Designer of Fraudulent Tax Promotion Product Sentenced to Prison
A Chino, California, businessman was sentenced to serve more than four years in prison yesterday in the U.S. District Court in Las Vegas for his role in a conspiracy to promote and sell fraudulent tax products, including a product called Tax Break 2000, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
Daniel William Porter pleaded guilty to one count of conspiracy to defraud the United States. U.S. District Judge Miranda Du sentenced Porter to serve 55 months in prison and three years of supervised release following his prison sentence. As part of his plea agreement, Porter agreed to cooperate with the government and assist with its ongoing investigation into entities and individuals involved in the sale and promotion of Tax Break 2000.
“Today’s sentence sends a clear and powerful message to those individuals who, like Mr. Porter, seek to evade and help others evade their federal tax obligations, that they will be prosecuted, convicted and sentenced to substantial terms of incarceration,” said Acting Assistant Attorney General Ciraolo. “No individual is above the law, and the Tax Division, working with its partners at IRS-Criminal Investigation and the Offices of the U.S. Attorneys, will hold accountable those who engage in criminal conduct at the expense of honest taxpayers and the U.S. Treasury.”
According to court documents and court statements, Porter conceived and designed Tax Break 2000, which purported to be an online shopping website. By at least November 2000 and continuing through at least July 2002, Porter conspired with others to promote and sell Tax Break 2000 to customers throughout the United States. Customers were falsely and fraudulently told that purchasing Tax Break 2000 would allow them to claim legitimate income credits and deductions under the Americans with Disabilities Act (ADA) by modifying the website each customer was provided to make it accessible to the disabled. The National Audit Defense Network (NADN) charged $10,475 for the product to maximize the fraudulent income tax credits and deductions that customers would claim on their federal income tax returns. However, the customers only paid between $2,000 and $2,695 for the product. The remainder of the cost was covered by a promissory note that customers were not expected to repay.
Porter sold Tax Break 2000 directly through Oryan Management and by contracting with other individuals and entities, including Donald Hicks, a tax return preparer in Gladstone, Missouri, and NADN in Las Vegas. Through Hicks and NADN, Tax Break 2000 was sold to thousands of customers. Alan Rodrigues, NADN’s former general manager and executive vice president, Weston Coolidge, the former president of NADN, and Joseph Prokop, the national director of marketing for Oryan Management and a former NFL punter, were convicted at trial in the District of Nevada for their roles in the sale and promotion of Tax Break 2000 in a separate criminal case.
On March 10, at the sentencing of Rodrigues, Coolidge and Prokop, Judge Du found that the intended tax loss to the Internal Revenue Service (IRS) associated with NADN’s sale of Tax Break 2000 was more than $60 million and that the fraud loss to the customers who purchased Tax Break 2000 was more than $36 million. Rodrigues was sentenced to serve 72 months in prison, Coolidge was sentenced to serve 70 months in prison, and Prokop was sentenced to serve 18 months in prison to be followed by 30 months home confinement. All three defendants were ordered to pay restitution of more than $35 million to customers of NADN who purchased the fraudulent tax product. Donald Hicks, who promoted the fraudulent tax products in Missouri, pleaded guilty in a separate criminal case in the Western District of Missouri.
Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation, who investigated the case, and former Trial Attorneys Timothy J. Stockwell, Katherine L. Wong and Mark L. Williams, and Paralegal Larry Garland of the Tax Division, who prosecuted the case. Ciraolo also thanked the U.S. Attorney’s Office in the District of Nevada in Las Vegas for their substantial assistance.