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Noted miami fraud investigator challenges IRS

Posted on September 17, 2009 3:00 AM EST

A noted Miami fraud investigator known for his expert opinion on Miami fraud and white collar crimes (i.e., mail fraud, wire fraud, racketeering (RICO), tax fraud and other organized scheme to defraud, has sued the Internal Revenue Service (IRS) for a $4.8 million dollar judgement levied against him. The IRS sued Lewis B. Freeman for allegedly promoting an abusive and fraudulent tax shelter. A Miami lawyer filed the suit in federal court and alleges that Freeman had no involvement in an illegal scheme to defraud.

Freeman and his Miami firm are often hired to act as fraud experts in Miami federal cases. Freeman is often interviewed by the media for his expertise on Miami fraud cases and white collar crime. To date, the IRS has not filed an answer to the civil complaint filed in federal court. Freeman filed to suit in federal court for two reasons; first, he has no desire to pay the federal government $4.8 million dollars; secondly, he is concerned about his and his firm's reputation as a result of levied fine.

The complaint filed on Freeman's behalf alleges that he long with three other shareholders proposed a tax shelter program to 20 companies. The plan allowed for employees of these companies to be paid to reimburse commuter costs. The reimbursements are tax-free for the employees and the employer does not have to pay social security or Medicare taxes on the tax-free reimbursements. The tax-free program was provided to 4,827 employees. The IRS claims that the abusive tax shelter was a fraud, and that Freeman owed the IRS a $1,000 dollar penalty for the 4,827 workers for a total of $4.87 million dollars.

The other three shareholders involved in the alleged fraudulent tax shelter have also received IRS penalty notices similar to the one received by Freeman. Freeman's attorney does not know if the other shareholders will follow Freeman's lead and file a lawsuit in federal court. Freeman not only contests the IRS claim regarding the tax shelter, but also contests the amount of the fine. He claims the tax shelter was provided to 20 companies. As such, he asserts that if he liable, the amount of the fine should only be $200,000.

Noted Fraud Investigator Fights Big IRS Penalty, Forbes September 4, 2009.
Categories: Fraud