WASHINGTON Ė The United States has sued two men seeking to bar them from promoting an alleged tax scheme involving bogus gold mining tax deductions, the Justice Department announced today. The civil suits against Eric J. Peterson of Channelview, Texas, and William H. Camp of Washington, D.C., also seek to bar the two men permanently from preparing tax returns for others.
The suit against Peterson was filed in U.S. District Court in Houston. The lawsuit against Camp was filed in U.S. District Court in Seattle, Wash., where a substantial number of his customers reportedly reside.
According to the governmentís complaints, both defendants were salesmen for a scheme called MIDAS, which was offered by a firm called Merendon Mining of Colo., and the so-called Institute for Financial Learning (IFFL), a Calgary, Canada-based company.
The complaints allege that beginning in 2003 IFFL and Merendon salespeople persuaded customers to participate in the MIDAS scheme by promising large profits from purported investments in Colorado and Arizona gold mines. The complaints allege that MIDAS participants usually made no investment of their own funds, but instead used funds obtained from the Internal Revenue Service (IRS) by filing amended tax returns claiming bogus gold-mining-development deductions to get large tax refunds for earlier tax years. Camp and Peterson allegedly prepared many of those false amended returns. Frequently, the suits allege, Camp and Peterson determined the amounts of the bogus mining deductions based on the amount needed to offset most or all of customersí income for earlier years.
The complaint against Peterson alleges that seven of his MIDAS return-preparation customers were current or former NFL football players. Peterson allegedly prepared amended tax returns with bogus deductions to claim millions of dollars in tax refunds for these players.
Camp, described in the complaint as a Washington, D.C., resident, was sued in the state of Washington because he allegedly promoted the scheme to residents of that state, as well as to customers in Florida, California, Texas, Georgia and New York. The complaint also alleges that Camp claims to be an accountant, but says the IRS has not confirmed that he actually holds an accounting license. According to the complaints, Camp and Petersonís customers received a combined $1 million in fraudulently obtained refunds before an IRS investigation uncovered the scheme and the IRS stopped issuing additional claimed refunds.
Since 2001, the Justice Department has obtained injunctions against more than 310 tax preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website, as is information about the Justice Departmentís Tax Division.