The Federal Trade Commission is mailing refund checks totaling more than $16 million to about 18,000 consumers who paid money to American Tax Relief, which bilked financially distressed consumers by falsely claiming it could reduce their tax debts.
Under a settlement, the defendants turned over millions of dollars in assets the court had frozen, including bank accounts, jewelry, and a Ferrari. In addition, the parents of one of the defendants turned over bank accounts, jewelry, a Beverly Hills residence, and a Los Angeles condominium.
Affected consumers will receive, on average, 16% of the amount they lost.
The money will be going to people like Jerry of South Bend, Ind., who complained recently to ConsumerAffairs about his experience.
"I too was taken for over $4500.00 by these so called tax experts. They did absolutely nothing but take our money and ask for personal info and robbed our bank account," he said, adding that he is still making payments to the IRS "with no end in sight."
In its heydey, American Tax Relief claimed in TV, radio and Internet ads that it could settle consumers' delinquent federal and state taxes for a fraction of the amount they owed. The company also claimed that it could remove tax liens and stop wage garnishments, bank and tax levies, property seizures, and "unbearable monthly payments."
The company's troubles began in April 2010 when federal agents executed a criminal search warrant on the operation's Beverly Hills business premises. They seized money from bank accounts and a Ferrari from the company's owner, and placed liens on two residences, including a $3.4 million house.
At the time, one of the company's owners was leasing six other vehicles, including a Rolls Royce, a Bentley, two Porsches, and two Mercedes-Benzes, according to exhibits the FTC filed in court.
American Tax Relief charged upfront fees ranging from about $3,200 to $25,000 for the purported tax relief services.
What to do
Those who receive checks from the FTC’s refund administrator should cash them within 60 days of the mailing date. The FTC never requires consumers to pay money or to provide information before refund checks can be cashed. Those with questions should call the refund administrator, Gilardi & Co., LLC, at 1-877-430-3699, or visit www.FTC.gov/refundsfor more general information.