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US/1; ATTN: Fm211 – Secial Working Group (Augmented) – Fm211-[SWG]-(A)
[ed.note: Injunctive relief, ONLY?…Stay turned. It gets better.]
[OPEN SOURCE - Article ONLY:]
Feds: Brea man’s tax credits are bogus
2011-07-01 09:37:22
A Brea man has been accused of peddling billions of dollars in bogus tax credits in a case that also involves Bernard Madoff, Hurricane Katrina and a mysterious alcohol-detoxification system.
Lamar Ellis is 77 years old and lives in a sparse home papered with legal documents that he says proves he really does have those tax credits. The federal government says he's a fraud and is seeking a court order to block him from using any such credits.
Ellis describes himself as a retired medical researcher who once invented a system to rapidly detoxify people who have used alcohol or drugs. He declined to speak in much detail about it – "that's actually proprietary," he said – but a press release he once issued explained that it could help drunken drivers function "near a high state of normalcy."
Ellis patented parts of his system in 1989, records show, but he never marketed or sold them. He claims, though, that state and federal governments awarded him as much as $36 billion in research tax credits for his work.
Federal prosecutors with the Department of Justice say the government would never have given Ellis tax credits like that. In legal papers filed this week, they described Ellis' claims as "false and/or fraudulent," part of a tax-fraud scheme.
Their complaint accuses Ellis of trying to sell or transfer his purported credits, but doesn't say whether he ever profited from them. It seeks an injunction to stop him from using the credits but does not seek any criminal charges. A Justice Department spokesman said he could not comment further.
Ellis, in the government's telling, tried to sell tax credits over the Internet and partnered with nonprofit groups in the South in an effort to turn his claimed credits into money. In particular, he worked with the Southwest Louisiana Business Development Center, which helps small businesses in the Gulf Coast.
The group has included $24 billion in "other assets" from Ellis on its tax forms since 2007, records show. Those credits were to be used in the Gulf Coast recovery from Hurricane Katrina, according to the tax forms.
The group's president, Charles Achane, said it was a "real kick in the stomach" when he learned the credits might be bogus. "It means that a lot of the plans that we have to rebuild the Gulf Coast will be severely dashed," he said.
Ellis, though, says he never tried to transfer his credits, for one very simple reason. The credits, he says, were stolen.
He says he signed his billions of dollars in purported tax credits over to a bank for safekeeping. The bank at some point rolled his credits into bonds or other securities, he says, which ended up in the hands of Bernard Madoff, the convicted king of fraud. Ellis has filed suit to recover them.
Meanwhile, Ellis says, he had plunged into depression from his service in the Korean War. He entrusted his financial affairs to family members, friends and a few people he just met along the way.
He believes some of them saw the tax credits on his financial forms and, acting without his knowledge, tried to tap into them. He says the only credits he has now are from a charitable donation of his patents and equipment to his childhood church in Mississippi, which he valued at $500 million.
Ellis says he has not used any of his alleged tax credits to reduce his own tax bills – "never, never, never." The government, though, says some of his associates have claimed tax credits from him – and had to pay up when they got audited.
Ellis responds with an accountant's litany of tax forms and numbers when asked about the tax credits he says he earned. But asked about the specific claims in the government's legal filings, he responds: "I don't know what they're talking about... I was out of the loop on that... I don't remember writing that."
He hasn't seen the government's complaint against him. It was filed on Wednesday, but the court hasn't yet served him with it. "You really caught me by surprise," he said when informed of a federal case against him.
© Copyright 2011 Freedom Communications
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Subject: FW: JUSTICE DEPARTMENT SUES TO STOP ORANGE COUNTY, CALIFORNIA,
MAN FROM SELLING BILLIONS IN FAKE TAX CREDITS
Date: 6/30/11 12:04:34 PM
From: "Doug Irving" [redacted]@ocregister.com>
To: [SWLABDC-redacted-]
Mr. [redacted SWLABDC Officer identification],
The federal complaint against Mr. Ellis is attached to this email.
Please call me after you've had a chance to read it. I am preparing a
story for the Orange County Register in California about the case and
would very much like to include your comments. You can reach me directly
at 714-704-[#redacted].
Thank you,
Doug Irving
The Orange County Register
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From: USDOJ-Office of Public Affairs (SMO) (JMD)
Sent: Thursday, June 30, 2011 10:51 AM
To: USDOJ-Office of Public Affairs (SMO) (JMD)
Subject: JUSTICE DEPARTMENT SUES TO STOP ORANGE COUNTY, CALIFORNIA, MAN
FROM SELLING BILLIONS IN FAKE TAX CREDITS
Note: The complaint is attached in pdf format.
[cid:image003.jpg@01CC370D.1C6D2800][cid:image004.jpg@01CC370D.1C6D2800]
LIMITED DISSEMINATION BELOW:
____________________________________________________________________________
FOR IMMEDIATE RELEASE
TAX
THURSDAY, JUNE 30, 2011
(202) 514-2007
WWW.JUSTICE.GOV
TTY (866) 544-5309
JUSTICE DEPARTMENT SUES TO STOP ORANGE COUNTY, CALIFORNIA, MAN
FROM SELLING BILLIONS IN FAKE TAX CREDITS
WASHINGTON - The United States has sued an Orange County,
Calif., man to stop him from selling bogus tax credits, the Justice
Department announced today. According to the civil injunction complaint
filed in a Los Angeles federal court, Lamar Ellis of Brea, Calif.,
fraudulently claims to have billions of dollars in federal research tax
credits that the government supposedly granted him for purported
scientific breakthroughs. The complaint states that Ellis claims to be
a retired medical doctor, researcher and inventor.
The complaint alleges that Ellis has advertised his
purported ownership of fake tax credits on various websites and has
issued phony documents to individuals purporting to give them credits
that can be used to reduce their tax obligations. Ellis has allegedly
partnered with the Southwest Louisiana Business Development Center, a
community development entity, in an attempt to sell $24 billion of
fictitious tax credits.
According to the complaint, in 1998 the U.S. Securities and
Exchange Commission sued Ellis for his involvement in a fraudulent
investment scheme involving Ellis's claimed invention of a
"detoxification system" that could purportedly detoxify people of drugs
or alcohol in as little as 15 minutes. The complaint states that Ellis
and his co-defendants allegedly offered to sell unregistered stock in
Ellis's company, Lamelli Inc., as part of that scheme. According to the
complaint, a court found that they falsely claimed to investors that the
detoxification system had been approved by the National Institutes of
Health and that Lamelli had received a grant from the Food and Drug
Administration. The government alleges that a court ordered Ellis to
disgorge his profits from the fraud and to pay a penalty.
In the last decade, the Justice Department's Tax Division
has obtained hundreds of injunctions to stop tax fraud promoters and
unscrupulous tax return preparers. Information about these cases is
available on the Justice Department
website.
# # #
11-859
DO NOT REPLY TO THIS MESSAGE. IF YOU HAVE QUESTIONS, PLEASE USE THE
CONTACTS IN THE MESSAGE OR CALL THE OFFICE OF PUBLIC AFFAIRS AT
202-514-2007.
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