By: A.J. Cook


Of all schemes devised by human kind for revenge, a most diabolical one emerged from innovative scoundrels. They concocted a way to sic the Internal Revenue Service on a person's enemies.

Natalie Telemaque and three cohorts sold their ploy through the mail and in seminars. Before they were stopped, the IRS visited and disrupted lives of a judge, a Congressman and many of its own agents.

The scheme: File with the IRS Form 1099, falsely reporting paying income to the victim. That person would not report the income, naturally, and the IRS would swing into action. The scheme had a purported additional benefit -- a deduction of the bogus expenditures for the person sending the form. As a result the government received refund requests of more than $1 billion.

The foolhardy Telemaque, charged with conspiracy to defraud the government, refused to attend her trial and stayed in jail. The trial continued without her. The judge wasted little time in sentencing her to three years in prison followed by two years supervised release.

The Moral: Recommending using tax laws to get even can backfire.

Telemaque's clients and others who file the fake forms also violated the law. They can be fined up to $5,000 and sent to jail for up to three years -- or both.

Victor Parsons, a boilermaker for Electrical Energy Services, Inc., allowed his anger at two IRS agents to override common sense. He sent the IRS 1099 forms showing the two had each received $3 million.

At trial his lawyer argued that Parsons was incompetent. But both Parsons and his doctor disagreed. Next, the lawyer argued the $3 million on the forms was so ludicrous that no sane IRS employee would believe them. Maybe so, said the judge, but "The large amounts do not reduce the forms to scraps of blank paper." He sentenced Parsons to six months in jail.

The Moral: Sweet revenge can be confining.

Merlyn Dykstra was convicted and sentenced to 21 months in jail for sending out bogus 1099 forms. Earlier the IRS, after he failed to pay overdue taxes, used the courts to seize his home and bank accounts. The forms showed he paid income to the people involved in the seizures: two judges, a U.S. Marshall, several IRS officers and even the bank employee who released the funds to the IRS. While the fired-up Dykstra was at it and since he was having such a good time, he sent one form listing his wife's former employer.

Then he took the Telemaque program one step further: He sent a follow-up letter to the IRS saying that these people failed to pay their taxes. He demanded a reward for turning them in.