The Audacity of Tax Fraud: Promoter Sentenced to Nine Years

One enterprising criminal tax fraud promoter has put a new twist on the concept of “robbing Peter to pay Paul,” in a scheme which might be described as robbing Uncle Sam to pay citizens of the Great White North: persuading Canadian citizens to file fake United States tax forms to collect real refunds from these fraudulent claims.

A Canadian tax fraud promoter who was extradited from Canada and convicted at trial was sentenced to nine years in prison for conspiracy and three counts of wire fraud. The sentencing judge cited the “audacious nature” of his scheme.

Franzie F. Colaco, 54, of Brampton, Ontario, Canada, was convicted during a two-day jury trial. He was found guilty of conspiring with Ronald L. Brekke and others to promote a scheme known as “1099 OID” fraud. Under this scheme, tax filers use fraudulent Form 1099-OID forms to claim tax refunds equal to the value of the filer’s personal debt.

Colaco promoted this scheme throughout Canada and encouraged Canadian citizens to request refunds from the U.S. government.

The IRS flagged the vast majority of the 1099 OID filings as frivolous, but refund claims totaling approximately $14 million were paid to followers of Brekke and Colaco before the IRS detected the fraudulent nature of the returns.

“This defendant promoted theft of U.S. tax dollars by convincing Canadians they could get rich at others’ expense,” Acting U.S. Attorney Annette L. Hayes said in a statement. “This is a fraud — pure and simple — and one that will not go unpunished.”

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One thought on “The Audacity of Tax Fraud: Promoter Sentenced to Nine Years

  1. Interesting…
    “This defendant promoted theft of U.S. tax dollars by convincing Canadians they could get rich at others’ expense,” Acting U.S. Attorney Annette L. Hayes said in a statement. “This is a fraud — pure and simple — and one that will not go unpunished.”

    I am confused because it appears the U.S. government kidnapped and caged a foreign sovereign individual for employing the same tactics as the U.S. government. This tactic they reference as “theft”. The last time I checked, government employs a similar tactic, except it uses coercion and the threat of violence to remove the physical manifestation of an individuals productivity and time. Apparently, though, its ok because instead of theft they label it taxation. Yet somehow this simple truth escapes probably 90+ percent of the population.

    This reminds me of that fantastic bumper sticker we still see on occasion:
    “Don’t steal, the government hates competition”

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