JUSTICE DEPARTMENT SUES N.J. MAN TO STOP PROMOTION OF TAX SCAM JUSTICE DEPARTMENT SUES ANOTHER PROMOTER OF FRIVOLOUS “SECTION 861" SCHEME

The following press release was published by the US Department of Justice on Nov. 7, 2002. It is reproduced in full below.

FOR IMMEDIATE RELEASE THURSDAY, NOVEMBER 7, 2002 WWW.USDOJ.GOV TAX (202) 616-2777 TDD (202) 514-1888 WASHINGTON, D.C. - The Department of Justice today filed suit in federal court to stop Richard Haraka, alias Rick Bryan, of Clifton, N.J., from promoting a tax refund scam known as the “Section 861 argument” for the tax code provision it misinterprets. Promoters of the Section 861 argument falsely claim that income from sources in the United States is not subject to federal income tax.

Today’s suit, filed in Newark, N.J., is part of a continuing nationwide crackdown against promoters of the Section 861 scam. The government’s complaint alleges that Haraka helped co-found an organization known as “Taxgate,” where he sells materials over the Internet designed to teach customers how to evade federal taxes and unlawfully interfere in the administration of the federal tax laws. According to the complaint, Haraka began promoting the scheme in the mid-1990s with Thurston Bell, who is the subject of a similar suit pending in federal court in Harrisburg, Pa.

The complaint also asks the court to order Haraka to provide the Department of Justice with the name of every person to whom he gave, sold or otherwise provided materials relating to the so-called Section 861 argument.

“Like several of the lawsuits we have recently filed around the country, this suit involves the Section 861 scam. Every court that has considered it has rejected it as frivolous,” said Eileen J. O’Connor, Assistant Attorney General in charge of the Justice Department’s Tax Division. “We will continue to pursue these cases vigorously and shut down schemes that cheat honest Americans who pay their taxes.” The Justice Department has already obtained injunctions against three bogus Section 861 promoters: Harold Hearn of Atlanta; David Bosset of Spring Hill, Fla.; and Douglas Rosile of Venice, Fla. A hearing on the Department’s request for an injunction against a fourth alleged promoter, Thurston Bell of Hanover, Pa., took place on Nov. 4th in a U.S. district court in Harrisburg. 02-659

Source: US Department of Justice