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Written by 8:52 am Blog, Securities Fraud Articles

Investors duped by fraud may be able to get tax relief

As reported in the Sun Sentinel, and according to tax attorney Richard S. Lehman, investors duped by fraud can get some tax relief — refunds from the tax losses paid on income that turned out to be fictitious.

“Thousands of people are facing financial ruin from Ponzi scheme losses and many of them aren’t aware of the many courses of action they can take to recover the taxes paid,” said Richard S. Lehman, a Boca Raton tax attorney, whose clientele include several of Bernard Madoff’s victims.

Lehman clarified the new Internal Revenue Service guidelines to about 60 attorneys and accountants at a seminar on “The Safe Harbor, is it Worth it?” at the Boca Raton Marriott last week.

Accountants, financial advisors, and attorneys must work together to map out an effective strategy for these victims, he said.
The IRS offers victims a safe harbor procedure that will be beneficial to many Ponzi scheme victims, he said. However, the taxpayer must waive certain important tax rights to accept the benefits.

“For many people the tax rights they are forced to waive are very valuable and do not have to be waived,” he said.

Investors can now claim their losses from a Ponzi scheme as a theft loss rather than a capital loss, a personal casualty loss or a personal theft loss. Investors who lost in Ponzi schemes will also be able to include not only the net amount invested but also the fictitious income reported on tax returns in the year the scheme was discovered.
Given the current volatility, investors, especially the elderly, should thoroughly investigate any new venture before committing their money.

With Internet brokerages and telemarketers pitching various investments, it is crucial for investors to understand the difference between real investment opportunities and fraud.

In addition to tax relief from a ponzi scheme or other investment fraud, investors may also be able to bring claims against the financial advisor or brokerage firm that recommended the fraudulent investment.
The White Law Group is a securities fraud law firm that helps investors with securities fraud cases against their financial advisor or brokerage firm.

If you have questions about your broker, please call The  White Law Group at  312-238-9650 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration, investors protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.

To learn more about The White Law Group, visit https://whitesecuritieslaw.com.

Last modified: December 22, 2022