million over the last four years.

Attorneys for the company had asked George to consolidate the government's case with the bankruptcy proceeding arguing that any kind of injunction would put the company out of business and end any chances of a successful bankruptcy.

Last week attorneys for the IRS filed a motion in U.S. Bankruptcy Court to force the liquidation of the company.