- The Washington Times - Sunday, January 27, 2002

A Texas man who promoted a scheme to fraudulently advise black taxpayers they were entitled to reparations based on a nonexistent tax provision was sentenced Friday to 78 months in prison, the Justice Department said.
Vernon T. James, 46, of Carrollton, Texas, also was ordered by U.S. District Judge Paul Brown in Sherman, Texas, to pay restitution to the government of approximately $1.2 million. James will begin serving his sentence immediately.
According to court records, James was convicted in October after a two-day trial of preparing 10 fraudulent personal federal income-tax returns for the years 1997, 1998 and 1999, in which the returns claimed a $40,000 credit labeled "Notice to Shareholder of Undistributed Long-Term Capital Gains."
The Justice Department said James solicited clients from churches, telling them that a "black investment tax" was a legitimate $40,000 credit, which could be claimed by black taxpayers on their federal income-tax returns.
In fact, department officials said, there is no such credit as the "black investment tax" or any other reparations granted by Congress.
Testimony during the trial indicated James attempted to obtain more than $8.4 million through the filing of more than 300 fraudulent tax-credit claims. The Internal Revenue Service was able to prevent most of the fraudulent claims from being paid, the department said, although approximately $1.2 million in false claims were paid out.
The department also said that testimony during the trial showed that James personally received approximately $200,000 from the scheme.
"Unsuspecting citizens are often targeted by deceptive promotions," U.S. Attorney Matthew D. Orwig in Texas said. "We intend to vigorously investigate and prosecute individuals involved in fraudulent schemes such as this."
Assistant Attorney General Eileen J. O'Connor, who heads the Justice Department's tax division in Washington, said a department priority is to "prosecute criminals who line their own pockets by promoting fraudulent tax schemes."
The IRS issued a nationwide warning for taxpayers not to be misled into filing slavery-reparation claims. The IRS has recently seen a significant surge in these false filings, and the agency urged taxpayers not to fall victim to this tax-refund scam.
"Promoters are shamelessly preying upon people," IRS Commissioner Charles O. Rossotti said. "These snake-oil salesmen build false hopes and charge people good money for bad advice on reparation refunds. In the end, the victims discover their refund claims are rejected, and their money and the promoters are long gone."

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