CT Criminal Lawyer

IRS Special Agent Shaun Schrader’s affidavit in support of a search warrant for NOVA Benefit Plan’s offices in Connecticut has been widely circulated and reported. That affidavit is particularly damning for NOVA and apparently NOVA now wants to restrict your right to read it.

On January 31st, NOVA’s lawyers filed an Emergency Motion to Seal the affidavit. No ruling has yet been made by the court. NOVA Benefit Plans, Benistar 419 Plan & Trust, Grist Mill Trust, US Benefits Group and others – all players or promoters in welfare benefit and 419 plans – filed the motion.

During the investigation leading up to the raid of NOVA’s headquarters, several undercover IRS special agents posed as potential customers. The agents recorded conversations with senior company officials. These officials all but admitted the program was a scam. These recordings are transcribed in part in the search warrant affidavit. Apparently the promoters don’t want their clients hearing the truth – the truth that they probably have sunk hundreds of millions of dollars in abusive tax shelters. Investments that NOVA said were legal.

In one conversation, a NOVA representative discussed how easy it was to claim a disability and withdraw one’s money from the plan tax-free. He told the undercover agent, “We’ve never denied a claim? I recently, I don’t want to say the client’s name, but he went through a minor surgery, had a little-had a mole removed off his elbow I think and left a little scar the size of a pencil eraser, and, you know, that-that qualified.”

When discussing the “independent plan trustee” that must approve the claims, a Nova representative is recorded saying, “I, I’m gonna put this very simply for you, we control the trustee, okay, and I, I don’t mean that in a bad way. He’s independent but he’s part of the family and we control the stuff that happens, we have ways to make stuff happen?It’s best for us to pay out as much claims so when it times for us to fight this in tax court, we can play and sing the welfare benefit song.”

Why NOVA and its progeny now want to silence the truth is baffling. The affidavit has been unsealed for several months and multiple copies exist on the Internet.

Company lawyers have also disclosed in their own filings how 50 “heavily armed” IRS agents raided their offices and carted off a “tractor trailer” full of documents. Not the thing to say if you wish to keep your clients thinking everything is fine.

What are the real reasons for filing the motion? That too is a secret, at least for now. Plaintiff’s Emergency Motion to Seal filed January 31st is itself sealed.

Keeping the truth from clients, vendors and the public does not engender trust. It makes it look like the companies and their officers are as guilty as the IRS says they are.

If you purchased or invested in a welfare benefit, contact a qualified tax attorney or CPA well versed in welfare benefit plans. The stakes are very, very high. The attorney or CPA should be able to help you unwind the plan, amend returns and help abate the penalties that will certainly follow. An attorney can also represent you if the matter goes to tax court, if you elect to bring a lawsuit to recover your losses or if you become the target of a criminal investigation.

Penalties can be as high as $100,000 to $200,000 per year for having an unqualified or unreported plan.

Originally published here.