A federal judge in Seattle, Washington has permanently barred William H. Camp, Jr., of Washington, D.C., from promoting a sham mining expense tax scheme called MIDAS, offered by Merendon Mining of Colorado and the institute for Financial Learning (IFFL).
In his order granting the U.S. Department of Justice's motion for summary judgment, U.S. District Judge Ricardo S. Martinez said Camp assisted in the organization of the Mining Interest Development Action strategy (MIDAS) program, a scheme promoted through Merendon Mining of Colorado, which claimed it owned two formerly active gold mines in Colorado and Arizona.
Merendon affiliates told investors that, with new technology, the mines might be able to produce gold and other minerals, the court said.
The prospectus provides that Merendon has developed a mineral program that allows participants to obtain an interest in minerals produced at a mine in Jamestown, Colorado. It provides that the investors must collectively invest $100 million annually and investors will receive 50% of the minerals extracted as a result of their respective ownership share of total investment, the judge said.
Merendon Mining (Colorado) was named in a similar tax scheme involving seven NFL football players, said two Justice Department lawsuits filed in February 2008. The Justice Department didn't actually sue Merendon, but targeted the accountants who worked for the company, which included Camp.
The DOJ said Camp began persuading customers in 2003 to participate in the MIDAS scheme by promising large profits from investments in Colorado and Arizona gold mines. The court found that MIDAS participants usually made no investment of their own funds, but instead used funds obtained from the IRS by filing amended tax returns claiming bogus gold mining development deductions to receive large tax refunds for earlier tax years.
The court further found that Camp prepared these falsely amended returns, many of which wrongfully eliminated the majority of his customer's income tax liabilities for 1997 through 2002, the DOJ said. The court also found that Camp charged his customers up to $4,000 each to prepare and file the false amended returns.
Judge Martinez estimated that Camp prepared amended income tax returns for at least 22 MIDAS customers from Washington, Florida, California, Texas, Georgia, and New York. The judge found none of these persons had paid any amounts toward the development of any mines to Merendon, Merendon mining (Nevada), and the Institute for Financial Learning, Capital Alternatives, or any others.
Camp also had reason to know that none of these organizations had paid the amounts reported on the tax returns toward the development of any mining facility, he added.
The court ruled a permanent injunction is necessary because Camp will continue to promote this or other fraudulent ax schemes. The order prohibits Camp from preparing, filing or helping other to file federal tax returns and bans him from promoting or selling the MIDAS program.
The Institute for Financing Learning operates a website on the Internet, which states: Our Vision is to provide effective results through focused education that will guide and facilitate methods of financial empowerment for our members and their families for generations to come. The website says the organization offers wealth building workshops.
Creditors have tried to force Merendon Mining (Colorado) into bankruptcy. The company's registered agent at the end of last year was Milo Brost, whom the Alberta Securities Commission permanently banned from securities trading in 2007. The commission is reviewing other allegations of fraud involving Brost and Merendon Mining of Alberta.
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