Tax Cheating

Texas couple convicted at break neck speed

39 witnesses in less than three days?  Zow.

Source: North Texas e-News reprint of DOJ press release

Flower Mound couple convicted of tax evasion
Sep 25, 2006

Excerpts:

Sherman, TX -- United States Attorney Matthew D. Orwig announced today that a Flower Mound couple has been convicted of tax evasion in the Eastern District of Texas. The guilty verdict was returned late Friday against JAMES VAN METER, 55, and ANITA VAN METER, 54, following a one-week trial before United States District Judge Richard Schell. The Van Meters were immediately taken into federal custody following the verdict.

According to information presented at trial, during the tax years 1999 and 2000, the Van Meters owned and operated The Wellness Center, a homeopathic business where they provided services and sold products to various clients.

At trial, prosecutors presented the testimony of 39 witnesses in less that three days and introduced almost 200 exhibits establishing that the Van Meters had failed to file income tax returns and pay taxes since 1989 and had used a combination of off-shore entities and third-party trusts in order to willfully attempt to evade paying income taxes.

Nuclear Engineer pleads guilty to tax crimes

Source:  Post Gazette

Nuclear engineer guilty of conspiracy, tax evasion

Tuesday, September 26, 2006
By Paula Reed Ward
Pittsburgh Post-Gazette

A nuclear engineer who formerly worked for Westinghouse Electric Corp. pleaded guilty yesterday in federal court to conspiracy and tax evasion.

Initially, Mark M. Kaushansky, 55, of Monroeville, was charged with helping Russia's former atomic energy minister steal more than $9 million in aid money from the U.S. Department of Energy.

But the plea before Senior U.S. District Judge Maurice B. Cohill included just nine of the original 20 counts against him, and they all related to tax evasion.

Diamond broker / tax protester indicted

First, illegal fundraising, then refusing to pay any income taxes on millions of income. What a gem...

Source: Pensacola News Journal

Diamond broker in IRS flap 'Sport' Suttles accused of failing to pay $2.5 million since 1990

By Michael Stewart

Excerpts:

A Pensacola businessman embroiled in a political donations scheme 16 years ago is facing 10 counts of tax fraud.

Fred "Sport" Suttles, 51, is accused of failing to pay the Internal Revenue Service more than $2.5 million in income and employment taxes, interest and penalties between 1990 and now.

Suttles' longtime friend, Mary Ham, with whom he has a 17-year-old daughter, is a co-defendant on one charge of conspiracy to defraud the IRS.

Assistant U.S. Attorney Michelle Heldmeyer said the pair are leading "tax-protester-type lifestyles" in which they claim that they are not legally obligated to pay taxes.

Before his arrest on the contempt charge, Suttles was hiding in a motel on Pine Forest Road.

He was arrested at his jewelry store after driving a borrowed truck within a couple blocks of the business, parking it and riding to the store on a bicycle, Burgess said.

Ham was arrested Friday morning.

Ham, who lives with her 17-year-old daughter, disappeared for two months, and attempts to locate her were unsuccessful, Burgess said.

Metabolife owner sentenced to only 6 months

Even though his tax cheating was in the millions of dollars?

Source:  North County Times

Saturday, September 23, 2006
Metabolife owner sentenced for tax evasion

Excertps:

SAN DIEGO ---- A North County man who owns part of weight loss-oriented Metabolife International, Inc., was sentenced Thursday to six months in custody for evading millions of dollars in taxes.

U.S. District Court Judge Barry Ted Moskowitz also sentenced William Robert Bradley of Rancho Santa Fe to two years of supervised release that includes four months of home confinement and 1,000 hours of community service, authorities said.

According to assistant U.S. attorneys Phillip L.B. Halpern and Kyle W. Hoffman, Bradley used various schemes to avoid paying taxes, including diverting corporate profits, improperly classifying corporate income, failing to report personal income and using a charitable foundation to conceal income.

When Bradley pleaded guilty, the DOJ put out a strongly worded press release, in which United States Attorney Lam said, "Metabolife tried to cheat on its taxes, pure and simple, and corporate tax cheats do not receive special treatment."

Six months sounds like special treatment to me.

Texas doctor tries to use a bogus trust to evade taxes

Source:  Amarillo Globe News

Friday, September 22, 2006

Excerpts:

Physician sentenced for tax evasion

An Amarillo physician has been sentenced to 46 months in prison and three years of supervised release for tax evasion.

Evidence at the trial showed Miller entered into a scheme with Charles Matich in 1996 to use limited liability companies and sham trusts to conceal income and move it into offshore accounts. Most of the money was moved by Matich to the Channel Islands, court documents show.

Matich is a cooperating defendant awaiting his own sentencing on tax charges in San Diego.

Now the good doctored tried to make good on his taxes.  Really.  After all, he offered the IRS $7,500 as payment in full for an outstanding debt of $140,000...

To read more:  DOJ Press Release

Bus Exec whose tax protester boss is on the lam found guilty

Most tax protesters are barely scraping by.   But not this time...

Source:  Minneapolis Star Tribune

Ex-executive found guilty of aiding tax evasion
And the Comtrol CEO, still a fugitive, was supposed to have stood trial with his former coworker

September 21, 2006 – 10:29 PM

A former executive of a small Maple Grove computer firm was found guilty Thursday by a federal jury in Minneapolis of five counts of aiding and abetting the tax evasion of fugitive millionaire tax protester Robert Beale.

The jury convicted Lee Stagni, former president and chief operating officer of Comtrol, of conspiring with Beale to defraud the federal government.

Beale, Comtrol's CEO, was scheduled to stand trial with Stagni on the same charges, but a warrant was issued for his arrest after he failed to show up Aug. 14, the day the trial was scheduled to begin. His whereabouts remain unknown. U.S. District Judge Ann Montgomery postponed Stagni's trial until this month in hopes that Beale would turn up or be captured.

After the jury verdicts were read Thursday afternoon, federal prosecutor Timothy Rank asked Montgomery to detain Stagni until he is sentenced, but Montgomery denied the motion. However, she noted that she had been "burned" once, a reference to Beale.

After court was adjourned, Stagni's attorney, Don Lewis, said, "We've very disappointed" by the verdict. He added that "there was no evidence presented that Mr. Stagni was a tax protester" and that Stagni and Beale had disagreed "very frequently."

Asked what the verdict might mean for Beale should he eventually be brought to trial, Lewis said, "I'm not here to comment on Mr. Beale's prospects." He said no one knows where Beale is.

Rank and Michael Cheever, another assistant U.S. attorney, declined to comment on the case. "We have a codefendant so we can't react," Cheever explained as he hurried with Rank onto a courthouse elevator.

To read more about the boss on the lam and his wacky tax protest beliefs, go here.

Connecticut plastic surgeon evades taxes with less than surgical precision

What can I say?  Doctors and tax evasion...

Source:  Westport News

Westport Doctor Charged With Tax Evasion, Fraud

Westport resident Steven Herman, a plastic surgeon with offices in Norwalk and Manhattan, pleaded guilty Monday, before U.S. District Judge Janet C. Hall in Bridgeport, to charges of tax evasion, illegal structuring of financial transactions and health care fraud, according to Kevin J. O'Connor, U.S. Attorney for the District of Connecticut.

Between January 1998 and April 2003, Herman reportedly skimmed cash receipts and insurance checks from his two practices and willfully failed to report these amounts on his federal individual income tax returns. The skimmed amount totaled $883,700, according to the "stipulation of offense conduct." The amounts of unreported income increased each year: $76,630 in 1998; $87,574 in 1999; $160,031 in 2000; $248,898 in 2001 and $310,567 in 2002.

Idaho tax protesters sentenced

Trying to claim that you aren't a US citizen and therefore the IRS and DOJ have no authortity over you isn't going to work...

Source:  KUTV.com

Tuesday September 19, 2006

BOISE, Idaho (AP) An Idaho landscape artist whose work is in the collection of billionaire potato baron J-R Simplot and Microsoft co-founder Paul Allen has been sentenced to six months in jail for tax evasion.

John Thurman Horejs and his wife Elaine of Burley had pleaded guilty in June to federal tax charges after acknowledging they had evaded more than 170-thousand dollars in income taxes and obstructed internal revenue laws.

Besides prison, he also was sentenced yesterday to one year supervised detention and his wife was sentenced to five years probation.

Court records showed the pair falsely claimed they were not U-S citizens, filed false trust documents and falsely claimed the paintings seized by the I-R-S were owned by a trust.

I-R-S agent for Idaho, Paul Camacho, says the case shows, as he put it, "it is an illusion that income taxes can somehow be dodged.''

Additional Info:

DOJ Release announcing the indictment

DOJ Release announcing the guilty plea

Rhode Island tax protest promoter shut down

News Alert: Setting up a phony church doesn't make you income tax free...

Source: ABC6 News

Providence man agrees to stop alleged tax fraud scheme

September 20, 2006

WASHINGTON (AP) - A Providence man has agreed to stop marketing an alleged tax fraud scheme under a federal court order.

Officials from the Justice Department say Eric Messier falsely advised customers that they could avoid paying federal income taxes by treating their assets and income as a "corporation sole" -- a church or charity organization with tax benefits in some states.

A government's complaint filed in the U-S District Court in Rhode Island says customers paid Messier between 25-hundred dollars and 10-thousand dollars to participate in the scheme.

The court order gives Messier 15 days to remove from his Web site all information advertising the scheme and to give the government a list of his customer's names and other personal information.

More Info:  DOJ Press Release

Five CA preparers invdicted for thousands of false returns

If these people took in more than $1.5 million in fees in recent years, why is my tax money paying for public defenders?

Source:  The Press-Enterprise

Excerpts:

A family-run tax business in Rialto cost the federal government more than $14.4 million in lost-tax revenue when it filed thousands of false returns over several years, the government charged Monday.

Berry's attorney, assistant federal public defender Kay Otani, said Berry had never been incarcerated and had no criminal record. He had security clearance during the more than 30 years he worked for an aircraft company. "I see nothing sinister," Otani said.

The indictment alleged the defendants filled 11,000 false returns between 2000 and 2004, with 6,000 filed in 2003 alone. The 49-page indictment said employees and the owner of a private, home-run tax business that later became N.C.K. Services Inc. with an office in Rialto not only filed false returns, but also failed to report their own income from the business.

The indictment said the defendants used a variety of methods to falsify itemized 1040a tax forms, including inflating and fabricating deductions for such items as real estate taxes and mortgage interest.

They also made calculations based on income rather than actual expenses to "zero out" the taxes due and get a refund of "most -- if not all" -- the withheld taxes, the indictment alleges.

The indictment charges the defendants with conspiracy to defraud the United States, aiding in preparing false tax returns, filing false income tax returns, willful failure to file tax returns, submitting false documents to the IRS and making false statements to a financial institution.

Additional info:  DOJ Press Release

Is tax cheating viral?

According to a DOJ press release released on 9/19/06, a Danville abusive trust promoter named Robert Douglas Hazen pleaded guilty to aiding in assisting the preparation of a tax return.  His co-defendant, a financial advisor named Earl Combs, had already cut his deal with the DOJ 10 months earlier.

When you trace back through the people mentioned in these releases you really have to wonder whether tax cheating is a disease that either renders the people involved terminally greedy or serially stupid.

So let's start with accountant Donald Fletcher.   Mr. Fletcher was convicted in 2001 of conspiring against the US government and aiding in the preparation of false returns and was sentenced to a 71 month prison sentence where he later passed away.  Mr. Fletcher got into trouble for advising his clients to write off all of their personal expenses as business expenses.

From his 2003 appeal, (which he lost):

Mr. Fletcher also told the prospective clients that JO & C knew of "secret" provisions hidden in the Internal Revenue Code, provisions accountants and attorneys were not trained in, and that his method was not taught at business schools such as Harvard and Stanford. Although Mr. Rogers delivered much of the advice that was rendered directly to taxpayers, that advice, as taxpayers described it at trial, was entirely consistent with Mr. Fletcher's comments during the seminar about deducting a cat as a "rodent control device," or $500 for dog food as a "security device," or even a bird as "aerial surveillance."

Oh dear.   

Financial advisor Earl Combs had a number of clients who had used Mr. Fletcher's creative (cough cough) tax planning and were now being audited.  So he referred these clients to Mr. Hazen, who promised that he could reduce their tax liabilities to practically zero by setting up phony charitable foundations.  The clients under audit for writing off personal expenses as business expenses, were now advised to write off personal expenses as charitable deductions.

It's a disease, but it isn't limited to tax cheating the IRS.  After all, Mr. Hazen also recently lost his CPA license for ripping off clients.

Publication: PR Newswire
Publication Date: 03-JAN-03

Article Excerpt

SACRAMENTO, Calif. -- SACRAMENTO, Calif., Jan. 3 /PRNewswire/ -- Effective immediately, Robert Douglas Hazen, CPA, of Danville, California, is no longer licensed to practice public accountancy in California, as a result of a stipulated settlement in which he admitted diverting hundreds of thousands of dollars from trust funds of which he was the trustee into his own personal accounts and those of his children.

Pure trust promoter gets 63 months in prison

Source:  DOJ Press Release

Excerpts:

United States Attorney McGregor W. Scott and Roger L. Wirth, Special Agent-in-Charge of the IRS Oakland Field Office, announced today that CALVIN AVILA, 69, from Sacramento, was sentenced by United States District Judge William B. Shubb on September 13, 2006 to 63 months in prison on federal income tax charges.

Sigerseth's 1993 and 1994 tax returns were audited by the IRS in 1997. Sigerseth's 1995 and 1996 tax returns were also audited, and he hired AVILA to help him with his disputes with the IRS. AVILA was himself a promoter of these tax evading trust arrangements and convinced Sigerseth that the NTS trusts were simply poorly drafted. AVILA redrafted the business and family trusts, and appointed himself as trustee. Thereafter, both Sigerseth and AVILA took the position with the IRS that the trusts were "pure trusts" that were somehow beyond the regulation of, or taxation by, federal and state government. Both defendants were defiant in response to repeated requests for information from the IRS and sent material to the IRS claiming, among other things, that the IRS was not a real government agency, and that the Internal Revenue Code was not valid law since the regulations pertained to the U.S. Bureau of Alcohol, Tobacco and Firearms. They also took steps to make collection of Sigerseth’s 1995 and 1996 tax liability more difficult by opening new bank accounts with false taxpayer I.D. numbers and names not associated with Sigerseth, and by filing a Tax Court petition for purposes of delay.

To read more about pure trust schemes:

IRS Notice

Quatloos

California tax preparer pleads guilty to preparing 480 false returns

Source:  DOJ Press Release

Defendant STEVE TACANG entered a guilty plea this morning before United States District Judge Garland E. Burrell, Jr., to two counts of aiding and assisting in the preparation of false tax returns. According to Assistant United States Attorney S. Robert Tice-Raskin, who is prosecuting the case, TACANG was the principal owner and operator of EST Enterprise, a tax preparation business which operated in Vallejo, California. Between 2002 and 2004,TACANG prepared over 480 returns for scores of taxpayers containing false deduction information related to donations, unreimbursed employee expenses, safe deposit box fees and moving expenses.

Irwin Schiff follower convicted

Yikes, that means at least 24 Irwin Schiff clients have been convicted of tax crimes, and yet his loyal cult followers still think his "methods" work.

Source:  Detroit News

Excerpts:

Kenneth Heath, 69, faces up to five years in prison for each of the four counts of tax evasion and up to 10 years for passing a bogus document intended to convince the Internal Revenue Service he owed it nothing.

During his three-day trial in federal court, Heath testified that he was convinced taxes are only voluntary after reading "The Federal Mafia" by Irwin Schiff, an infamous tax scofflaw who has claimed that his devotees had skipped paying more than $2 billion in taxes.

Schiff, 78, began a 13-year prison term in February for his latest tax crimes.

In August 2003, Heath made matters worse when he sent IRS officials a "Registered Bill of Exchange" for $89,000 and documents stating he had no unpaid taxes. There is no such thing as a bill of exchange, officials said.

Florida couple filters income through phony trusts

And pay themselves just enough income to fall under the standard exemption amount. Hmmmm.

Excerpts from United States v. Bahrs, N.D. Fla., No. 1:05-CV-138-SPM, 8/29/06:

This is a suit brought by the United States to collect unpaid income taxes for the tax years 1995 and 1996 from the Bahrs, who had filed returns for those years showing no tax liability. They accomplished this by creating two trusts-American Professional Services Enterprises Business Trust ("Business Trust") and In God We Trust Family Trust ("Family Trust"). The Bahrs assigned all of their income to the Business Trust, deducted business expenses, and then paid the remainder of the money to the Family Trust, which deducted personal expenses before paying the remaining income to the Bahrs. The remaining income just happened to be the exact amount of personal exemptions and standard deductions claimed, thus resulting in tax returns showing that no taxes were owed for those years.

The main argument made by the Bahrs is that the subject property is not subject to foreclosure because it is held not by them, but by the Mission, thus shielding it from any tax liens or foreclosures.

The subject property held in the Family Trust was quit-claimed to the Mission on June 11, 1998, ostensibly as a "religious contribution". John Bahrs testified at deposition that he felt a calling to become a missionary and wanted to be associated with a "religious entity," so he decided, after conversations with representatives of the Church of Yahweh, that he would create the Mission to carry out charitable works. Notably, Bahrs does not know where the Church of Yahweh is located or what it does, he is the sole missionary of the organization, and the Mission's "congregation" consists of his three children, who assist him in caregiving for the elderly.