Tuesday, June 22, 2004
Copyright Las Vegas Review-Journal
Founder of tax service investigated by government commits suicide
By JOHN G. EDWARDS
A founder of a tax service company that the Justice Department accused of promoting schemes that cheated the government out of $324 million in taxes died from a self-inflicted gunshot wound Sunday.
The Clark County coroner's office on Monday ruled that Robert Bennington, 40, a co-founder of the National Audit Defense Network, committed suicide. The shooting happened at 12:30 p.m. Sunday in a vehicle at University Avenue and Hualapai Way.
National Audit Defense Network sold fraudulent tax schemes, including phony Web site businesses, to an estimated 100,000 taxpayers around the country, according to the Justice Department. That resulted in the loss of $324 million in federal taxes, according to the agency.
The Justice Department said individual defendants formerly associated with the company are using its customer lists and selling fraudulent tax schemes.
While the company is in bankruptcy, "its former principals have taken NADN's customer list without authorization and without payment and are continuing to scam customers" through other companies, according to a motion filed by tax division trial attorney Evan Davis.
Bennington started several years ago with three or four salespeople and two accountants who helped people with tax issues, according to his brother, Michael Berman
"He started that business to help people, and it turned into something else," Berman said. "His philosophy was to let the people run the business."
Larry Weinsteen, an attorney and friend, agreed.
"Robert certainly would have never done anything intentionally to cheat or hurt anybody." Weinsteen said.
Berman said: "Somewhere along the line, it was turned around. He was overwhelmed, and he was embarrassed" about the Justice Department lawsuit.
Earlier, "he was fun to be around, always optimistic. He was never depressed," Berman said.
A divorced single father, Bennington was devoted to his two sons, age 9 and 12, and had a "heart of gold," said a friend who asked not to be identified. "The kids were his life."
The Justice Department is focusing its attention on businesses connected to former National Audit Defense Network executives, who are now marketing tax services to former company customers.
A bankruptcy judge entered an injunction against further activities by the company, but the injunction didn't stop individual defendants from pursuing similar businesses.
The injunction against National Audit Defense Network "has removed only one head of this hydralike operation," the Justice Department said. "Swift action against individual defendants is needed to protect the public."
In several cases, representatives of the new firms told company customers that buying their services would prevent income tax audits.
Cort Christie, former company co-owner who runs Nevada Corporate Headquarters, is registered agent for four Nevada corporations with Global Management. They are among the companies that are using National Audit Defense Network customer lists to sell fraudulent tax services, according to the government. Christie didn't return a call seeking comment Monday.
In one instance, Tim Franks called Lydia Montelongo, a National Audit Defense Network customer, and said he was going to work for Global, the government motion said. He offered to sell her a Web site, eliminate a loan and prepare her tax returns. Franks told her the company would get her a $5,000 tax credit for being disabled and a $5,475 tax deduction, which the government called "bogus."
A representative of Allied Grant Writers of America called Allan Kerr, another former National Audit Defense Network customer, on his mobile telephone, offering to create a Web page for $4,000, according to the motion. The representative falsely claimed the Web page would show an intention to make a profit and would prevent an audit by the Internal Revenue Service, the motion said.
Allied made a similar sales pitch to Joan Klanchnik, according to the motion. When she didn't immediately agree, Allied tried to contact Klanchnik for 12 consecutive days, the motion said. Panos Papagiannopoulos and Adam Mangabang, two former National Audit Defense Network co-workers, are officers with Allied.
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