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IRS Targets HedgeLender, Alexander Financial, Alexander Capital Markets
Internal Administrator
Posted: Saturday, August 13, 2011
Joined: 10/12/2010
Posts: 5780


Posted: 9/22/2010 1:42:03 PM

By: jcolvin2

http://www.justice.gov/opa/pr/2010/September/10-tax-1063.html

Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE
Wednesday, September 22, 2010
Justice Department Asks Federal Court to Bar Allegedly Fraudulent Stock Loan Scheme

HedgeLoan Scheme Allegedly Mirrors Fraudulent Derivium Scheme, Falsely Claiming to Allow Customers to Receive Tax-Free Cash for Stock

WASHINGTON – The United States has filed a complaint asking a Virginia federal court to permanently bar three firms and three men from promoting a nationwide "HedgeLoan" scheme that the complaint alleges involves the disguised sale of more than $268 million in securities, the Justice Department announced today. HedgeLoan allegedly mimics the fraudulent Derivium 90 percent loan scheme that a California federal court enjoined last year.

The civil injunction suit names three men: Daniel Stafford of Gaithersburg, Md.; Fred R. Wahler, Jr. of Philadelphia; and William Chapman of Great Falls, Va. Stafford and Wahler allegedly own Philadelphia-based defendant HedgeLender LLC. Chapman allegedly owns the remaining two companies named in the complaint, Alexander Capital Markets LLC and Alexander Financial LLC, both based in Great Falls.

According to the government complaint, the defendants promote and operate the HedgeLoan scheme, in which customers are falsely told that they can receive tax free cash for their securities in the form of a "loan," when in reality the monies received are sales proceeds subject to federal income tax on capital gains at the time of receipt. One couple from Michigan cited in the complaint allegedly used the defendants’ HedgeLoan scheme to dispose of more than $4 million in stock through 25 separate transactions. According to the complaint, the Internal Revenue Service audited the couple’s 2005 federal income tax return and found that they had under-reported their income by $3,662,528 as a result of their participation in the scheme. The complaint further alleges that the couple allegedly agreed to pay an additional $616,984 in income tax for 2005.

The suit claims that in virtually every case, the defendants simply sold the customer’s securities on receipt, remitted up to 90 percent of the sales proceeds to the customer as the "loan," and retained the remaining sales proceeds for themselves and the other parties who facilitated the scheme. This allegedly left defendants without the assets necessary to return every customer’s so-called "collateral" if requested at the end of the purported "loan" term. As early as 2007, defendants allegedly lacked the funds to return all customers’ securities who requested them – yet they continued to promote and operate the HedgeLoan scheme and related schemes.

In the past decade the Justice Department has obtained injunctions against hundreds of tax scheme promoters and tax preparers. Information about those cases is available on the Justice Department website.

10-1063 Tax Division


Anonymous
Posted: Saturday, August 13, 2011

Posted: 4/2/2011 5:25:33 AM

By: Darrius Reznick

Hedgelender was not a part of Alexander and did not enrich itself with this. They were the marketing firm, which represented the product as the lender, Alexander, stated.

In addition, the "$4 million" cited in this case was not a HedgeLender client. It was an Emerging Money Corporation client, the former firm out of Stamford CT. None of HedgeLender the company's clients had any problems with their loans.

Alexander Capital was not in a true Joint Venture with Alexander Capital but was a marketing firm that shared no profits with Alexander as it was a separate company. Thought its name was Hedge LENDER - it was not a lender, but a broker (just as Coca Cola doesn't sell cocaine, or Kleenex doesn't sell Clean, it was a trade name.

Alexander did represent that it hedged all of its portfolios but nothing that Hedgelender ever marketed did not first come from Alexander in writing and verbally, so they are innocent in any lender fault here as they were not a lender.

Also, very, very few 90% LTV nonrecourse stock loans were ever done by Hedgelender and that LTV ended after only a year or two. The use of the phrase "no capital gains" lasted very briefly and was only used in the phrase "no capital gains unless you default on your loan repayment, at which point the loan converts to a sale" - the precise phrase that Alexander told to all its agents and marketers.

It's convenient to throw around the name "Hedgelender" because it rolls off the lips so nicely, but in fact Hedgelender was simply a broker/marketer and if anything it said was wrong, it was only because those words were incorrectly provided to it by the actual lender, Alexander Capital.

Finally, remember that HedgeLender the company did only a tiny fraction of Alexanders loan referral business. Most came from Emerging Money Corporation - including all of the transactions cited in this complaint. Hedgelender is being slandered and its role blown way out of proportion. The lender was Alexander, not HedgeLender.

Note that this complaint was settled without admitting or denying, and there were no monetary fines associated with it.


Anonymous
Posted: Saturday, August 13, 2011

Posted: 9/22/2010 2:44:53 PM

By: OI

Surrounding similar schemes, and know there were / are alot across the nation, Dr. Alexander Gilbert Baraona left northern Calif. - after similar scams - for Lake Tahoe where he enjoyed spending OPM. He ever get nabbed yet? I mean, since he skated straight-away from so many of his LOIs on bogus bank paper deals that drew in millions of OPM for his buddy Bob Palm.

Thanks, John

OI


 

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