August 4, 08

NEWS / FEDERAL COURT BARS OHIO ACCOUNTANT FROM SELLING OIL AND GAS TAX SCHEME

Alleged Revenue Loss Estimated Between $5.7 and $6.9 Million

WASHINGTON � A federal judge has barred accountant Daniel D. Weddington of Newark, Ohio, from promoting an alleged tax fraud scheme involving interests in gas and oil wells, the Justice Department announced today.

The government’s amended complaint in the civil injunction case alleged that Weddington and other defendants sold the scheme to more than 200 customers across the country that resulted in an estimated loss of between $5.7 and $6.9 million to the U.S. Treasury. According to the amended complaint, customers used the scheme to claim income tax deductions for fictitious well drilling costs. Customers allegedly paid for their investments using sham notes that were paid off by fictitious gas royalty payments from fictitious wells.

U.S. District Judge James L. Graham in Columbus, Ohio, issued the preliminary injunction order, which will remain in effect indefinitely, pending the outcome of a criminal investigation. Weddington agreed to the injunction without admitting wrongdoing.

The injunction order does not apply to the other defendants. The case against them is pending.

The amended complaint also alleges that defendants used a shell corporation, Aurora Capital Group Inc., to issue sham letters of credit to scheme customers in an attempt to make customers’ sham notes appear legitimate, so as to deceive the Internal Revenue Service (IRS).

The preliminary injunction bars Weddington from interfering with or obstructing IRS audits of scheme participants and from representing any scheme participants in connection with their IRS audits.

Since 2001, the Justice Department’s Tax Division has obtained injunctions against more than 345 tax preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website, as is information about the Justice Department’s Tax Division.
http://www.usdoj.gov/tax/txdv08683.htm

Tags: corporation, criminal investigation,