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Pepperdine University School of Law

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Monday, January 31, 2011

'You've Got a Buddy in the Tax Fraud Business'

Buddy's The former Cincinnati-based in-house counsel for the former 30-store retail chain Buddy's Carpet -- which carpet-bombed local media with advertising with the tag line "You've Got a Buddy in the Carpet Business," a play on the late former owner Burton B. “Buddy” Kallick's name -- was sentenced to 18 months in federal prison for his role in a tax fraud scheme.  From Friday's DOJ press release:

The evidence showed that, prior to selling the business in 2000, the defendants caused the firm to spend a total of $3.6 million on eight “Loss of Income” insurance policies, the purpose of which was to provide substantial tax deductions to the company and to the owners. ... The evidence also demonstrated that these insurance policies were a sham.   The evidence further showed that [the defendants] attempted to conceal their participation in these sham arrangements by establishing offshore nominee entities in foreign countries, such as Nevis.

http://taxprof.typepad.com/taxprof_blog/2011/01/youve-got.html

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