Following a six-week trial, a federal jury convicted three men Tuesday in a massive tax fraud scheme that occurred more than a decade ago.
The scheme, which federal prosecutors said occurred between 2001 and 2004, involved the now-defunct Las Vegas company the National Audit Defense Network. The company was accused of selling an Internet package, dubbed “Tax Break 2000,” to help thousands of clients across the country claim improper tax deductions
The Justice Department once estimated that the Internal Revenue Service lost more than $324 million in taxes to the scheme.
Two defendants — former NADN General Manager Alan Rodrigues, 55, and former NADN Chairman Weston Coolidge, 69 — were found guilty of 20 felony charges, including conspiracy to defraud the IRS and helping people prepare false tax returns. Both men showed no emotion as the verdict was read.
A third defendant, former marketing man and ex-NFL punter Joseph Prokop, bowed his head and shook it from side to side briefly, as the jury found him guilty on 18 of 20 of those charges, including the conspiracy count.
The jury had been deliberating since Thursday.
After dismissing the panel members, U.S. District Judge Miranda Du set a Sept. 3 sentencing date for all three men.
Timothy Stockwell, a trial attorney with the Justice Department’s Tax Division in Washington, asked Du to order the defendants detained until their sentencings, saying they now face stiff prison terms and are flight risks.
But Du concluded the three men are not likely to flee and allowed them to remain free on their own recognizance.
Defense lawyers said afterwards they expected to appeal the verdict.
John Collins, special agent in charge of IRS Criminal Investigation in Las Vegas, pointed out the significance of the verdict.
“The object of this scheme was to defraud the government and the taxpaying public,” Collins said. “It also victimized the thousands of taxpayers who purchased the bogus product only to lose their money. We view these types of schemes as organized tax evasion.”
The defendants were indicted by a Las Vegas federal grand jury more than five years ago, and the case has slowly made its way through the court system. The company’s co-founder, Robert Bennington, committed suicide.
Rodrigues is a former owner of the Opera House and Silver Nugget casinos in North Las Vegas, and Coolidge is a longtime Las Vegas businessman. Prokop, who worked for a California company that sold Tax Break 2000 to NADN, played for several NFL teams, including the New York Jets and Miami Dolphins, between 1987 and 1992.
Prosecutors argued that Tax Break 2000 was sold as a website that allowed customers to claim up to $10,475 in income tax credits and deductions under the Americans With Disabilities Act.
Many of the customers, prosecutors alleged, were audited by the IRS after it questioned the legality of the program.
The defendants carried out the scheme even after being told by its own “dream team” of tax experts that the IRS wouldn’t approve the program, Stockwell told the jury early in the case. The scheme also continued after the IRS began investigating the company.
Defense lawyers argued that their clients disputed claims the program was illegal and did not willfully seek to break the law.
The attorneys blamed the criminal case on one of the prosecution’s key witnesses, Daniel Porter, the California businessman who created Tax Break 2000. Porter pleaded guilty in the scheme in return for a lighter sentence and testified for the government during the trial.
Rick Pocker, who represented Rodrigues, contended Porter was the “real conspirator” in the case.
Rodrigues ran NADN, which at one point had 400 employees, like any other business and simply had a “good faith disagreement” with the IRS over Tax Break 2000, Pocker said
Contact Jeff German at email@example.com or 702-380-8135. Find him on Twitter @JGermanRJ.