Taxes Add Insult To Injury For Ponzi Victims

If you have income, then you must pay taxes. That is true even when that income may be only what a Ponzi schemer may have reported to you. That is unfortunately the situation in which the Montréal victims of Earl Jones now find themselves.

Apparently the Quebec tax authorities will try to lighten the tax burden on Jones’s victims even though many should have no tax burden since the income was illusory.

Victims of financial fraudster Earl Jones won’t have to pay taxes on investment income they didn’t actually earn, Quebec Revenue Minister Robert Dutil announced. Jones’s victims will also be able claim a deduction for lost revenues, Dutil said in a statement. “I sympathize with these people who are going through a deplorable situation, and I want to clarify this to help avoid all confusion for these victims,” he said.

When someone is in a precarious financial situation and unable to meet their obligations, the agency follows their case closely in line with the information available.

Some of the fraudster’s victims are finding at the federal level that things are moving more slowly and there are delays in getting some relief for taxes they paid on fictitious income.

Kevin Curran, a member of the Earl Jones Victims Organizing Committee, says the government told victims last summer to file adjusted tax returns for previous years stating that the fake income provided to them by Mr. Jones was erroneously reported, at which point they would receive tax refunds. Many of the more than 150 victims did so, but despite a promise to move swiftly, they are still waiting for their tax returns. Some of these people are struggling to afford daily living expenses. Furthermore, a handful of the victims that would qualify for increased government pensions cannot get them because their income is still wrongly pegged as being too high.

Last year in the United States, the Ponzi Scheme victims of Bernie Madoff received somewhat faster tax breaks although the public resentment about the support the troubled banks were getting may have created a more favorable climate for speedy action.

The Internal Revenue Service announced unprecedented tax relief for victims of Ponzi schemes, saying many of those affected could deduct up to 95% of their losses immediately. The move represents a significant relaxation of longstanding limits on tax relief for victims of investment scams. It reflects the pressure officials are feeling to help individuals who have been hurt in the current financial crisis, when public resentment is growing over the billions of dollars the government is directing into troubled banks and other big corporations.

Meanwhile it is good to see that vigorous action is being taken to prosecute those who perpetrated these dreadful schemes. The Feds are targeting Bernie Madoff’s brother and sons for Tax Fraud.

Last summer, prosecutors essentially made clear they wouldn’t go after Bernie’s wife, Ruth. But that’s not the case in regard to his brother, Peter, or his sons, Mark and Andrew. It is reported that federal tax-fraud prosecutors in Manhattan are pursuing cases against Bernard Madoff’s brother and sons.

To add to this sorry tale of woe, it now appears that there is a Bogus Web Site Reportedly Trying to Rip Off Madoff Victims

A bogus Web site is targeting victims of Bernard Madoff’s record Ponzi scheme in an apparent identity-theft scam, the Securities Investor Protection Corp warned today, The New York Post reported. The site claims that $1.3 billion in Madoff money was recently found hidden in Malaysia, and displays photos of huge stacks of cash allegedly stashed by the mega-crook. The so-called “International Securities Investor Protection Corporation” urges burned investors to submit claims by filling out an online form and mailing in a copy of “your most recent brokerage account statement.”

The site rips off design elements of the real SIPC site. The SIPC wants to be as clear as possible that Madoff victims and other investors should not share any personal financial information via this Web site or rely upon it as an information source.

One would hope that these poor victims have gone through enough to realize that once bitten requires them to be twice shy.

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