Thursday, October 7, 2010

FTC claims California company over tax relief scam

Report from federal officials on Wednesday: Thousands of consumers drowning in tax debt fall victim to a nationwide scam by a California based company whose owners enjoyed a generous lifestyle in a multimillion-dollar home with seven luxury cars in the garage.

According to the Federal Trade Commission, which announced it has filed a lawsuit in an attempt to win consumers' money back. A federal judge in Chicago has ordered the company to stop the misleading claims and selected a receiver to take control of the company. The judge also froze company possessions and its owners Alex Hahn, age 43 and his wife, Joo Hyun Park, age 37, of Beverly Hills.

According to a search warrant filed in the current case by the U.S. Postal Inspection Service, Alex Hahn was convicted in 2006 of mail fraud in California and sentenced to five years probation and ordered to pay nearly $1.3 million restitution. David Vladeck, director of the Federal Trade Commission's Bureau of Consumer Protection said: Their scam is over, closed down.

The FTC estimates 20,000 consumers paid upfront fees from $3,200 to $32,000 for worthless tax relief service. The company also charged customers credit cards without their authorization and gave few refunds. A new FTC telemarketing rule that takes effect on October 27 will forbid companies that sell debt relief services by phone from collecting fees before they settle or reduce a customer's debt.

When Fullerton told his wife, Darlene Fullerton, about the company's unmet promises she became pretty livid about the whole situation and went to work filing complaints with the Better Business Bureau, two state attorneys general and the FTC.

The IRS allows taxpayers to settle debts for less than what's owed, but most people don't qualify and they don't need a third party's help. But it makes installment agreements with people who can't pay all their debt at once.

Darlene Fullerton said "Consumers don't have to deal with companies like this”.

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