A federal indictment accusing three men of a massive tax fraud was unsealed Wednesday and two of the defendants were arrested.
The defendants are charged with conspiracy to defraud the United States by interfering with the Internal Revenue Service, 15 counts of aid in preparing false income tax returns and five counts of mail fraud.
The three men are associated with the National Audit Defense Network, a Las Vegas company that the U.S. Justice Department sued in federal court five years ago.
The government then estimated that the tax advisory service had served 640,000 customers and caused $324 million in underpayment of income taxes.
A federal grand jury on Tuesday indicted former NADN general manager Alan Rodrigues, former NADN President Weston Coolidge and Joseph Prokop, a former National Football League punter who worked as national marketing director of a separate company.
Coolidge has not been arrested. Prokop was arrested in Los Angeles on Wednesday morning.
Rodrigues, 49, a former pit boss and casino owner from Henderson, appeared in federal court Wednesday afternoon and pleaded not guilty to the 21-count indictment levied against him. During a brief hearing, prosecutors said law enforcement officers served three search warrants and seized 200 boxes of documents.
The 12-page indictment explains that NADN was formed in 1996 and initially represented clients in tax audits. It had offices at 4330 S. Valley View Blvd.
Later, the company began preparing income tax returns and incorporating businesses, according to the indictment.
A separate company, Oryan Management and Financial Services of Upland, Calif., created an Internet shopping Web site called Tax Break 2000. Oryan, which was owned by unindicted co-conspirator Daniel Porter, paid NADN a commission to sell Tax Break 2000, according to the government.
In early 2001, the company began selling Tax Break 2000, which defendants claimed would enable customers to legitimately claim tax credits and deductions under the Americans with Disabilities Act.
Customers were told they could get tax breaks by making their Web sites accessible to the disabled, but the tax benefits in fact were fraudulent, according to the indictment.
Customers were persuaded to borrow 80 percent of the $10,475 purchase price, the court papers say.
The defendants paid attorneys to write favorable opinion letters about Tax Break 2000, according to the charges. Also, the defendants are accused of creating false tax forms to give the appearance that customer Web sites were throwing off commission income.
By 2004, NADN had sold Tax Break 2000 approximately 22,000 times to customers around the country, the charges say.
The company, which employed 430 workers, closed for a time in 2004 after being sued by the Justice Department.
The federal lawsuit was transferred to bankruptcy court where NADN's bankruptcy case remains.
Forty-year-old Robert Bennington, a company co-founder, was found dead with a self-inflicted gunshot wound in June 2004 after the Justice Department filed the lawsuit against the network.