Return to Tax Industry News
 

Post Date:  9/21/2016
Last Updated:  9/21/2016

Summary
Cross References
- Leslie, T.C. Memo. 2016-171, September 14, 2016

The taxpayer met Eugene McCullough at a local swap meet. McCullough sold golf clubs and accessories. They became friends and he told her about an old friend of his named Lawyer Stanley who he knew from his days in the Navy. He explained that Stanley had a troubled past, but had since gotten into the diamond business and seemed to be doing very well for himself. The taxpayer decided she would like a small pair of earrings. McCullough reached out to Stanley on behalf of the taxpayer to purchase the earrings, but Stanley only did wholesale.

A few weeks later, Stanley contacted McCullough and said he had an offer the taxpayer might be interested in. For the right initial investment, Stanley would give the taxpayer $1 million once the diamonds were in hand and then resold.

The taxpayer took the bait. No contract was signed because she trusted McCullough, and it was only supposed to take 10 to 30 days for her to see a return on her investment. She wired a first payment of $320,000 to an entity named Africa World Trade, LLC. A few days later, Stanley began emailing McCullough exclaiming that the taxpayer could make millions and that if she would keep providing capital, she could own her own bank. Giving into the sense of urgency projected by Stanley’s emails, the taxpayer wired him an additional $60,000.

Stanley’s excuses for delay began. First, it was some bank’s standing in the way of Stanley’s payment to the taxpayer, then it was delays because of the Christmas holidays, and finally Stanley wrote McCullough another email explaining that the inland revenue taxes was the last obstacle. They raised it 1.0025% and that he needed additional funds. So the taxpayer wired another $25,000 to Stanley.

The court said in its ruling that this was all of course just a scam of the same kind anyone with an email address has encountered since the opening of the internet. And it played out just as one would expect. More delays followed by more excuses followed by more delays.

The taxpayer finally became leery of her newfound business partner 74 days after her initial investment. She emailed McCullough and Stanley to complain about Stanley’s over the top delays but received one last excuse. Stanley needed to get a probate document for some reason or another before he could make the deal go through. The scales cascaded from the taxpayer’s eyes and she threatened to call the police. There was still no progress, only more stalling. Stanley upped his game from deceit to outright forgery by creating and sending to her documents from something called the Foreign Credit Commission (FCC), but the number shown on the documents was false. Stanley then blamed the taxpayer for causing more delay by contacting this FCC.

See printable version for remainder of article.

Print Version:  Click here for a printable version of this document.