10-22-2003 -- Day, Brian Allen -- Indictment/Arrest -- News Release

Montville Tax Consultant Charged with $400,000 Fraud Against Clients

NEWARK - A Montville tax consultant has been charged in an Indictment with defrauding clients of nearly $400,000 while asserting that he was negotiating settlements on their behalf with the Internal Revenue Service, U.S. Attorney Christopher J. Christie announced.

Brian Allen Day, 42, whose business, The Tax Consultants, Inc. is in West Paterson, was arrested Friday by Special Agents of the Internal Revenue Service Criminal Investigation section. The 29-count Indictment alleges that Day took large sums of money from the clients on the representation that it would be turned over to the IRS as part of negotiated settlements. Instead, Day simply kept the money for his own use, according to the Indictment, which was returned under seal Thursday and unsealed with his arrest at his home early Friday morning.

The Indictment alleges that Day defrauded clients of $391,901 in amounts ranging from $25,000 to $130,000 from about August 1999 through February 2003. Seven individuals are identified by initials in the Indictment as victims. At Day's initial appearance before U.S. Magistrate Judge Mark Falk on Friday, Assistant U.S. Attorney Treby Williams said the fraud may actually exceed $600,000. Day was released on a $750,000 bond to be secured by equity in his Montville home.

Judge Falk also ordered that Day not prepare tax returns or represent clients in IRS proceedings pending resolution of the case, at which time that prohibition could remain in effect.

The Indictment charges Day with 14 counts of wire fraud, with 11 of those counts each carrying a maximum penalty of five years in prison and a $250,000 fine, and three counts carrying a maximum penalty of 20 years in prison and a $250,000 fine; six counts of making materially false statements to the IRS, each carrying a maximum penalty of five years in prison and a $250,000 fine; one count of obstructing the administration of IRS laws, carrying a maximum penalty of three years in prison a $5,000 fine; one count of subscribing to a false personal tax return (1997), carrying a maximum penalty of three years in prison and a $100,000 fine; and seven counts of failing to file personal or corporate income tax returns for tax years 1997 through 2000, each count carrying a maximum penalty of one year in prison a $25,000 fine.

Day allegedly defrauded his clients by claiming to represent their interests in the IRS Offer in Compromise (OIC) Program, which can lead to settlements for less than the entire amount of tax due the IRS. Day informed clients that they owed large amounts in tax which could be abated through OIC applications, according to the Indictment. He then allegedly instructed his clients to send him checks or instructed them to wire him money in amounts equal to the OIC settlement amounts, which he then deposited into his own bank accounts, never paying any of the money to the IRS.

In one case described in the Indictment, Day advised a woman, D.L., on preparation of tax returns in connection with her deceased mother's estate. Based on his calculations, he allegedly told the woman that the estate owed the IRS a substantial sum, which could be reduced through the OIC program. In August and September 2000, D.L. wire transferred a total of $100,000 to a bank account of Day's, who then told her he applied it to the IRS tax due on the estate.

Day also allegedly repeatedly made false written statements and misrepresented his credentials in proceedings before the IRS, which has specific requirements for individuals to represent clients before the agency on tax matters.

Christie credited Special Agents of the IRS Criminal Investigation section, under the direction of Special Agent in Charge Patricia J. Haynes in Newark; the IRS Office of Inspector General; and Special Agents of the FBI, under the direction of Special Agent in Charge Louie F. Allen, for their assistence in developing the case against Day.

The case is being prosecuted by Assistant U.S. Attorney Treby Williams of the U.S. Attorney's Office in Trenton.

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Defense Counsel: Eric R. Breslin, Esq. Newark