National Security Systems Inc. v. Iola, No. 10-4154; Third Circuit; opinion by Chagares, U.S.C.J.; filed November 8, 2012. Before Judges Fuentes, Chagares and Restani, International Trade Judge, sitting by designation. On appeal from the District of New Jersey. [Sat below: Judge Thompson.] DDS No. 25-8-8165 [64 pp.]
This litigation arises out of a tax avoidance scheme devised in the late 1980s. Defendant James Barrett, a financial planner, induced plaintiffs to adopt an employee welfare benefit plan known as the Employers Participating Insurance Cooperative (EPIC). Promoters of EPIC marketed it to closely held corporations as a means of obtaining tax benefits. EPIC’s advertised tax benefits, as plaintiffs discovered years later, were illusory; the scheme masqueraded as a multiple employer welfare benefit plan, but, in fact, was a method of deferring compensation.
