By Don McNay
“Go ahead and hate your neighbor,
Go ahead and cheat a friend.”
-Coven (theme from the movie Billy Jack)
I saw a “pat on the back” news release from the Federal Trade Commission today. The headline said, “FTC Settlement: Tax Relief Scammers Agree to Pay More Than $15 million.”
If you go down a couple of sentences, it notes that the scheme bilked consumers out of $100 million dollars.
Crime does pay.
Making $100 million dollars, with the cost of getting caught at $15 million, is an $85 million dollar profit.
Most business, legitimate or illegitimate, will take an $85 million profit any day of the week.
The seminal book on crime, The Godfather, said, “a lawyer can steal more with his briefcase than 100 men with guns.”
Alexander Seung Hahn, the “leader” of the group American Tax Relief LLC, obviously used some of the $100 million to hire some excellent attorneys as he and American Tax Relief got a sweetheart deal.
In theory, the settlement order imposes a $103 million judgment but, according to the news release, “The judgments will be suspended once the defendants and relief defendants have surrendered assets that total more than $15 million, including cash, a home in Beverly Hills and a condo in Los Angeles, jewelry and gold items, and a 2005 Ferrari.”
In other words, everyone goes away happy as long as Hahn and his people fork over $15 million.
If they had walked into a tax relief center with a gun and robbed it of $85 dollars, not $85 million, they would spend several years in the pokey.
Instead, they have to suffer the indignity of giving up their Ferrari.
To some in Beverly Hills, giving up the house and Ferrari may be the same as breaking rocks, but it doesn’t seem the same to me.
I have never understood two things. One is why no one has cracked down on the “tax relief” people a long time ago. I rarely watch television, but see their nonstop advertisements. The Internal Revenue Service has a program called an “Offer in Compromise” where is it is theoretically possible to have your tax burden reduced, but it is rarely successful.
In 2008, the last year that I have statistics for, the Internal Revenue Service received 48,000 Offers in Compromise and only accepted 11,000.
I suspect very few of the successful offers came via the companies that advertise on television.
If anyone should be doing hard time, it should be the people running “tax relief” and “debt relief” scams. They prey upon the most desperate members of society.
If you are so far behind that you think that someone on the internet or answering an 800 number can help you, you are obviously at the end of your rope.
You are also probably financially disconnected. There are legitimate bankruptcy attorneys who may be able to help. I would rather take a chance walking into a local attorney’s office than paying an unknown “tax relief” specialist with a Ferrari.
Since a lot of poor and desperate people ponied up over $100 million, the tax relief scam business must be a good one.
The other thing that the “settlement” does is to show the ineffectiveness of the Federal Trade Commission. I am not sure why they are still in business.
When Elizabeth Warren and others pushed for and created the Consumer Financial Protection Bureau, the Bureau seemed like a perfect “one stop shop” to go after things like “tax relief scams.” In theory, tax relief scams could be something that the Internal Revenue Service goes after. It also could be something where the Justice Department, state attorney generals, state consumer protection agencies or the Federal Trade Commission might consider it their turf.
I’m hoping that the FTC settlement does not preclude the CFPB or other groups from going after tax relief scams.
Or even worse. The FTC settlement showed that crime can have a big payoff. I just hope it does not encourage others to get into the same line of business.
As Glenn Frey said, “the lure of easy money has a very strong appeal.”
Especially to the tune of an $85 million profit.
Don McNay is the best-selling author of Life Lessons from The Lottery and Wealth Without Wall Street.