Update: Wednesday, Oct. 26, 2022 -- A federal jury in Detroit on Tuesday acquitted Jeffrey S. Freeman of one count of tax evasion and two counts of wire fraud.
Original Story was on May 12, 2021
The former owner of a national skin care product company is suing her Birmingham lawyer, accusing him of stealing millions from her in a tax-fraud scheme the lawsuit describes as "shockingly corrupt."
Ashley Vann filed the case March 31 in U.S. District Court in Detroit against Jeffrey S. Freeman.
The suit alleges that Freeman swindled her out of $6.5 million in 2013 by convincing her she owed more than she actually did to the IRS. The suit alleges he pocketed the money, which she didn't discover until 2019.
Neither Freeman nor his attorneys returned a call for comment.
In the late 1990s, Vann, a Canadian citizen, whose primary residence is Spain, launched Dermal Tone, a company selling a facial exerciser. She says she sold the Las Vegas-based business in 2003.
In 2000 and 2001, as it became successful, she invested money from the U.S. profits into her start-up in Europe, with the understanding she would reduce her U.S. income tax liability, the suit says.
She subsequently abandoned her plans in Europe and amended her U.S. income tax returns to reflect that, which meant the overseas investments were no longer deductible.
While she wanted to pay all taxes, penalties and interest, her tax advisers recommended she file an "Offer in Compromise" to the IRS to waive or reduce those fees, the suit says.
In 2012, while negotiations with the IRS were underway, she learned she was under criminal investigation by the IRS for unpaid taxes, penalties and interest, the suit says. Her lawyer quit representing her, saying he was uncomfortable dealing with a criminal probe. Meanwhile, the suit contends, the lawyer failed to forward correspondence from the IRS.
She then searched the Internet for an attorney with expertise in the area and contacted Freeman, who took over the case. At that point, the suit says, she had no idea how much she owed. After negotiating with the IRS, Freeman told her she owed $8.4 million in taxes and another $6.5 million in penalties.
He told her that $6.5 million of the money went to the IRS for penalties and fees, when in fact, the agency had waived those extra fees. On top of that, she paid $222,428 in legal fees.
The suit says she only discovered the alleged scam in 2019, after her bank asked for documents on the IRS transactions. She subsequently obtained IRS documents showing the actual payment.
Freeman's attorneys filed an April 28 motion to delay the case from moving forward because he is the subject of an IRS criminal investigation.
"Because of the complete and total overlap between this civil case and the criminal proceeding, there is a definite danger that Mr. Freeman may incriminate himself if civil discovery proceeds," Freeman's attorneys, Joseph Richotte and George Donnini of Butzel Long in Bloomfield Hills, wrote in a motion.
Vann's attorneys, Kenneth Neuman and Jennifer Grieco of Birmingham, responded Tuesday in a court filing., They oppose the delay and note that Freeman's criminal probe involves his failure to report the $6.5 million as income. The criminal statute of limitations on the alleged theft has expired, they add.