Department of Justice Seal Department of Justice
FOR IMMEDIATE RELEASE
FRIDAY, AUGUST 13, 2004
WWW.USDOJ.GOV
TAX
(202) 514-2007
TDD (202) 514-1888

FEDERAL COURT BARS NATIONWIDE TAX SCAM, ORDERS IMPRISONMENT OF TWO PROMOTERS

Order Permanently Halts Sale Of Counterfeit Checks And Other Scams, Two Men Ordered To Be Jailed Until They Comply With Earlier Order


WASHINGTON, D.C. - Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division, announced today that a federal court in Ocala, Florida has ordered four people and their businesses to stop preparing, selling, or marketing fraudulent tax schemes. The permanent injunction applies to Eddie and Kathleen (“Kookie”) Kahn of Sorrento, Florida; David Stephen Lokietz of Mt. Dora, Florida; Bryan Malatesta, a certified public accountant in Cleburne, Texas; and Eddie Kahn’s Mt. Dora, Florida businesses-American Rights Litigators (ARL), Guiding Light of God Ministries (GLGM), and Eddie Kahn and Associates.

“People who sell tax scams are cheating their customers as well as law abiding taxpayers,” said Assistant Attorney General O’Connor. “The IRS and Justice Department are working vigorously to protect the public and the U.S. Treasury from tax scams.”

The United States District Court for the Middle District of Florida entered the permanent injunction on August 12 after these defendants failed to respond to the Justice Department’s complaint. The court found that the defendants sold counterfeit checks, set up sham corporations (known as “corporations sole”) to help customers hide income and assets, and helped customers obstruct IRS investigations and collections by filing frivolous complaints against IRS employees. The order bars the defendants from selling these or any other fraudulent tax schemes and from representing customers before the IRS. The injunction also requires the defendants to send their customers a copy of the injunction and to refund to their customers all membership fees and other payments received for selling fraudulent tax schemes and services since 1996.

The court separately ordered that Eddie Kahn and Bryan Malatesta, who previously had been found in civil contempt of court for failing to obey the court’s preliminary injunction, be incarcerated until they turn over documents, including their customer list, to the Justice Department. To that end, the court directed the Clerk of the Court to issue bench warrants for the arrest and detention of Kahn and Malatesta until each complies with the previously entered injunction.

More information on this case is available at http://www.usdoj.gov/tax/prtax/txdv03730.htm.

Court papers filed in an earlier tax injunction case-against Douglas Rosile, a Florida-based former accountant-alleged that Eddie Kahn sent customers to Rosile for preparation of tax returns making frivolous claims that wages are not income. In June 2002, a federal court in Tampa preliminarily barred Rosile from preparing tax returns for others. Information about the Rosile case is available at http://www.usdoj.gov/tax/prtax/txdv02145.htm,and http://www.usdoj.gov/tax/prtax/txdv02352.htm.

Information about the Tax Division is available at http://www.usdoj.gov/tax/index.html.

Assistant Attorney General O’Connor thanked Justice Department trial attorney Anne Norris Graham for her representation of the United States in this case. The case was investigated and referred to the Justice Department by the IRS’s Small Business/Self Employed Division.

Related Documents:

  United States v.
Eddie and Kathleen Kahn, et. al.

 
Permanent injunction

Contempt Order

(PDF documents)


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