A few days ago, Irwin M. Borowski, a government attorney, got an interesting piece of mail at home. It was an invitation to invest in a tax shelter called International Monetary Exchange S.A., which had the catchy pitch of "gold for tax dollars."
Yesterday, borowski had an answer for IME.
As associate director of enforcement at the Securities and Exchange Commission, Borowski's name appeared on the bottom of a civil fraud suit against the firm filed in U.S. District Court in Los Angeles.
The government is seeking a court order to halt the company from selling shares in an alledgedly fraudulent tax shelter, boasting gold mines in remote jungle areas of Panama and French Guiana.
Among the 18 defendants named in the suit is Gerald L. Rogers, a Californian who the SEC alleges is the central figure in the scheme.
The Sec said that IME already is in civil contempt of a court order to obey an earlier subpoena. Fines total $610,000 through Oct. 8, which the SEC said the company has failed to pay.
An SEC official said it is unknown how much money has been invested in Ime because most of the funds have gone out of the country.
In addition to soliciting by mail and phone, IME advertises extensively in many leading publcations, the SEC said.
"The defendants have falsely represented in their offering materials that signficant federal income tax benefits (400 or 500 percent tax 'write-offs') and gold profits would accrue to investors in 'gold for tax dollars' securities," according to court papers.
The complaint said the IME is "currently engaged in a nationwide sales campaign" of securities that the company has never registered with the SEC.
Among IME's "false and misleading" sales claims, according to the complaint, is that gold has been found in "proven commercial quantities," that investors have the right to explore and extract all gold from their claims and that physical development will be done on each investor's claim.
None of the principals of IME could be reached last night for comment.