Defendants Organize, Operate and/or promote a scheme- VEBA PLANS

Defendants organize, operate, and or promote a scheme in which they sell to customers owning smalloften closely-held companies participation in Voluntary Employee Beneficiary Associates (VEBA) plans. The defendants claim that customers can, through the contributions their business makes to VEBA plans administered or operated by the defendants, fund for their employees (and more often than that not themselves) a valuable insurance-oriented welfare benefit while claiming all of the VEBA contributions as a federal income tax deduction. At the same time , those plan contributions are intended to provide participating customers with a valuable deferred compensation-like benefit that allows them to recoup the full value of their initial contributions. In fact, this scheme- through which the Defendants' customers enjoy a substantial tax deduction for their plan contributions, while also permitting them to retain the full value of the contribution later- violates the Internal Revenue Code and applicable Treasury regulations, and the Defendants' promotion of it constitutes enjoin-able penalty conduct.