Department of Justice Seal Department of Justice
FOR IMMEDIATE RELEASE
THURSDAY, JANUARY 23, 2003
WWW.USDOJ.GOV
TAX
(202) 514-2007
TDD (202) 514-1888

FLORIDA MAN ORDERED TO HALT TAX SCAM

Court Enjoins St. Petersburg Promoter Of Frivolous "U.S. Sources" Tax Scheme


WASHINGTON, D.C. A federal court in Tampa issued a preliminary injunction order on Jan. 21 directing Everte Farnell to stop promoting an unlawful tax scam known as the "Section 861 scheme" (after the tax code provision it misinterprets) or "U.S. Sources argument."

Under the court's order, Farnell must stop promoting the scam and stop preparing tax returns for others. He must also give the Justice Department a list of all persons for whom he has prepared returns in the past.

According to the order, and other papers filed in the case, Farnell promoted the scam on behalf of an organization known as the National Institute of Taxation Education, which is headquartered in Hanover, Pa. The order states that Farnell and other N.I.T.E. associates falsely claimed that U.S. citizens' income from sources in the United States is not subject to the federal income tax.

"This latest order confirms that the Section 861 scheme is bogus and illegal," said Claire Fallon, Deputy Assistant Attorney General in charge of the Justice Department's Tax Division. "In this tax-filing season, law-abiding taxpayers should be on the look out for scams like this, which can only get them in trouble."

Today's order is the sixth obtained by the Justice Department against promoters of the "Section 861 scheme." Federal courts have previously entered similar orders against Harold Hearn of Atlanta; David Bosset of Spring Hill, Fla.; Douglas Rosile of Venice, Fla.; Carel A. "Chad" Prater and his associate, Richard W. Cantwell, both of Sarasota, Fla.; and Thurston Bell of Hanover, Pa. A seventh case, against Richard Haraka of Clifton, N.J., is pending in federal court in Newark.

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