New I.R.S. Tax Rulings Provide Alternatives to Victims of Madoff, Ponzi Schemes

(BUSINESS WIRE)--Victims of the Bernie Madoff fraud and other Ponzi schemes have alternatives for obtaining refunds from tax losses and should weigh the numerous recovery avenues before proceeding with a course of action, according to a prominent Florida tax attorney with in-depth knowledge of the new rulings.

The topic, “The Safe Harbor, is it Worth it?” is published on www.bernardmadofftaxloss.com. It will be presented by Boca Raton-based attorney Richard S. Lehman on Wednesday, June 10, 3-5 p.m. at the Boca Raton (FL) Marriott. The course offers CPE credit for accountants. To register, call 561-368-1113 or visit www.bernardmadofftaxloss.com.

“Thousands of people are facing financial ruin from Ponzi scheme losses,” said Lehman. “Many of these victims aren’t aware of the many courses of action they can take for recovery of taxes paid. Accountants, financial advisors, and attorneys must work together in mapping out an effective strategy for these people.

“The I.R.S. offers victims a ‘safe harbor procedure’ that will be beneficial to many Ponzi scheme victims seeking tax refunds from tax losses. However, the I.R.S. requires the taxpayer to waive certain important tax rights to accept the benefits. For many people the tax rights they are forced to waive are very valuable and do not have to be waived.

“For victims to choose correctly between the safe harbor rules or alternatives, it will be important for them to have accounting and legal experts to guide them through the process of determining whether the safe harbor is the best choice and available to the client or whether the client will benefit more by proving that he is entitled to similar tax benefits to the safe harbor without waiving valuable rights.”

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Consumers Can Detect and Fight “Madoff-Style” Ponzi Schemes:

(BUSINESS WIRE)--Thousands of large and small investors will suffer from Ponzi schemes such as those perpetrated by Bernard Madoff and Lou Perlman – but few investors will know how to avoid them in the future or how to recover any of their losses, says Lunelle Siegel, executive director of the Association for Fraud Recovery and Prevention (AFRP) (http://www.fraudrecovery.org).

“Ponzi schemes are insidious and can go on for years, and affect both the wealthy and not-so-wealthy,” says Siegel. “For most investors, the chance of a direct recovery is very slight. However, there are special tax code provisions that will allow them to recover up to 30 percent of their losses. AFRP can help them understand their options.”

AFRP is a consumer advocacy association formed to investigate fraudulent schemes, inform members of scams, provide information on how to evaluate opportunities before investing, help individuals recover a portion of their losses and advocate for stricter penalties for those convicted of investment fraud.

Following are some tips AFRP offers for individuals considering an investment:

* Is the annual return the same in up and down markets? Many fraudsters promise a number and don’t change it despite the volatility of the market and how investments react to it.
* Is the investment salesman registered in your state or with the Securities & Exchange Commission (SEC)? Ask to see their license. Individual states and the SEC govern the sale of investments in their jurisdictions. If the salesman isn’t registered, he or she is likely a scam artist.
* Is the accounting firm that is providing financial statements for the investment registered with the state in which they are located? Legitimate sounding frauds often include audited financials from a fictitious CPA firm.

“The old saying that if something seems too good to be true, it probably isn’t, is often right,” says Siegel. “Sadly, some investors will fall prey to investment scams more than once – a situation that can be devastating for older individuals living on a fixed income. And in today’s difficult economic times, there’s less and less leeway for loss in anyone’s portfolio.”

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