Kansas Files Suit Against Renaissance,
The Tax People
Charges Company With Running Illegal Pyramid Sales Scheme
October 27, 2000
The State of Kansas has filed suit against The Tax People, charging the company with running an illegal pyramid referral sales scheme. The suit was filed in Shawnee County District Court, and asked for a permanent injunction to shut down what it described as a long-running fraud by the company's principal, Michael Cooper, who insists that his program is legal.
Cooper, president of the company, has been the object of three separate regulatory actions in the past six years in the state of Kansas.
- State of Kansas v Truly Special, Inc. Mr. Cooper, a principal with Truly Special, entered into a Consent Judgment with the office of the Attorney General on April 30, 1996.
- Kansas Securities Commission, KSC Docket No. 95E044, Order entered against Cooper and Truly Special, Inc.
- KSC Docket No. 99E027, Order entered against Cooper and Renaissance Designer Gallery Products, Inc.
Raided by Federal Agents
Riot-gear clad Federal agents from the IRS and the US Postal Inspection Service, accompanied by the Jackie Williams, the US Attorney, Kansas Division, served subpoenas on the headquarters offices of The Tax People in Topeka, Kansas early in the morning on October 12, 2000. They spent the entire day removing files from the two offices, located at 1001 S.W. Gage and 1825 S.W. Fairlawn.
Williams acknowledged that the US Attorney is cooperating with the Kansas Attorney General in the investigation, but declined further comment.
The Tax People sells "tax advice" to consumers, and charges both a signup fee and monthly fees for the "advice." It also encourages members to recruit others into the scheme, in a multi-level marketing setup. The company claims 50,000 recruits, many of whom have complained about improper ongoing charges to their credit cards, lack of customer service, and the company's inability or unwillingness to resolve issues.
A company spokesman claims that the raid by Federal investigators on October 12 was the result of negative publicity in a recent New York Times article. The company claims to be operating its business as usual following that raid. On September 13, 2000, the Times published an article describing problems with The Tax People. In the article they observed that the Federal government was unlikely to take any action.
Clifton Jolley, a Renaissance spokesman, claimed that "The New York Times runs a front page story saying the Internal Revenue Service will do nothing. (A month later), agents show up in body armor to seize records. Do the math," according to the Kansas City Star on October 13.
In addition to ongoing investigations by the Kansas Attorney General, Missouri and Hawaii are also investigating The Tax People for possible pyramid scheme violations.
Kansas Warns Representatives
On October 13, a spokesperson for the office of the Kansas Attorney General warned representatives of The Tax People that they could also be liable for pyramid scheme violations, a Level 9 Felony in that state. She suggested that they might want to seek counsel from their own attorney rather than calling the Attorney General's office. At this point in the investigation, a call from a marketer for the company could provide the Attorney General with evidence to use against that representative.
The investigations into The Tax People are drawing national attention. The Topeka Capital Journal reported on October 17 that:
"The Kansas attorney general's office has received inquiries about its investigation of Renaissance from attorneys general, securities exchange commission offices, federal trade commission offices, district attorneys and consumer services departments in Missouri, Oklahoma, Nebraska, Minnesota, Colorado, California, Florida and North Dakota, said Tiffany Ball, a spokeswoman for Attorney General Carla Stovall."
Loophole Will Cost Consumers
Due to a loophole in the shutdown, however, The Tax People is still permitted to do business with existing customers. On this basis, Cooper has emailed members instructing them to continue to pay $100/month in servicing fees. Therefore, by the time Kansas obtains the permanent injunction, many more consumers will have lost additional monies.
A hearing on the Attorney General's Temporary Restraining Order against The Tax People is scheduled for December 11, 2000. The Attorney General will be seeking to convert the Temporary Restraining Order into a Temporary Injunction, pending trial.
This report compiled from copyrighted articles at MLMSurvivor.com. Used by permission.