Interesting. One fellow I know who I consider to be very intellegent, said that he would have to become a criminal and get what he needed from the black market. He also said that black market goods would come pouring across the borders and the Gestapo needed to control that would make the IRS look like a small town cop by comparison.
You need to hang with people who are more intelligent than your friend.
Currently, you can cheat all on your own without the collusion of anyone else.
With the FairTax, two or more people must be involved in order to cheat the system. Both run the risk of the other being 'the cop'. You won't even be able to trust him because he may be offering to find cheats to reduce his sentence after he gets caught doing the same.
Would you really risk jail to save a few hundred dollars or even a few thousand?
Then he's as misinformed as you. Help educate him.