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Asset Protection Group Update

By Randall K. Edwards - Email Editor

Date : Aug 30, 2007

Dear Subscriber:

Over the past few months, this newsletter has run several items about the meltdown of the Asset Protection Group, a Las Vegas-based company run by Bill Reed and his right-hand henchman, convicted felon, Rick Neiswonger. The company, which advertised heavily on talk radio, solicited “representatives” who would pay almost $10,000 each for the privilege of selling Reed’s “bulletproof Asset Protection” program throughout the nation. Almost 2,000 such “representatives” paid their money and bought Reed’s baloney, which was founded on a combination of Nevada “bearer share” corporations, offshore companies, nominee officers (usually Reed and cohorts), “friendly liens,” and a host of other shady dealings. The scam took full advantage of a video cut by none other than Robert Wagner, the “Hart to Hart” actor who was once married to Natalie Wood. The video, which featured Reed, warned of the “litigation explosion” which could be used as a hook for selling Reed’s services.

About a year ago, the Federal Trade Commission (FTC) asked a federal court in Missouri to appoint a receiver to take over APG’s business because of Reed and Neiswonger’s exaggerated income claims to the APG “representatives.” The Missouri court issued an order that put the company under federal jurisdiction and has been overseeing the APG mess ever since.

As of last week, a new player emerged in the APG/Reed/Neiswonger saga: The U.S. Justice Department, which announced that it was also suing APG and its principals for helping his customers evade payment of their taxes to the IRS, hide their income and evade taxes. The Justice Department's complaint provided examples of six sham liens totaling more than $2 million that Reed and APG allegedly filed for customers who owed nearly $900,000 in federal taxes. According to the complaint, the IRS had discovered at least 75 APG customers who had used nominee bank accounts to evade collection of federal taxes.

Of course, it goes without saying that if APG, Reed and Neiswonger didn’t like the way they were going to look after the FTC was after them, they’re going to like it even less when the Justice Department and the IRS are through with them.

The fate of the “representatives” who were ripped off by APG, Reed and Neiswonger is as yet undecided for a couple of reasons.

First, the fact that the feds have gone after the APG bunch doesn’t necessarily mean that private individuals ripped off by them will get a shot at them – at least not for a while. Here’s why. When the FTC filed its action, the Missouri court issued an order that no one else could file any claims against APG, Reed or Neiswonger without the court's permission. Within a few months of that order, I filed a class action lawsuit against APG, Reed and Neiswonger on behalf of some individual clients who had been ripped off by APG. In that matter, I asked the Missouri court to lift its order and give my clients permission to sue APG, Reed and Neiswonger in the Nevada courts for claims arising under several different theories ranging from fraud to theft. My clients weren’t the only ones who had a beef with APG, of course. Other claimants, like Rob Lambert, whose Asset Protection Corporation sponsors this newsletter, also had claims that they could have asserted but hadn't yet filed with any court. Rob's claim arose when documents seized from APG by the feds revealed that APG had paid a computer hacker to try to crash his Asset Protection Corporation bulletin board -- no doubt because the truth was being told about APG there, and Reed, Neiswonger and company didn't like to have the rock lifted up and the maggots underneath exposed to the light of day.

The Missouri court turned down all requests from individuals to lift the court order and to go forward with their claims, finding that it would be easier to administer the morass that the APG case has turned into by resolving the government's claims first in the Missouri action. Whether a process will eventually be put into place for individuals to file claims with the Missouri court or the court-appointed receiver has yet to be determined. As things currently stand, though, right now it looks pretty tough for anyone to try to sue APG, Reed and Neiswonger until the feds are through with them. Thus, my clients ultimately dismissed their case and I am unaware of anyone else who is pursuing any individual action against the APGers -- at least for now. If there's anything left of APG, Reed and Neiswonger after the feds have had their way with them, I wouldn't be surprised if some individual or even class action suits were filed in the future.

Second, it also remains to be seen whether the IRS will be scrutinizing everyone on APG’s “representative” or “customer” lists for possible tax evasion. Like a snail, APG has left a trail of slime in its wake.

There’s a reasonwhy I’m reporting on the sad tale of APG’s crash and burn other than to simply watch it with a sort of twisted fascination. It’s to offer a word of warning. Just because Reed and Neiswonger plowed their APG airplane into the ground doesn’t mean that the world is now safe from asset protection rip-offs. In fact, quite the opposite is true. There are plenty of vultures out there who are more than willing to jump into the void left by APG’s absence. In fact, despite the fact that Nevada’s legislature outlawed “bearer shares” in its last session, one needs only do a Google search under the key words "Nevada corporations bearer shares" or “Nevada nominee services” to realize that not only are there still companies out there hawking “bearer shares” in Nevada, but offering to throw in “nominee services” in the bargain.

So be careful. The fact that APG got taken down won't stand as a deterrent to any of the other hustlers who can still make a few bucks singing the same song that APG sang.

Randall K. Edwards practices law in Utah, Nevada, California and Arizona, with his main office in Salt Lake City.

Randall K. Edwards

 

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