04/19/2010

News / Justice Department Asks Federal Court to Shut Down Ohio Firm That Allegedly Promotes Improper Theft Loss Deductions

Columbus Man Suspended from Law Practice

WASHINGTON - The United States has sued an Ohio man and his company, seeking to bar them from promoting a scheme that allegedly helps customers claim improper theft loss tax deductions, the Justice Department announced today. The suit also seeks to bar the defendants from preparing tax returns for others.

According to the civil injunction lawsuit, filed in the U.S. District Court for the Southern District of Ohio, Tobias Elsass of Columbus, Ohio, who is suspended from the practice of law, is the founder of Fraud Recovery Group, a Worthington, Ohio, company. Elsass and his company allegedly target potential customers who have experienced significant investment losses. In return for a percentage of the anticipated tax refund that will result from the defendants’ services, the government complaint alleges, the defendants prepare federal income tax returns for customers claiming a deduction from the "theft loss" the customer purportedly experienced

Federal tax law allows victims of certain criminal investment frauds to claim a theft loss deduction. But the taxpayer must be able to substantiate that the loss was the result of theft, among other requirements, in order to qualify for the deduction. The complaint alleges that Elsass and Fraud Recovery Group have repeatedly helped customers claim theft loss deductions when the customers did not qualify for them. As a result, the Internal Revenue Service has repeatedly disallowed customers’ deductions, the suit says.

Since 2001, the Justice Department's Tax Division has obtained more than 465 injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns.

http://www.justice.gov/opa/pr/2010/April/10-tax-439.html

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