Wednesday, January 18, 2012

Sam Brownback budget adviser Arthur Laffer sued over Ponzi scheme

Posted By on Wed, Jan 18, 2012 at 1:36 PM

The Laffer Curve might work diffently when it comes to his checkbook.
  • The Laffer Curve might work differently when it comes to his checkbook.
Last week, Kansas Gov. Sam Brownback released a $14 billion budget proposal that cut state spending by a reported 4 percent. Under his plan, taxpayers would pay lower taxes, but it rankled some Sunflower State residents because it wants to eliminate homeowners' mortgage deductions and charitable deductions. It was also reported that economist Arthur Laffer, known as an early proponent of Reaganomics, advised Brownback on his budget.

Laffer is famous among economists for the "Laffer Curve," which theorizes that lowering taxes can increase government revenue because when taxes get too high, people either won't work or won't pay taxes. According to The Kansas City Star, Laffer was to return to Topeka this week to talk about the budget. But that might be difficult now that Laffer has been sued for allegedly promoting a Ponzi scheme.

According to Courthouse News Service, Laffer was paid to essentially endorse something called Business Radio Network (BizRadio), which went bust. Laffer allegedly didn't say anything as investors' money was "wasted with no reasonable expectation of recovery." He and fund managers are accused of making $3.1 million on BizRadio, which, according to the suit, "never generated sufficient revenue through the sale of airtime to keep itself a viable entity. BizRadio was able to exist through the continuous influx of additional capital until it eventually collapsed in upon itself."

The suit seeks to recover damages from Laffer and the fund managers.

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